SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
===============================================
FORM 8-K/A
AMENDMENT NO. 1
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
===============================================
Date of Report (Date of earliest event reported): October 10, 1997
Genesis Health Ventures, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 1-11666 06-1132947
- ---------------------------- ----------- -------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
148 West State Street, Suite 100
Kennett Square, Pennsylvania 19348
----------------------------------
(Address of principal executive
offices, including zip code)
610-444-6350
--------------------------------------------------
Registrant's telephone number, including area code
Item 7 is hereby amended as follows
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
1. Financial Statements of business acquired:
The Multicare Companies, Inc. and Subsidiaries
(1) Independent Auditors' Report (1)
(2) Consolidated Balance Sheets as of December 31, 1995 and 1996 (1)
(3) Consolidated Statements of Operations for the years ended
December 31, 1994, 1995 and 1996 (1)
(4) Consolidated Statements of Stockholders' Equity for the years
ended December 31, 1994, 1995 and 1996 (1)
(5) Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1995 and 1996 (1)
(6) Notes to Consolidated Financial Statements (1)
(7) Unaudited Consolidated Balance Sheet as of September 30, 1997 (2)
(8) Unaudited Consolidated Statement of Operations for the three and
nine months ended September 30, 1997 (2)
(9) Unaudited Consolidated Statement of Cash Flows for the nine
months ended September 30, 1997 (2)
(10) Unaudited Notes to Consolidated Financial Statements (2)
- -------------------------------
(1) Incorporated by reference to The Multicare Companies, Inc. Annual report on
Form 10-K for the period ended December 31, 1996.
(2) Incorporated by reference to The Multicare Companies, Inc. Quarterly Report
on Form 10-Q for the period ended September 30, 1997.
2. Pro Forma Financial Information:
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
SEPTEMBER 30, 1997
The Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
twelve months ended September 30, 1997 gives effect to the following
transactions: (1) the Tender Offer, (2) the Merger (including the Conversion of
Multicare's Convertible Debentures), (3) the sale of the 9% Notes and the
application of proceeds therefrom, (4) the Equity Contributions and the
application of proceeds therefrom, (5) the closing of the Credit Facility and
the application of the proceeds therefrom, (6) the acquisition of the A.D.S
Group ("A.D.S") by Multicare in December 1996 (the "A.D.S Acquisition"), as
though the transaction had occurred as of October 1, 1996 and (7) the Therapy
Sale and the Pharmacy Sale, as though the transactions had occurred as of
October 1, 1996. The Unaudited Pro Forma Condensed Consolidated Balance Sheet
gives effect to each of the foregoing transactions as though each transaction
had occurred as of September 30, 1997. The contract therapy businesses sold by
Multicare to Genesis pursuant to the Therapy Sale were primarily acquired by
Multicare in April 1997; no adjustments have been made in the pro forma
information to reflect the results of operations of the businesses sold in the
Therapy Sale prior to their acquisition by Multicare. The proforma information
should be read in conjunction with the Companies' historical consolidated
financial statements. The columns entitled "Genesis Historical Results " and
"Multicare Historical Results" represents the historical consolidated results of
the respective companies as of September 30, 1997 and for the twelve months then
ended. The column entitled "A.D.S Historical" represents the historical results
of the A.D.S Group from the period of October 1, 1996 through December 31, 1996.
In December 1996, Multicare acquired the A.D.S group and consolidated their
operating results commencing on January 1, 1997.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable and are described in the
notes accompanying the Unaudited Pro Forma Condensed Consolidated Statement of
Operations and the Unaudited Pro Forma Condensed Consolidated Balance Sheet.
The Unaudited Pro Forma Condensed Consolidated Financial Information is
provided for informational purposes only and does not purport to represent
what the Company's results of operations or financial position would actually
have been had the transactions in fact occurred at such dates or to project
the Company's results of operations or financial position at or for any future
date or period. The Unaudited Pro Forma Condensed Consolidated Financial
Information has been prepared using the purchase method of accounting, whereby
the total cost of the Tender Offer, Merger, Pharmacy Sale and Therapy Sale are
allocated to the tangible and intangible assets acquired and liabilities
assumed based upon their respective fair values at the effective date of the
transactions. Such allocations are based on studies and valuations which have
not yet been completed. Accordingly, the allocations and estimated lives
reflected in the Unaudited Pro Forma Condensed Consolidated Financial
Information are preliminary and subject to revision. However, the Company does
not expect material changes to the allocation of purchase price.
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
(In thousands)
Pro Forma
Genesis
Multicare
Adjusted for
Debt Conversion
Genesis Multicare Debt Transactions and Pharmacy
Historical Historical Conversion Adjustments Therapy Sales
---------- ---------- ---------- ------------ ---------------
Current assets $ 352,437 $ 146,254 $ - $ - $ 498,691
Property and equipment, net 578,397 460,800 - 254,000 (3) 1,293,197
Goodwill, net 359,956 171,324 - 690,680 (2)(3) 1,221,960
Other assets 143,323 44,755 - 51,000 (2)(3) 239,078
---------- -------- ------- --------- -----------
Total assets $1,434,113 $823,133 $ - $ 995,680 $ 3,252,926
========== ======== ======= ========= ===========
Current liabilities $125,507 $ 94,432 $ - $ - $ 219,939
Long term debt, excluding current maturities 651,667 423,421 (55,420)(1) 792,674 (2)(3) 1,812,342
Deferred taxes 37,745 42,106 - 101,600(3) 181,451
Other liabilities 11,173 - - - 11,173
Minority interests - - - 420,000 (4) 420,000
Shareholders' equity 608,021 263,174 55,420 (1) (318,594)(3)(4) 608,021
---------- -------- ------- --------- -----------
Total liabilities and shareholders equity $1,434,113 $823,133 $ - $ 995,680 $ 3,252,926
========== ======== ======= ========= ===========
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Balance
Sheet
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED PROFORMA
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
(1) Reflects the conversion of the 7% Senior Subordinated Convertible Debentures
of Multicare into shares of Multicare common stock in connection with the
Merger as follows:
Long-term debt (55,420)
Shareholders' Equity 55,420
(2) Reflects Genesis' financing of its equity investment in Multicare, the
purchase prices of the Pharmacy Sale and Therapy Sale and other transaction
costs. The Genesis equity investment in Multicare is eliminated in
consolidation.
Transaction Consolidation
Adjustments Elimination Total
----------- ------------- -----
Investment in Multicare 325,000 (325,000) -
Goodwill 65,000 65,000
Debt Issuance and
Transaction Costs, net 27,000 27,000
Long-term debt 426,000 426,000
The assets and liabilities of the Multicare pharmacy and therapy businesses
are reflected in the historical balance sheet of Multicare at September 30,
1997. Genesis agreed to purchase these businesses in connection with the
Pharmacy and Therapy Sale. The pro forma effect of the Pharmacy Sale and
Therapy sale on the consolidated balance sheet of Multicare and Genesis is
not significant other than the elimination of Multicare's equity in those
businesses, and the goodwill resulting from the allocation of purchase
price, which is reflected in footnote 3
(3) Reflects the allocation of purchase price and financing for the Merger as
follows:
Multicare Pharmacy & Consolidation
Elimination Merger Therapy Sales Elimination Total
----------- ------ ------------- ------------- -----
Property and Equipment - 254,000 - - 254,000
Goodwill (171,324) 828,504 (31,500) - 625,680
Debt issuance costs, net - 24,000 24,000
Deferred taxes - 101,600 101,600
Long-term debt - 440,674 (74,000) - 366,674
Shareholders' equity (318,594) 745,000 - (325,000) 101,406
In connection with the allocation of excess purchase price to property and
equipment, a deferred tax liability of $101,600 has been recorded using an
effective tax rate of 40% for the difference between the tax and book bases.
The Consolidation Elimination represents the elimination of Genesis' equity
contribution in Multicare.
(4) Represents the reclassification of the equity partners' equity interest in
Multicare of $420,000 from shareholders' equity to minority interests.
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED SEPTEMBER 30,1997
(In thousands, except per share data)
ADS Genesis/
Genesis Multicare ADS Pro Forma Multicare/ADS
Historical Historical Historical (1) Adjustments Proforma
---------- ---------- -------------- ----------- -------------
Net Revenues $1,099,823 $679,292 $15,544 $ - $1,794,659
Expenses:
Operating Expenses 858,916 515,576 13,258 1,387,750
Corporate, General & Administrative 41,039 31,984 2,047 (125)(2) 74,945
Special Charge 15,000 15,000
Lease Expense 28,587 15,929 49 861 (3) 45,426
Depreciation & Amortization 41,946 27,916 365 15 (4) 70,242
Interest Expense, Net 39,103 28,642 535 162 (5) 68,442
---------- -------- ------- ------- ----------
Total Expenses $1,024,591 $620,047 $16,254 $ 913 $1,661,805
---------- -------- ------- ------- ----------
Income Before Income Taxes
and Extraordinary Item $ 75,232 $ 59,245 $ (710) $ (913) $ 132,854
Income Tax Expense (Benefit) 27,088 22,152 (273) (351) 48,616
---------- -------- ------- ------- ----------
Income Before Extraordinary Item 48,144 37,093 (437) (561) 84,238
Extraordinary item 553 2,219 - - 2,772
---------- -------- ------- ------- ----------
Net Income $ 47,591 $ 34,874 $ (437) $ (561) $ 81,466
Primary earnings per share
before extraordinary item $ 1.35
Primary earnings per share $ 1.33
Weighted average shares of
common stock and equivalents 35,643
Addition to income as a result of
interest on convertible debt 303
Fully diluted earnings per share
before extraordinary item $ 1.34
Fully diluted earnings per share $ 1.32
Weighted average shares of
common stock and equivalents 36,306
(RESTUBBED TABLE)
Genesis /
Multicare/
A.D.S Adjusted
Transactions for Transactions
Adjustments Pro Forma
----------- ---------
Net Revenues $ (0) (6) $1,794,659
Expenses:
Operating Expenses (16,469) (7) 1,371,281
Corporate, General & Administrative (14,200) (6) 60,745
Special Charge 15,000
Lease Expense (3,570) (8) 41,856
Depreciation & Amortization 27,021 (9) 97,263
Interest Expense, Net 64,962 (8) 133,404
-------- ----------
Total Expenses $ 57,744 $1,720,549
-------- ----------
Income Before Income Taxes
and Extraordinary Item $(57,744) $ 75,110
Income Tax Expense (Benefit) (20,814) (10) 27,802
-------- ----------
Income Before Extraordinary Item (36,929) 47,308
Extraordinary item -- 2,772
-------- ----------
Net Income $(36,929) $ 44,536
Primary earnings per share
before extraordinary item $ 1.33
Primary earnings per share $ 1.25
Weighted average shares of
common stock and equivalents 35,643
Addition to income as a result of
interest on convertible debt 303
Fully diluted earnings per share
before extraordinary item $ 1.31
Fully diluted earnings per share $ 1.23
Weighted average shares of
common stock and equivalents 36,306
See Accompanying Notes to Unaudited Pro Forma Condensed Consolidated Statement
of Operations
GENESIS HEALTH VENTURES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED PROFORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)
(1) Represents the historical results of operations of A.D.S from October 1,
1996 through December 31, 1996. Multicare paid approximately $10,000,
repaid or assumed approximately $29,800 in debt, financed $51,000 through a
lease facility and issued 554,973 shares of its common stock for A.D.S.
Total goodwill approximated $29,900.
(2) Reflects the elimination of duplicative positions at A.D.S and the
reduction of professional and accounting fees.
(3) Reflects the additional lease expense associated with the $51,000 lease
financing entered into in connection with the A.D.S Acquisition. The lease
facility was repaid in connection with the Merger.
(4) Reflects additional depreciation and amortization expense resulting from
the amortization of goodwill incurred in the A.D.S Acquisition and
depreciation resulting from the allocation of the purchase price for A.D.S
to property, plant and equipment. Goodwill is being amortized over periods
of 25 to 40 years.
(5) Reflects the additional interest expense on the incremental debt incurred
in connection with the A.D.S Acquisitions.
(6) Represents the net reduction in corporate, general and administrative
expense due to the elimination of Multicare / A.D.S Proforma corporate,
general and administrative expense and the incurrence of management fees.
The management fee, which is charged and recognized by Genesis as operating
income, is eliminated in the consolidated operating results of Multicare
and Genesis. As a result of the Mergers, certain corporate employees of
Multicare are employed by Genesis. The overall reduction in corporate,
general and administrative expense is the result of anticipated cost
savings from the elimination of duplicative positions and other costs.
Multicare
Multicare / A.D.S Pro Forma
corporate, general and
administrative (33,976)
Management fee 35,782
Genesis
Corporate, general and
administrative 19,776
Elimination of management fee (35,782)
--------
Total corporate general and
expense (14,200)
========
Genesis
Management fee 35,782
Elimination of management fee (35,782)
--------
Revenues, net (0)
========
(7) In connection with the Merger, Genesis' equity partners in the Multicare
Transaction will absorb the first $40,000 of operating losses of
Multicare. Consequently, $16,469 of estimated losses have been added back
to other operating expenses.
(8) Interest and lease expense has been adjusted to reflect the indebtedness
incurred in connection with the Merger, the Pharmacy Sale, the Therapy Sale
and the repayment of indebtedness (including the repayment of $54,000 under
a lease financing facility). The estimated average interest rate for the
Credit Facility and for the Notes is 8.4% and 9%, respectively.
Multicare
Credit Facility 33,207
Notes 22,500
Other debt 3,344
Multicare / ADS Pro Forma
interest expense (29,874)
Genesis
Credit Facility 35,784
-------
Total Interest Expense 64,962
-------
Lease expense (3,570)
=======
(9) The revenues and expenses of the Multicare pharmacy and rehabilitation
businesses are included in the Multicare historical results for the twelve
months ended September 30, 1997. With the exception of depreciation and
amortization, the proforma effect of the Pharmacy Sale and the Therapy Sale
on operating revenues and expenses is not expected to have a significant
effect on the consolidated operating results of Multicare and Genesis, as
those revenues and expenses formerly reflected in the operating results of
Multicare will be reflected in the results of Genesis. In connection with
the Merger, Pharmacy Sale and the Therapy Sale, depreciation and have been
increased by the amortization of goodwill and depreciation resulting from
the allocation of purchase price. As a result of the Merger, the
preliminary allocation of the purchase price has resulted in an increase to
property and equipment ($254,000) and goodwill ($657,180) which are
amortized over 30 years and 40 years, respectively. The Therapy Sale and
Pharmacy Sale have preliminarily resulted in additional goodwill of
approximately $65,000 which is amortized over lives ranging from 20 to 40
years.
-------
Depreciation and amortization 27,021
=======
(10) Represents income tax expense at an effective tax rate of 37%. The primary
difference between expense calculated at statutory rates and the amount
reflected in the pro forma statements is attributable to non-deductible
goodwill and the provision for state income taxes.
3. Exhibits:
Exhibit No. Description
----------- -----------
10.1(3) Agreement and Plan of Merger dated June 16, 1997 by and
among Genesis ElderCare Corp., Genesis ElderCare
Acquisition Corp., Genesis Health Ventures, Inc. and The
Multicare Companies, Inc.
10.2(4) Third Amended and Restated Credit Agreement dated October
9, 1997 to Genesis Health Ventures, Inc. from Mellon Bank,
N.A., Citicorp USA, Inc., First Union National Bank and
NationsBank, N.A.
-1-
Exhibit No. Description
----------- -----------
10.3(4) Credit Agreement dated October 14, 1997 to The Multicare
Companies, Inc. from Mellon Bank, N.A., Citicorp USA,
Inc., First Union National Bank and NationsBank, N.A.
10.4* Management Agreement dated October 9, 1997 among The
Multicare Companies, Inc., Genesis Health Ventures, Inc.
and Genesis ElderCare Network Services, Inc.
10.5(4) Stockholders' Agreement dated October 9, 1997 among
Genesis ElderCare Corp., The Cypress Group L.L.C., TPG
Partners II, L.P., Nazem, Inc. and Genesis Health
Ventures, Inc.
10.6(4) Put/Call Agreement dated October 9, 1997 among The Cypress
Group L.L.C., TPG Partners II, L.P., Nazem, Inc. and
Genesis Health Ventures, Inc.
10.7* Stock Purchase Agreement dated October 10, 1997 among
Genesis Health Ventures, Inc., The Multicare Companies,
Inc., Concord Health Group, Inc., Horizon Associates,
Inc., Institutional Health Care Services, Inc., Care4,
L.P., Concord Pharmacy Services, Inc., Compass Health
Services, Inc. and Encare of Massachusetts, Inc.
10.8 Asset Purchase Agreement dated October 10, 1997 among
Genesis Health Ventures, Inc., The Multicare Companies,
Inc., Health Care Rehab Systems, Inc., Horizon
Rehabilitation, Inc., Progressive Rehabilitation Centers,
Inc. and Total Rehabilitation Center, L.L.C.
10.9(3) Letter Agreement dated June 16, 1997 between Genesis
Health Ventures, Inc. and Straus Associates.
23.1 Consent of Independent Public Accountants
- ----------
* Previously filed.
(3) Incorporated by reference to the Tender Offer Statement on Schedule
14D-1 filed by Genesis ElderCare Corp. and Genesis ElderCare
Acquisition Corp. on June 20, 1997.
(4) Incorporated by reference to Amendment No. 7 to the Tender Offer
Statement on Schedule 14D-1 filed by Genesis ElderCare Corp. and
Genesis ElderCare Acquisition Corp. on June 20, 1997.
-2-
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 hereunto duly authorized.
GENESIS HEALTH VENTURES, INC.
By: /s/ George V. Hager, Jr.
-------------------------------------------------
George V. Hager, Jr.
Senior Vice President and Chief Financial Officer
Date: December 22, 1997