SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): November 20, 2001
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Concentra Operating Corporation
(Exact name of Registrant as specified in its charter)
Nevada 001-15699 75-2822620
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of incorporation) Identification
Number)
5080 Spectrum Drive
Suite 400 - West Tower 75001
Addison, Texas (Zip code)
(Address of principal
executive offices)
Registrant's telephone number, including area code: (972) 364-8000
Not Applicable
(former address if changed since last report)
Item 2. Acquisition or Disposition of Assets
On November 20, 2001, Concentra Inc. ("Concentra Holding") acquired all
of the outstanding shares of capital stock of National Healthcare Resources,
Inc. ("NHR"), a privately-held company located in New York City, in a
transaction valued at $141 million. Under the terms of the transaction,
Concentra Holding issued approximately $81.5 million of its common stock and
approximately $1.0 million in cash to the shareholders of NHR in exchange for
all of the outstanding shares of common stock of NHR. Concurrent with this
acquisition, Concentra Holding contributed the capital stock of NHR to Concentra
Operating Corporation's (the "Company") capital and repaid $58.5 million of
NHR's indebtedness. This repayment was financed through the contribution of
$19.5 million in equity to the Company from Concentra Holding's sale of new
common stock, existing cash on hand, and by borrowing under the Company's
existing revolving credit line. Because there has been no active trading market
for Concentra Holding's common stock, the Board of Directors relied upon
independent valuation analyses, internal financial analyses and negotiation with
the principal shareholders of NHR to determine the fair value of the Company's
common stock and number of shares to issue in the transaction.
NHR, founded in 1992, provides care management and network services to
the workers' compensation and auto insurance industries on a national level. NHR
is a leading provider of outsourced claims management services to payors of
worker's compensation, automobile related injury insurance, and disability
insurance claims. NHR's businesses are complementary in nature to the Company's
Case Management and Network Services businesses. NHR offers a model for managing
the cost and care resulting from work-related injuries, automobile accidents,
and general health-related events that cause absence in the workplace. Claims
adjusters (typically working with insurance carriers and third party
administrators) access these services to facilitate the recovery of the injured
person, expedite the injured person's return to work, and control the costs
associated with the claim. The services NHR provides are to facilitate an
employee's return to work following a workplace injury or expedited recovery
after an automobile injury. As a result, NHR is able to assist insurance
companies and self-insured corporations to manage their total workers'
compensation and automobile-related injury insurance claim costs. NHR had
revenue of $110.6 million for the nine months ended September 30, 2001.
The acquisition will be accounted for under the purchase method of
accounting whereby assets and liabilities are "stepped-up" to fair value with
the remainder allocated to goodwill. Because the Company is controlled by its
largest stockholder, Welsh, Carson, Anderson & Stowe ("WCAS"), and because WCAS
also owned a minority portion of NHR, the acquisition accounting is viewed as a
reorganization of entities under common control. Accordingly, the historical
costs of NHR's assets and liabilities will be utilized to the extent of WCAS'
proportionate ownership interest in NHR. The Company will recognize NHR's
historical earnings in proportion to WCAS' investment in NHR utilizing the
equity method of accounting from August 1999, when WCAS acquired control of the
Company, through the effective date of the acquisition. The Company will
consolidate all of NHR's earnings after November 1, 2001, the date that the
Company effectively controlled NHR.
On November 12, 2001, Concentra Holding also completed the acquisition
of all of the outstanding capital stock of Health Network Systems LLC ("HNS"), a
privately-held company located in Naperville, Illinois, in a transaction valued
at approximately $31 million. The transaction was fully financed through the
sale of new equity in Concentra Holding. Under the terms of the transaction,
Concentra Holding paid $30 million in cash and other consideration for HNS'
capital stock. Concurrent with this acquisition, Concentra Holding contributed
the capital stock of HNS and $1 million of cash to the Company, and the Company
repaid approximately $1 million of indebtedness. HNS, founded in 1999, provides
complementary network services such as provider bill re-pricing and provider
data management for health plans and other payors working with multiple
preferred provider organization networks. Steven E. Nelson, a Director of the
Company and of Concentra Holding, is the President and Chief Executive Officer
of HNS. Mr. Nelson and certain other Board members and members of management of
the Company were investors in HNS. All of HNS's assets, including contracts,
equipment, intangibles and goodwill, as well as all of its liabilities, have
become those of the Company and will be recorded at fair value. HNS had revenue
of $3.5 million for the nine months ended September 30, 2001. The effective date
of the acquisition is November 1,
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2001. Financial statements for HNS will not be provided because HNS is not
considered a significant business as defined by Article 11-01(b) of Regulation
S-X.
Item 7. Financial Statements and Exhibits
(a) Financial statements of businesses acquired
Financial statements will be provided by amendment to this Current Report
by February 4, 2002.
(b) Pro forma financial information
Pro forma financial information will be provided by amendment to this
Current Report by February 4, 2002.
(c) Exhibits
2.1 Agreement and Plan of Merger by and among Concentra Inc., NHR
Acquisition Company, Inc. and National Healthcare Resources,
Inc. dated as of November 2, 2001 (incorporated by reference to
Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001).
99.1 Press Release of the Registrant dated November 12, 2001.
99.2 Press Release of the Registrant dated November 20, 2001.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONCENTRA OPERATING CORPORATION
(Registrant)
By: /s/ Richard A. Parr II
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Name: Richard A. Parr II
Title: Executive Vice President, General
Counsel & Secretary
Date: December 4, 2001
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INDEX TO EXHIBITS
EXHIBIT
NUMBER
2.1 Agreement and Plan of Merger by and among Concentra Inc., NHR
Acquisition Company, Inc. and National Healthcare Resources,
Inc. dated as of November 2, 2001 (incorporated by reference to
Exhibit 2.1 to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2001).
99.1 Press Release of the Registrant dated November 12, 2001.
99.2 Press Release of the Registrant dated November 20, 2001.
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