U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 12b-25
NOTIFICATION OF LATE FILING
(Check One):
[X]Form 10-K [ ]Form 20-F [ ]Form 11-K [ ]Form 10-Q [ ]Form N-SAR
For Period Ended: year ended December 31, 1996
[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-F
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended:
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Read Attached Instruction Sheet Before Preparing Form. Please Print or
Type.
Nothing in this form shall be constructed to imply that the Commission
has verified any information contained herein.
________________________________________________________________________________
If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates: not applicable
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Part I--Registrant Information
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Full Name of Registrant: PROVIDENT AMERICAN CORPORATION
Former Name if Applicable:
Address of Principal Executive Office: 2500 DeKalb Pike
Norristown, PA 19404-0511
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Part II--Rules 12b-25 (b) and (c)
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If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following should
be completed. (Check box if appropriate)
(a) The reasons described in reasonable detail in Part III of this form
could not be eliminated without unreasonable effort or expense; [ X ]Yes[ ]No
(b) The subject annual report, semi-annual report, transition report on
Form 10-K, Form 20-F, 11-K or Form N-SAR, or portion thereof will be filed on or
before the fifteenth calendar day following the prescribed due date; or the
subject quarterly report or transition report on Form 10-Q, or portion thereof
will be filed on or before the fifth calendar day following the prescribed due
date; and [X] Yes [ ] No
(c) The accountant=s statement or other exhibit required by Rule
12b-25(c) has been attached if applicable. [ ] Yes [X] No
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Part III--Narrative
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State below in reasonable detail the reasons why Form 10-K, 20-F, 11-K, 10-Q,
N-SAR or the transition report or portion thereof could not be filed within the
prescribed time period.
See Schedule AA@ attached hereto.
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Part IV--Other Information
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(1) Name and telephone number of person to contact in regard to this
notification
Benedict J. Iacovetti, Chief Financial Officer (610) 279-2500
- ---------------------------------------------- ----- -----------------
(Name) (Area Code) (Telephone Number)
(2) Have all other periodic reports required under section 13 or 15(d)
of the Securities Exchange Act of 1934 or section 30 of the Investment Company
Act of 1940 during the preceding 12 months or for such shorter period that the
registrant was required to file such report(s) been filed? If the answer is no,
identify report(s).
[X] Yes [ ] No
(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal year will be
reflected by the earnings statement to be included in the subject report or
portion thereof?
[X] Yes [ ] No
If so, attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the reasons why a
reasonable estimate of the results cannot be made.
See press release attached hereto as Schedule "B."
PROVIDENT AMERICAN CORPORATION
(Name of Registrant as specified in charter)
has caused this notification to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: March 31, 1997 By /s/ Benedict J. Iacovetti
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Name: Benedict J. Iacovetti
Title: Chief Financial Officer
Schedule A
On December 22, 1997, PAMCO's independent auditors, Coopers & Lybrand,
LLP ("C&L"), resigned. This action was taken without prior warning. There were
no accounting irregularities or reportable events which prompted the C&L
resignation decision, as was detailed in our previous 8-K filing (a copy of
which is attached hereto) with the Commission. The C&L resignation created
significant timing difficulties with respect to interviewing and retaining a new
auditing firm. Preliminary discussions with several auditing firms indicated
that the audit of the 1997 financial statements could not be completed in time
for the Company to file its Form 10-K on a timely basis. The Company then
renewed discussions with C&L, at which time the Company requested that C&L
reconsider its decision and told C&L that it was placing the Company in a
tenuous position regarding the Company's ability to file its Form 10-K on a
timely basis. C&L declined to reconsider.
After a lengthy interview process, which encompassed detailed
discussions with many accounting firms, varying in size from several of the
largest international firms, several national firms, and even several regional
accounting firms, PAMCO selected BDO Seidman, LLP ("BDO") as its new auditors. A
Form 8-K was also filed in this regard. This appointment became effective on
February 23, 1998.
BDO informed the Company's management that, given the timing of its
appointment as auditors and the need for retention of a new actuarial firm, its
audit of the Company's financial statements and issuance of its report thereon
could not be completed by the March 31, 1998 deadline for filing the Company's
1997 Form 10-K. It should be noted that the actuarial function had previously
been performed by C&L. In coordination with the hiring of BDO as the Company's
new auditors, PAMCO also engaged the actuarial firm of Milliman & Robertson,
Inc. ("M&R") to conduct a comprehensive study of the Company's health insurance
products, including a detailed review of the claim reserve adequacy as of
December 31, 1997, a detailed review of the Company's deferred acquisition
costs, including the recoverability of such costs from the projected future cash
flows of the underlying insurance products, a review of the adequacy of the
Company's premium rates in relation to the insurance benefits provided under our
various product forms, as well as a review of the Company's life insurance
businesses. M&R was hired to perform these services on February 23, 1998, and
has just recently begun their data gathering and analysis procedures.
Because M&R's analysis described the preceding paragraph and resulting
report thereon will be relied upon by BDO in the conduct of its audit (both
statutory and GAAP), the completion of the 1997 audited financial statements is
expected to be delayed until both BDO and M&R complete their respective
procedures and issue their reports.
We have had discussions with BDO and M&R with regard to doing
everything in their power to expedite the audit, and they have been extremely
cooperative. However, given the recent appointment of BDO and M&R and the time
each needs to complete its work, the Company anticipates that it will not be in
a position to file its 1997 Form 10-K until June 1998.
Clearly, the resignation of C&L was beyond the control of the Company.
Nonetheless, the Company will do everything in its power to file its Form 10-K
as expeditiously as possible.
Schedule B
For Immediate Release: Contact: John Gillin
March 24, 1998 Provident American Corporation
(610) 279-2500
or: Kevin McGrath
Cameron Associates
(212) 245-8800
PROVIDENT AMERICAN TO DELAY FILING OF
ANNUAL REPORT ON FORM 10-K
NORRISTOWN, PA, March 24, 1998 -Provident American Corporation,
(NASDAQ:PAMC), an insurance holding company specializing in the marketing of
managed-care health insurance to individuals and small businesses, today
announced that its Annual Report on Form 10-K, for the year ended December 31,
1997, would not be filed by March 31, 1998.
As previously reported, the Company's independent auditors, coopers &
Lybrand, LLP resigned in late December 1997. Thereafter, the Company interviewed
auditing firms, and, effective February 23, 1998, selected BDO Seidman, LLP as
the Company's new auditors. In addition, the Company's actuarial consultant
Milliman & Robertson will provide assistance in various areas relating to the
audit.
In light of the untimely resignation of Coopers & Lybrand LLP and the
time required for new auditors to complete the work associated with the audit of
the year end financial statements, it is not expected that the Company will be
in a position to release its 1997 year end financial results or file its Annual
Report on Form 10-K until June 1998.
However, it is anticipated that the Company will report a fourth
quarter 1997 operating loss. In addition, the Company, is reviewing the
potential write-down of deferred policy acquisition costs relating to its health
insurance business. Restructuring charges will also be incurred as a result of
the outsourcing of various insurance administrative functions to HealthPlan
Services, Inc. These potential write-downs would result in a significant
reduction of intangible assets.
While the Company has just recently begun its year end audit process,
and any actual adjustments or write-downs will be subject to a comprehensive
examination and analysis, the Company estimates that it may incur a net loss
after special charges in the range of $12-15 million for the fourth quarter of
1997, as compared with net income of $1 million for the fourth quarter of 1996.
For the year ended December 31, 1997, the Company estimates that it may incur a
net loss in excess of $20 million, as compared with net income of $16 million
for the year ended December 31, 1996.
In response to these events and circumstances and the increasingly
competitive nature of the health insurance business, Provident American has
implemented several managed care initiatives which the Company expects will
improve its loss ratio and return it to profitability. These initiatives include
an increase in premium rates, more stringent front-end underwriting standards,
greater penalties for out-of-network usage, and administrative changes to
increase policyholder persistency. Effective January 1, 1998, Provident American
also began outsourcing all its current health insurance, policy issuance,
billing and claims to HealthPlan Services Corporation. The outsourcing agreement
has enabled the Company to concentrate its efforts on sales, marketing, and
product design.
Provident American is an insurance holding company specializing in the
marketing of managed-care health insurance through the underwriting of unique,
affordable health care and life policies to individuals and small businesses, a
$300 billion annual premium market.
This press release includes forward-looking statements, particularly
relating to the anticipated release date of financial results for the year ended
December 31, 1997, the Company's estimates regarding a net loss for the fourth
quarter of 1997, and the results of present initiatives, which are based upon a
number of assumptions concerning future conditions that may ultimately prove to
be inaccurate. Such forward-looking statements are subject to risks and
uncertainties and may be affected by various factors which may cause actual
results to differ materially from those in the forward-looking statements. These
forward-looking statements are made in reliance on the "safe harbor" provision
of the Private Securities Litigation Reform Act of 1995. Prospective investors
are cautioned that forward-looking statements are not guarantees of future
performance. For further information about these and other factors that could
affect the Company's future results, please see the Company's filings with the
Securities and Exchange Commission. Copies of these filings are available upon
request from the Company.