Filed by Per-Se Technologies, Inc.
Pursuant to Rule 425 under the Securities Act of 1933,
as amended, and deemed filed pursuant to Rule 14a-12
under the Securities Exchange Act of 1934, as amended
Subject Company: NDCHealth Corporation
Commission File No.: 001-12392
On August 30, 2005, Per-Se Technologies, Inc. posted the following
transcript from its investor conference call to its website:
PER SE TECHNOLOGIES
AUGUST 29, 2005
9:30 A.M. CDT
Coordinator Good morning or good afternoon. Thank you all for standing by
for today's conference. I would like to inform all
participants that your lines have been placed on a listen-only
until we open for questions and answers. I would also like to
inform all participants that today's call is being recorded.
If anyone does have any objections, they may disconnect at
this time. I would now like to turn the call over to Mr. Phil
Pead, Chairman, President, and CEO of Per Se Technologies.
Thank you, sir, you may begin.
P.Pead Thank you, operator. Good morning and thank you for joining us
on this call to discuss our acquisition of NDCHealth
Corporation. I have with me today Chris Perkins, our Chief
Financial Officer.
Before we begin, I'd like to read the following Safe Harbor
Statement. Please be aware that certain statements made in
this call will be forward-looking in nature within the meaning
of the Private Securities Litigation Reform Act of 1995. These
statements will include expectations with respect to future
results, and the assumptions on which such expectations are
based. As with all things, actual results may differ
materially from those projected in the forward-looking
statements. Additional information concerning factors that
could cause actual results to differ from those in the
forward-looking statements is found in our press release
issued this morning, and in our SEC filings, including the
Form 10-K for the year ended December 31, 2004, and the Form
10-Q for the quarter ended June 30, 2005.
Also, this call is intended for institutional investors and
analysts. We will be holding a media question and answer
session immediately following this call at 11:30 a.m. If you
are a member of the media, you are welcome to participate in
this call, but I would ask that you hold your questions for
the media Q&A session. The dial-in information for the 11:30
a.m. session was listed in our release this morning.
This morning we announced that we have signed a definitive
purchase agreement to acquire NDCHealth Corporation. Per Se
will acquire the physician, hospital, and retail pharmacy
segments of NDCHealth's
business. As part of the transaction, Wolters Kluwer will
purchase NDCHealth's Pharmaceutical Information Management
business. The total transaction is valued at approximately $1
billion. The transaction will result in total compensation to
NDCHealth's shareholders of $19.50 per share, with at least
$13 paid in cash, and up to $6.50 paid in Per Se stock. Per Se
will also refinance NDCHealth's outstanding debt.
I'd like to spend a few minutes talking about our strategic
rationale for acquiring NDCHealth. Chris Perkins will then
walk you through the financial aspects of the transaction in
more detail, and then I will open it up for questions.
This acquisition brings together two companies with
complementary operations and a shared strategic focus to help
healthcare providers be financially successful. While the main
focus of both of our businesses is improving providers'
reimbursement, there is no meaningful overlap in our service
and product offerings.
If we look at our respective lines of business by target
market, in the physician business, as you know, Per Se is the
leader in business process outsourcing for hospital-based
physicians. We excel at providing services, using proprietary
technology that improves the revenue and cash flow for these
large physician groups.
Respectively, NDCHealth is the leader in providing technology
for office-based physicians that enables them to effectively
manage their practice. NDCHealth's Physician Practice
Management Solutions targets solo practitioners and two doctor
practices. While Per Se has a small physician practice
management business comprising less than 3% of total revenue,
it targets office-based physicians in groups of five or more.
For hospitals, NDCHealth is the leader in providing revenue
cycle management solutions. NDCHealth has more hospitals and
healthcare organizations using its transaction processing
offerings than any other vendor in the industry. Per Se's
complementary hospital business consists of both revenue cycle
and resource management solutions, a business in which we are
the market leader that helps hospitals reduce costs through
efficient scheduling of labor and hospital operating rooms.
The acquisition of NDCHealth will add an entirely new market
segment to Per Se's offerings retail pharmacy solutions.
NDCHealth is the leader in providing both transaction
processing and point-of-sale systems to retail pharmacies of
all sizes. The NDCHealth intelligent network is one of the
most sophisticated real-time networks in the healthcare
industry, insuring that billions of pharmacy transactions are
securely transmitted to payers across the nation. Retail
pharmacies represent another group of providers
that are focused on insuring that they are being appropriately
reimbursed for the services they deliver. In addition,
NDCHealth's point-of-sale systems assist the pharmacy in
providing a highly efficient level of service to its patients
and customers.
While the businesses of NDCHealth and Per Se are complementary
with no meaningful product overlap, there are meaningful
synergy opportunities. Firstly, given that we are both public
companies, there is duplication in some of our respective
functions that can be eliminated. Additionally, because both
companies are in the business of helping providers improve
their reimbursement, we will have the opportunity over both
the short and the long term, to make cost improvements to our
infrastructure. Our objective is to focus on best of breed
services and technologies from both organizations, and move
forward with a combined operation that improves our cost
structure, and improves the business of our provider clients.
In addition to our highly complementary businesses, there will
also be expanded opportunities for growth. We see
cross-selling opportunities of our complementary products into
the expanded customer base as a future driver of growth. For
example, we have sophisticated patient communication services,
including print and mail capabilities, and a Web based patient
portal. These solutions are critical to improving the
operating efficiencies of hospitals.
Also, Per Se is a leading provider of claims processing for
physicians. The penetration into the NDCHealth customer base
for these services is low. Over the long term, we will be
better positioned to introduce new product offerings because
of our expanded resources and customer base. For example,
extending our business process outsourcing services to the
office-based physician market would be a natural extension of
our current physicians business.
Secondly, as we stated previously, we are interested in
entering the business process outsourcing market for
hospitals. NDCHealth client base of 1,800 hospitals and
healthcare organizations provides us a significant opportunity
for this new service offering.
In addition to the benefits of our combined organizations, we
believe there are significant benefits for each of the
customers that our respective companies serve today. The new
Per Se will have direct touch points with the key healthcare
constituents: patients, physicians, hospitals, pharmacies, and
payers, representing a more expanded reach than either
individual company has today. NDCHealth customer base of
100,000 physicians, 1,800 hospitals and healthcare
organizations, 50,000 retail pharmacies, and 1,000 commercial
and government payers will be combined with Per Se's 19,000
physicians, 2,000 hospitals, and 1,100 payers. Our goal with
this enlarged footprint will be to improve the data
capture and flow of information among providers, payers, and
patients, which we believe, will make our healthcare system
more efficient and lower the cost of providing care.
For the hospital-based physicians and for hospital customers,
our expanded reach in the hospital market will allow us to
improve data capture at the point of care in the hospital,
ensuring the correct patient information is captured at the
point of registration at the hospital, will improve the
reimbursement and payment process for providers and patients,
respectively.
With our expanded customer base, the amount of data or
business intelligence available to our provider customers will
greatly increase. Higher data volumes will allow our customers
to realize more revenue cycle efficiencies, which will
ultimately make reimbursement more predictable for hospitals
and physicians.
We view the pharmacy segment as an exciting new opportunity
for us. NDCHealth's real-time network for claims processing
carries the largest pharmacy claim volume in the U.S. today.
Our goal is to continue to provide value to that network, so
that pharmacies can continue to improve their revenue cycle.
In addition, we expect Enterprise RX, NDCHealth's new pharmacy
system, which is in the early stages of release, to provide
significant efficiencies for retail pharmacies of all sizes.
We view this transaction as benefiting our customers, our
employees, and the shareholders of both Per Se and NDCHealth.
The health market continues to search for services and
solutions that make the delivery of care more efficient. The
added breadth and depth that we will gain by combining two
companies with similar strategic focuses will not only make
healthcare more efficient, but will also improve our
competitive position in the industry.
I'd now like to turn it over to Chris to discuss the financial
aspects of this transaction.
C. Perkins Thank you, Phil. Starting with an overview of the numbers, the
acquisition of NDCHealth will result in pro forma revenues for
Per Se of approximately $590 million, an increase of
approximately 60% compared to our revenues for the trailing 12
months at June 30, 2005. While we are not prepared to give
specific earnings or cash flow guidance until the transaction
closes, we expect the acquisition to be accretive to earnings
per share in year one, and significantly accretive to cash
flow per share in year one.
Both Per Se and NDCHealth are businesses with a high recurring
revenue string, which leads to meaningful cash flow generation
from both companies. Also, Per Se has an approximately $390
million net operating
loss carry-forward as of December 31, 2004, making Per Se's
current tax paying rate less than 5%. Through the purchase of
NDCHealth, we will be accelerating the use of our NOL, further
enhancing cash flow accretion related to the transaction.
As Phil mentioned, we believe there are operating synergies
between our complementary businesses. We are confident that we
can achieve meaningful cost synergies through leveraging the
administrative and operational infrastructure of the combined
businesses. We expect between $15 million to $20 million of
cost synergies will be recognized in year one, and higher
levels will be realized on an annualized basis thereafter.
Turning to the financial components of the transaction, as
Phil stated earlier, the combined transaction is valued at
approximately $1 billion. The transaction will result in
compensation to NDCHealth shareholders of $19.50 per share,
with at least $13 paid in cash, and up to $6.50 paid in Per Se
stock. We estimate that there are approximately 36.5 million
to 37 million NDCHealth shares and share equivalents that will
be compensated in this transaction. Additionally, Per Se will
refinance NDCHealth's outstanding debt, currently totaling
approximately $270 million.
Per Se will fund the transaction from, one, the after-tax net
proceeds from the sale of the information management business
segment to Wolters
Kluwer, two, the issuance of approximately $410 million of
debt at closing, three, the issuances of up to $240 million
value of Per Se stock to NDC shareholders, and four, the use
of cash-on-hand. Excluding the net proceeds from the sale of
the information management business, Per Se's consideration
for the transaction is estimated to approximately $665
million.
While it is currently estimated that Per Se's equity
contribution will be approximately $240 million related to the
$6.50 per share compensation, we have the option to increase
the cash portion of the consideration to NDCHealth
shareholders. While it is entirely at Per Se's discretion, if
we decide to reduce some portion of the equity component of
the consideration and increase the cash funding, we would
issue additional debt to do so. This structure gives Per Se
flexibility in determining its capital structure and cost of
capital related to funding the transaction, while insuring
that NDCHealth shareholders will receive the $19.50
consideration.
We have received a financing commitment from Bank of America
for all new debt raised related to the transaction. In
addition, we will have a $50 million revolving credit facility
that we do not anticipate drawing on related to the
transaction. We would anticipate that new debt raised related
to the transaction would be a combination of both senior bank
debt
and senior subordinated debt, with an anticipated blended
interest rate of between 7.5% and 8.5%, based on current
market conditions.
We would anticipate that the transaction will close within the
next three to six months. The transaction must be approved by
the shareholders of both Per Se and NDCHealth, as well as
approved by regulators through a Hart-Scott-Rodino Filing.
P. Pead Thank you, Chris. The acquisition of NDCHealth is the largest
acquisition that Per Se has made. I'd like to spend a moment
discussing why we are confident in our ability to successful
integrate these businesses, and why we are confident that
under our leadership, the combined operations will reach its
fullest potential.
Under this management team, Per Se has delivered substantial
improvement in operating margins, and turned a net loss in
2000 to positive net income in 2001, and substantial growth
every year thereafter. The business has also gone from a
significant cash user, to generating positive and growing free
cash-flow for the past four years. We achieved this
improvement in profitability through both operational and
capital structure initiatives.
Over the last few years, we have focused on insuring that our
core businesses operated efficiently, and that we saw momentum
in our organic
growth rate. While Per Se has made only a few relatively small
acquisitions over the past several years, they have been
integrated successfully. The stability and momentum of Per
Se's business allows this management team to the latitude to
focus on the successful integration of NDCHealth.
We are very excited about the many opportunities that this
transformational acquisition presents to the customers,
employees, and shareholders of both Per Se and NDCHealth. We
believe that this transaction is in the best long-term
interest of both companies.
That completes my comments, operator. I would like to open it
up now for questions.
Coordinator Steve Halper, you may ask your question, and please state your
company name.
J. Beese Hello, this is Juliet Beese in for Steve Halper, Thomas Weisel
Partners. If you could just give us a little bit more
clarification, or review of how you're going to integrate the
pharmacy software business into your existing plans, please.
Thank you.
P. Pead Yes, certainly. Obviously, the pharmacy business is a new line
of business for Per Se. That is not a market that we currently
address, so the opportunity really for us is to continue to
expand the value for the NDCHealth network. There are many
other solutions that we know that NDC was pursuing to add
value to that network and in addition to continue with the
early release of Enterprise RX, to continue with the
investment of that product.
Again, we see significant value in upgrading the technology
that pharmacies are currently using in order to make them more
efficient. So we really see that business as continuing in its
progress and the level of integration will really be as
another line of business that Per Se will be focused on.
J. Beese So Enterprise RX is on track.
P. Pead Enterprise RX will continue in its current progress, and we
believe it's making very good progress.
Coordinator Sandy Draper, you may ask your question, and please state your
company name.
S. Draper Thank you. Sandy Draper at JMP Securities. Phil, you didn't
talk about one significant side. Can you comment at all on the
management and
certainly the NDC folks and any that plan on staying on, and
how you would foresee the management structure of the new
company?
P. Pead Yes, sure Sandy. Obviously, we have just signed this
agreement, and clearly, there is all the regulatory and
shareholder approvals to go through, so at this time, we're
not ready to comment on how the teams will come together. I
can tell you, though, that we're very impressed by the NDC
folks. We've spent a lot of time, as you can imagine,
assessing the company, and we're very pleased to see the
quality and energy and passion that the NDC employees have had
for their respective businesses. But at this time, I cannot
give you anymore information regarding how these businesses
will come together.
S. Draper The second question would be, or maybe it's a comment and I'd
like a response. It sounds like the logic behind this is
really to get bigger and broader as healthcare continues to
have more and more challenges and all the different players,
whether its pharmacies, hospitals, or doctors are trying to
figure out how to be more efficient to improve their cash
flow. As you said, there's not a lot of direct overlap, but is
it really just trying to become a bigger, broader solution
set, get a bigger name out there. So whether you're a pharmacy
or a hospital or a doctor, the brand name of Per Se, and I
would assume, maybe you keep some of that NDC is as
broad net throughout healthcare, become the financial solution
player. Is that the logic here?
P. Pead It really is that and a little bit more, Sandy. Clearly,
healthcare is a very fragmented market, and patients will move
in and out of different venues of care. And so often, the
information association with the care that's been provided is
lost, or it's not viewed holistically across the horizon
between payers and providers. We believe that the more touch
points that you can have in healthcare, where you might be
able to link a patient with that particular venue of care,
will just improve all kinds of opportunities for us to provide
better information to patients, better reimbursement and more
efficient revenue cycle management for hospitals and
physicians.
And, as you say, the administrative side of healthcare has
become probably the highest burden in the actual delivery of
care. Some $500 billion a year is spent, just administered the
delivery of care in the U.S. So what we're trying to do here
is to give payers, patients, and providers an opportunity to
come together in a single network that allows them to more
efficiently get reimbursed for the care that they've provided.
Coordinator Robert Willoughby, your line is open; please state your
company name.
R. Willoughby Bank of America. Good morning. Phil, what precludes you or
Wolters Kluwer from walking away from either of the
transactions here, and from another bidder from potentially
stepping up?
P. Pead Clearly, Robert, between now and closing, there are several
hurdles that we have to overcome. The commitment that, I
think, both companies have made to concluding this are the
substantial investment that we have made during this auction
process for NDC.
For Wolters Kluwer, their purchase of their particular
business segment is very important for their strategic focus.
They are a healthcare content management company. Certainly,
that's one of their largest segments. It's about $1 billion
for them. The purchase of the information management segment
for Wolters Kluwer gives them a richer dataset for them to
provide critical information, particularly to the
pharmaceutical industry, and other constituents of healthcare,
particularly as the longitudinal record gets built out. So, in
terms of their commitment, we know, in the many discussions
that we've had with them, that this is a very important
strategic acquisition for them.
As I mentioned on the call today, it's an important strategic
acquisition for Per Se. So our commitment to closing on the
businesses that we're buying, again, is a critical part of our
expected growth rate for the future.
In terms of a superior offer coming through, clearly that
remains an opportunity, and the NDC Board will obviously
exercise their fiduciary responsibility accordingly.
C. Perkins Otherwise, as Phil mentioned, we do have the appropriate
regulatory requirements through the H-S-R filing, and then
shareholder approval by both Per Se and NDC shareholders.
R. Willoughby Is it possible maybe to say how much of the due diligence
process you feel that you've completed? Is this 80% done, 90%
done? What's left to be accomplished from a due diligence
standpoint?
C. Perkins I think we've fully completed our diligence in all areas of
this business, so I would say it's 100% done, Robert.
R. Willoughby Okay, and NDC did have an SEC issue. Can you give us an update
where that stands? What you will incur, what may go over to
Wolters Kluwer?
C. Perkins I really can't comment on the specifics of the NDC matter, but
that will not go to Wolters Kluwer. Obviously, it's an issue
that remains with NDC, and then Per Se will be involved in
that only after closing of the transaction.
R. Willoughby I know you threw it out there. I missed it. What was the share
count for NDC you were using?
C. Perkins It's approximately 36.5 million to 37 million shares, or the
shares outstanding and the impact of the common share
equivalents.
Coordinator Sean Jackson, your line is open, and please state your company
name.
S. Jackson Yes, this is Sean from Avondale Partners. Chris, you mentioned
the cost synergy is $15 million to $20 million in year one.
Does that include the refinancing, cost savings?
C. Perkins No, that is really just operating cost synergies.
S. Jackson Also, what are your thoughts in general. on NDCHealth's market
to release the solutions that you guys are buying, and
especially in consideration of the fact that their business
has been flat line, even declining in growth the last couple
of years? What are your thoughts on the entire demand
characteristics for that business?
P. Pead Let me just step back and let's look at each of the business
segments. If you take the hospital EDI market, this is a
business that clearly has been moving from the legacy premise
product to the ASPE Premise product;
and clearly, there was some pricing changes that resulted from
that. We see this business on an upswing. Clearly, there are a
lot of hospitals today that are using the Premise product. The
conversions are going well.
We really like the E-Premise functionality. It's been well
received in the hospital market, and we believe that there is
some added value to that network. For us, we see hospital
claims processing and the whole edit validation process prior
to submitting a claim as vital in improving the hospital's
cash flow, so we see two areas of opportunity here. One is to
continue to add value to the network claims processing
business, and secondly, to add specific services associated
with the reimbursement process. We intend to extend our model
that we excel in on the physicians' side, who are also working
in the hospital, to the front-end of the hospital revenue
cycle management, so both those constituents can benefit from
this.
On the physician practice management solution, again, those
products have a significant market penetration. They've got
new versions of their two products coming out this year, in
fact, through the balance of next year, we've seen some of the
new functionality that are going to be added. We believe that
with the greater adoption now of the electronic medical
records for practice management solutions, there's a whole new
opportunity there to continue to upgrade the value associated
with the products that NDC offers.
In terms of cross-selling, the EDI penetration of that
physician base is very low, so we see an opportunity of taking
the 100,000 physicians that are currently using their practice
management solutions and integrating our physician EDI
processing to make those physician practices much more
efficient.
The pharmacy business, again, is a new line of business for
us. They've got a very sophisticated network with some very
large retail pharmacies connected to it. About 85% of the
pharmacies in the United States are connected to this
real-time secure network for pharmacy transactions. As you
know, that's not an area that we've been involved in, so this
will be a new line of business for us.
That network continues to add significant value in terms of
pre and post editing, providing pharmacies with an opportunity
to really improve their reimbursement, and also to make sure
that the data capture, particularly as it relates to drug
dispensing, is meeting regulatory hurdles. This is becoming
more and more interesting as the Medicare Prescription Drug
Program begins in January. So we see the fact that NDC won the
Medicare Troop Contract as being a significant opportunity for
growth in that network.
So we're excited about the assets. We think that there's an
opportunity to take the value that they have, plus the value
that we bring, and substantially grow this business over the
next few years.
Coordinator Danes Couple, your line is open, and please state your company
name.
D. Couple Good morning. Friedman Billings Ramsey. I wanted to go through
the math here on this deal, implicitly the $382 million from
Wolters, and $665 million from you guys, Phil, approximates to
about $1.05 billion. You guys have been alluding to $1 billion
of transaction value. Does that imply $50 million of
transaction fees and taxes?
C. Perkins What it really implies is, first, that Wolters Kluwer
transaction for the IM business will be subject to, it is a
taxable event. And there will be some tax that will be taken
out and generating the net proceeds from that transaction.
D. Couple Is that the primary source of that $50 million difference?
C. Perkins That is a source without going through the details, the
additional amount of the differential there is related to
transaction costs related to completion of the transaction.
The expenses related to executing the transaction and
refinancing the NDC debt.
D. Couple And refinancing the debt, again, it's about $270 million,
which should get it from 10.5% to 7.5% or 8.5%.
C. Perkins In the $270 million, $200 million of that is 10.5%. That's the
bonds, the subordinated debentures related to the NDC debt.
The remainder is term and revolving debt that is at a lower
rate. So, yes, in essence, there is the blended costs that NDC
has today will be offset by the blended costs that we will
have post-transaction.
D. Couple Given that there's almost no overlap in your businesses, do
you expect really that the operational synergies that you guys
are talking about, and I know this may be a big dead horse, is
primarily from the fact that you guys are both Atlanta-based
healthcare IT public companies, so workforce redundancies and
maybe some data center savings would be the primary sources of
the synergies?
C. Perkins Especially the way that we've termed it is that the level of
synergies that we expect to recognize in year one will be from
integrating a variety of
administration and some operational functions. We have a very
high degree of confidence in that level of synergies. We've
performed extensive due diligence on assessing to derive that
amount, so we have a very high degree of confidence. I think,
as we go on in further years, there are opportunities to look
at synergy opportunities related to operational infrastructure
that certainly have an opportunity to enhance that year one
synergy in years thereafter.
D. Couple So, really not so much on the data center side.
C. Perkins I think that would be correct.
D. Couple Finally, you guys had eluded to possibly getting benefits in
cross-selling EDI services to the 100,000 some physicians that
supposedly are being served by NDCHealth, but that's an
extremely tiny revenue base, out of those 100,000 physicians.
Given that NDCHealth has an EDI transaction platform and has
been, in your words, essentially, unsuccessful in getting
these physicians to use it, what gives you the level of
confidence that you will be successful in getting them to use
your EDI services?
C. Perkins I'll comment just one comment and I'll let Phil answer the
question. Those cross-selling synergies and opportunities are
not included in our
synergies in year one of $15 million to $20 million. I just
wanted to make sure that that was clear, that that is not part
of our financial assessment.
P. Pead Let me just comment on that, as far as EDI penetration.
NDCHealth's claims processing focus was primarily in the
hospital segment. That is where the majority of their EDI
transactions occur. For Per Se, the majority of our business
from an EDI perspective was on the physicians' side, and the
two claims transactions are very different in nature. In fact,
NDC relied on alternate networks to provide services to their
office-based physician groups.
So this is a natural opportunity for us, even though the
revenue for the software that they use is relatively small
compared to the percentage of total revenue for NDCHealth, the
number of claims that are processed by those 100,000
physicians is significant. So we see an opportunity to really
grow that EDI revenue over the next few years.
D. Couple And not through a sales force, because they're single and dual
physician practices, right?
P. Pead Well, the really interesting thing about this is that those
one and two doc physicians are supported by a very large
value-added reseller network that NDC has built over the
years. So the opportunity to use our EDI sales
transaction package through the VAR network is the way we
would do that.
Coordinator Our next question comes from Duane Kennimore, and please state
your company name.
D. Kennimore This is Duane Kennimore from First Capital Alliance.
Gentlemen, congratulations on the deal. I was calling because
I'm trying to get a more precise explanation of the
compensation mechanism for NDC shareholders. You indicated
that they're variable stock and cash components; but you
didn't indicate what the bounds are on that discretion, or
when any such determination would be exercised by you. Could
you be more specific, please?
C. Perkins No, we did not mention the specific boundaries on that, but I
think the important note to make on that is that it will be at
least, $13 a share in cash. So we do have the opportunity to
expand a level of cash that goes to the NDC shareholders, and
therefore, reducing the amount of equity-based compensation
related in that. That is at our discretion, and we will be
evaluating that from this point forward. It gives us the
opportunity, again, to continue to assess what is the optimal
capital structure and cost of capital related to this
transaction.
I think we would be indicating those bounds prior to the
shareholder meeting that both parties will have later on in
the process. So that is something that, again, gives us
flexibility in assessing our ultimate capital structure, and
insures that the NDC shareholders will be receiving the
committed $19.50 per share.
D. Kennimore So there's no minimum or maximum portion of each type of
compensation, it sounds like, except for the cash minimum you
indicated.
C. Perkins That's right. There is a minimum requirement for the cash.
Coordinator Our next question comes from Brian Lombardi, and please state
your company name.
B. Lombardi Hello, Dolphin. A couple of quick questions. When do you
expect your merger agreement?
C. Perkins That will be in accordance with the SEC requirements for
filing that, and it will be forthcoming shortly.
B. Lombardi Sounds like there's a financing condition.
C. Perkins We have a financing commitment related to the financing
condition of this, so we are highly comfortable and confident
in that. We received our financing commitment from Bank of
America.
B. Lombardi With regard to the equity component of the consideration,
what is the pricing period?
C. Perkins It will be based on a period of time closer to the closing
date, so it will be, again, that's all determined on the
process moving forward and when that closing date is targeted
for, but it will be subject to a time-period that's nearest
the date of the shareholder meetings.
Coordinator George Hill, you may ask your question, and please state your
company name.
G. Hill Yes, George Hill from Lehring Swan. I was just wondering if
you could give us a little more color on how or if the
acquisition of the NDC assets helps you move up-market into
the BSO into maybe the larger physician practices or
hospitals, or is it more likely to help you move down-market?
Thank you.
P. Pead Actually, it allows us to move in both directions. With the
office-based physicians, clearly we see, and there are some
very large office-based
groups that currently we do not provide services for, that we
would be looking in the near future to begin to offer
back-office processing for receivables to the office-based
community. The issue for us has been finding the appropriate
platform for us to provide the back-end services force. So
this acquisition does provide us with a great opportunity,
even though they are one and two physicians, they can be, we
believe, consolidated and providing services to those folks in
the office-based world.
For hospitals going up-market for us, we have found, clearly,
we, today, have about 1,000 physician groups representing
about 15,000 physicians that we provide outsourcing services
for. Clearly, we see the quality of the accounts receivable
that we're working for those physicians as a result of,
essentially, the registration process in hospitals. So if we
can be more involved in the revenue cycle for hospitals, it
will be a natural benefit for our physicians that we're
providing business process outsourcing in the office-based
physician marketplace.
So together, we think that hospitals will benefit by us
offering a broader level of services that are hooked into all
the edits and validation processes that E-Premise gives, which
will enlarge our footprint for hospitals. But also as a
corollary, the physicians that we perform outsourcing services
for will also benefit from a more accurate data capture at the
front-end.
G. Hill But it sounds like the opportunity more at the near term is to
move down-market to the mid-size and smaller practice than to
try to move up into larger hospitals.
P. Pead No, I think our goal is, we've been looking at the hospital
market, actually, for a lot longer than the small physician
market, so I think we're prepared to move into that hospital
market a lot sooner.
Coordinator Jerome Landy, you may ask your question, and please state your
company name.
J. Landy Hello, Milbert Capital. Is there a break-up date?
C. Perkins As is standard and customary related to these transactions,
that is included in the contemplation of the merger agreement.
J. Landy So there is one, but you're not going to say how much it is.
C. Perkins I'd rather not disclose it right now, and I think it will be
forthcoming when the merger agreements are filed.
J. Landy What about for the Wolters Kluwer deal?
C. Perkins Could you clarify the question?
J. Landy Is there also a break-up day on the IM, too?
C. Perkins Again, I think that will be part of the merger agreement, and
that information will be available.
J. Landy Can you clarify timing a little bit better?
C. Perkins Sure, the timing is, we will begin our process very quickly,
as far as preparing for the appropriate filings with the SEC
and the regulatory filing related to HSR. So it's a matter of
getting that documentation filed, completed with the SEC and,
therefore, then calling the appropriate time for a
shareholder's meeting.
J. Landy Is there financing in the IM sale on the buyer's side?
C. Perkins I don't believe so.
Coordinator Ned Davis, you may ask your question, and please state your
company name.
N. Davis The County Capital Group. You mentioned the NOL, and I have
two questions relating to that. First of all, I believe that
in NDC, the tax basis for the information management was very
low, and maybe I don't understand this transaction. Will any
of the NOL that you have be applied against a capital gain on
the sale of the assets to the other buyer?
Secondly, how much of your NOL can you realize operationally
from the profits of NDC that you accrue. How quickly can you
realize that?
C. Perkins Related to the first question, none of the Per Se NOLs will be
utilized related to the sale of the IM business to Wolters
Kluwer. There is a tax basis in that asset, and there are also
NOLs at the NDC level that can be used to offset gain on that
business sale. So there will not be any utilization of Per
Se's NOLs, because that transaction will happen immediately
prior to NDC's transaction, essentially simultaneously.
As far as post-closing, Per Se's NOLs will be immediately
available to offset any income of the combined business going
forward.
N. Davis So you can realize it as soon as it accrues.
C. Perkins That's correct.
Coordinator Our last question comes from Michael Emerald; you may ask your
question.
M. Emerald You said the pricing period is towards the close, but what are
the terms for the pricing period? How many days is it?
C. Perkins I think it's approximately 20 days, but again, that will
included in the merger agreement when that is available.
Coordinator I don't show any questions at this time.
P. Pead Thank you, operator. I'd like to close the call by reiterating
that this acquisition brings together two companies with
complementary operations and a shared strategic focus, which
is to help healthcare providers be financially successful.
We're excited about the opportunities, both over the short and
long term, and that the combination of Per Se and NDCHealth
affords to our employees and customers, and the value that we
believe this transaction will bring to our respective
shareholders. I appreciate you participating on the call, and
look forward to speaking with you in the future. Thank you.
Coordinator This concludes today's conference. You may disconnect at this
time.
THIS TRANSCRIPT SHALL NOT CONSTITUTE AN OFFER OF ANY SECURITIES FOR SALE. The
proposed transaction will be submitted to Per-Se's and NDC's stockholders for
their consideration. Per-Se
and NDC will file a registration statement, a joint proxy statement/prospectus
and other relevant documents concerning the proposed transaction with the SEC.
STOCKHOLDERS OF PER-SE AND NDC ARE URGED TO READ THE REGISTRATION STATEMENT AND
THE JOINT PROXY STATEMENT/PROSPECTUS, AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR
SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
You will be able to obtain a free copy of the proxy statement/prospectus, as
well as other filings containing information about Per-Se and NDC, at the SEC's
Internet site (www.sec.gov). Copies of the joint proxy statement/prospectus and
the SEC filings that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, from Per-Se's
Internet site (www.per-se.com) under the tab "Investors") through the "SEC
Filing" link or from NDC's Internet site (www.ndchealth.com) under the tab
"Investor Relations" through the "SEC Filing" link.
Per-Se, NDC and their respective directors and executive officers may be deemed
to be participants in the solicitation of proxies from the stockholders of
Per-Se and NDC in connection with the merger. Information about the directors
and executive officers of Per-Se and their ownership of Per-Se common stock is
set forth in the proxy statement on Schedule 14A for Per-Se's 2005 annual
meeting of stockholders, as filed with the SEC on March 25, 2005. Information
about the directors and executive officers of NDC and their ownership of NDC
common stock is set forth in the proxy statement on Schedule 14A for NDC's 2004
annual meeting of stockholders, as filed with the SEC on September 14, 2004.
Additional information regarding participants in the proxy solicitation may be
obtained by reading the joint proxy statement/prospectus regarding the proposed
transaction when it becomes available.
On August 30, 2005, Per-Se Technologies, Inc. posted the following transcript
from its media conference call to its website:
PER-SE TECHNOLOGIES
AUGUST 29, 2005
10:30 A.M. CDT
Coordinator Hello, and welcome to the Per-Se Technologies conference call.
All sites will be in a listen-only mode until the question and
answer session. This call is being recorded at the request of
the company, should anyone have any objections you may
disconnect at this time. I would now like to introduce your
host for today's call, Mr. Phil Pead; Chairman, President, and
CEO of Per-Se Technologies. Sir, you may begin.
P. Pead Thank you operator and welcome to the members of the media for
joining us today for this question and answer call. I have
with me Chris Perkins, our Chief Financial Officer. Before we
begin I'd like to provide an overview for those of you who
were not able to attend our investor conference call earlier
this morning, and then I'll open it up for questions.
This morning we announced that we have signed a definitive
purchase agreement to acquire Atlanta based NDC Health
Corporation. Per-Se will acquire the physicians, hospitals,
and retail pharmacy segments of NDC Health's business. As part
of the transaction, Wolters Kluwer will
purchase NDC Health's information-management business for
pharmaceutical manufacturers.
The total transaction is valued at approximately one billion
dollars. The acquisition of NDC Health for Per-Se will bring
together essentially two companies with very complimentary
operations and a shared strategic focus, which is to help
healthcare providers be financially successful. Both companies
are focused on improving the revenue cycle for healthcare
providers, so we see the opportunities to integrate NDC
Health's businesses with Per-Se's lines of business. To be a
key value proposition for healthcare providers, patients, and
payers in the future as these businesses come together.
The acquisition will significantly expand our customer base of
healthcare providers and increase our revenue on a pro forma
basis by more than 60%. Again just to give you some metrics on
the transaction, NDC Health's customer base include about
1,800 hospitals; 100,000 physicians. They have over 50,000
pharmacies that they connect to and offer solutions for, and
approximately 1,000 payers that they are connected to.
Contrast that with Per-Se. We have about 19,000 physicians;
about 2,000 hospitals; and a little over 1,100 payers that we
connect to. So what this will do for our respective customers
and prospects is provide many more touch points for
healthcare. So that we hope by doing this it will improve the
flow of
information and the accuracy of the data capture, so that we
can start making healthcare more efficient from an
administrative perspective.
As I'm sure some of you know the statistics in our healthcare
system. We have a great healthcare system, but it is burdened
by a very high administrative cost. CMS estimates that it's
about $500 billion of cost annually that healthcare providers,
payers, patients; in fact all the constituents of healthcare
have to absorb as part of the delivery of care process. What
we hope by achieving with this acquisition is to make that
process more efficient.
We're excited about it. Clearly it represents a significant
opportunity for us to leverage the solutions that both
companies have, and it will afford I think our customers with
new solutions as we build out our respective lines of
business.
I'd like to have the operator now open it up for questions.
Coordinator Thank you. Our first question comes from Mike Stobbe, the
Associated Press.
M. Stobbe Hello, thank you for this opportunity. Sir, just a couple of
quick questions about the two companies. How old is NDC Health
and how old is Per-Se?
P. Pead That's a good question, Mike. I do know that in some of the
statistics that we were looking at, I think that NDC I believe
is over 20 years old. We are celebrating our 20th Anniversary
this year, so I think it's almost 50 years of combined
experience in really focusing on the healthcare market,
particularly as it relates to reimbursement, Mike.
M. Stobbe I just wanted to understand the -- it's actually two
transactions. Is that correct? Wolters Kluwer, are they a
sister organization to you or what's their involvement in
this?
P. Pead Yes, it is spelled W-O-L-T-E-R-S and Kluwer is K-L-U-W-E-R.
They have a Web site here in the U.S.,
wolterskluwerhealth.com. They are a Dutch company, about $4
billion in revenues. They are an information management
company in total, and they operate in different market
segments. The healthcare segment for them is the part of the
company for Wolters Kluwer that's buying the information
management business of NDC Health. So they are separate
publicly traded company based in the Netherlands.
M. Stobbe Not related to your company at all?
P. Pead They're not.
M Not related to our company and they're acquiring was reflected
in the release, the information management business for a
purchase price of $382 million.
P. Pead Let me give you the media contact for Wolters Kluwer also. Her
name is Caroline Wouters, and they would prefer that you look
at their corporate Web site which is just wolterskluwer.com.
Wolters Kluwer Health is their U.S. health Internet address.
M. Stobbe Any plans to consolidate offices or layoff anyone as a result
of this purchase?
P. Pead Well, clearly Mike, at this point having just signed the
agreement. What we're focused on is, obviously, going through
the regulatory and shareholder approval process, which is
going to take us between three and six months. Of course
during that process both companies operate in a standalone
mode. We will just continue about our business as NDC does.
Then post transaction, clearly at that time we will formulate
our plans to look at whatever synergies are available to us.
Coordinator At this time I am showing no further questions. I'll turn the
call back over to you sir.
P. Pead Thank you very much. We obviously did a very good job in
providing you with a lot of information. Again should you have
any other questions please call Michelle Howard, and she'll be
happy to help you on the Per-Se side. Thank you all very much
for participating.
Coordinator Thank you for participating call and have a good day.
THIS TRANSCRIPT SHALL NOT CONSTITUTE AN OFFER OF ANY SECURITIES FOR SALE. The
proposed transaction will be submitted to Per-Se's and NDC's stockholders for
their consideration. Per-Se and NDC will file a registration statement, a joint
proxy statement/prospectus and other relevant documents concerning the proposed
transaction with the SEC. STOCKHOLDERS OF PER-SE AND NDC ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS, AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION.
You will be able to obtain a free copy of the proxy statement/prospectus, as
well as other filings containing information about Per-Se and NDC, at the SEC's
Internet site (www.sec.gov). Copies of the joint proxy statement/prospectus and
the SEC filings that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, from Per-Se's
Internet site (www.per-se.com) under the tab "Investors") through the "SEC
Filing" link or from NDC's Internet site (www.ndchealth.com) under the tab
"Investor Relations" through the "SEC Filing" link.
Per-Se, NDC and their respective directors and executive officers may be deemed
to be participants in the solicitation of proxies from the stockholders of
Per-Se and NDC in connection with the merger. Information about the directors
and executive officers of Per-Se and their ownership of Per-Se common stock is
set forth in the proxy statement on Schedule 14A for Per-Se's 2005 annual
meeting of stockholders, as filed with the SEC on March 25, 2005. Information
about the directors and executive officers of NDC and their ownership of NDC
common stock is set forth in the proxy statement on Schedule 14A for NDC's 2004
annual meeting of stockholders, as filed with the SEC on September 14, 2004.
Additional information regarding participants in the proxy solicitation may be
obtained by reading the joint proxy statement/prospectus regarding the proposed
transaction when it becomes available.
On August 30, 2005, Per-Se Technologies, Inc. posted the following transcript
from its employee conference call to its website:
- --------------------------------------------------------------------------------
PER-SE TECHNOLOGIES ALL EMPLOYEE CONFERENCE CALL
AUGUST 29, 2005
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALL PARTICIPANT
- --------------------------------------------------------------------------------
- - Philip Pead Per-Se Technologies, Chairman, President and CEO
- --------------------------------------------------------------------------------
PRESENTATION
- --------------------------------------------------------------------------------
Operator: Good Morning. My name is Julianne and I will be your conference
facilitator today. At this time, I would like to welcome everyone to the Per-Se
conference call. All lines have been placed on mute to prevent any background
noise. If you should need assistance during the call, please press "star" then
"zero" and an operator will come back on line to assist you.
I would now like to introduce Mr. Phil Pead, Chairman, President and CEO of
Per-Se Technologies. Please go ahead, sir.
Philip Pead: Thank you, operator. Good morning everybody. I know that many of
you have had difficulty dialing in this morning, due to the volume of calls. So,
that is why we are running a little late, so I can give everyone an opportunity
to participate.
I would like to thank you all for joining me this morning on such short notice.
I also have Chris Perkins with me this morning our Chief Financial Officer. And,
the reason for the call is to tell all of you that we announced this morning, I
think, some very exciting news and I am anxious to share that information with
you now.
We believe that today is the beginning of an exciting new chapter for our
company and all of us at Per-Se. As I have said this morning we announced that
we have formally agreed to acquire Atlanta based NDCHealth Corporation, which is
a well respected healthcare technology and services company. I believe the
acquisition will be a transformational union of two healthcare leaders that
share a common goal of helping providers achieve financial success.
Specifically, we have agreed to acquire the hospital office based physician and
retail pharmacy businesses of NDCHealth Corporation. In a simultaneous
transaction, Amsterdam based Wolters Kluwer has agreed to purchase NDCHealth
Information Management business, for pharmaceutical manufacturers. I would like
to explain why we chose this company and what it means for our Per-Se family
today and in the future.
Any acquisition that Per-Se explores must fit with our connective healthcare
business strategy. Like Per-Se, NDCHealth Corporation has built a strong
reputation in the healthcare business services
and technology market. Specifically, NDCHealth Technology and Services focus on
making healthcare more efficient for hospitals, small office based physicians
and pharmacies.
After a thorough review of NDCHealth we recognized that our two companies were a
good fit. We share a common strategic focus and commitment to the provider
community. And we believe that combining our efforts and resources will greatly
expand the breathe and depth of our offerings and that we can deliver to a
larger provider customer base.
I guess the bottom line of this acquisition is that by combining Per-Se and
NDCHealth complementary solutions and services we will be able to improve the
flow of information at the point of care, enabling providers, patients and
payers to take advantage of a more efficient healthcare system. This acquisition
will create a leader in healthcare services and technology solutions for
providers.
Let me go through the business segments with you so that you can get an idea of
what this means to our company. For physicians, as you know, Per-Se has long
been known as the leader in physician reimbursement. We excel at providing
business profit outsourcing services using proprietary technology that improves
revenue and cash flow for large physician groups. NDCHealth excels at providing
technology that enables office based physicians to run their solo and
two-physician practices.
Net access, our practice - - our physician practice management software for
office based physicians targets groups of 5 or more doctors. So, with NDCHealth,
we believe we will complete the physician segment with an offering for groups of
all sizes.
Let's look at hospitals. Per-Se is also known as a leader in delivering revenues
cycle and resource management solutions to hospitals. NDCHealth has focused on
providing revenue cycle management solutions for hospitals and has more hospital
and healthcare organization clients than any other vender in the industry.
We believe that together with our growing revenue cycle management offering and
resource management offering, we will be able to offer more functionality to an
expanded hospital footprint.
We also have a new target market for Per-se. The acquisition adds an entirely
new market segment to Per-se, which is retail pharmacies. NDCHealth is the
leader in providing both transaction processing and point of sale systems to
retail pharmacies of all sizes. Retail pharmacies are another provider set that
struggles with being properly reimbursed for the services they deliver. And we
are excited to expand our provider customer base.
Together NDCHealth and Per-Se solutions are very complimentary with no
meaningful overlap. This acquisition is not about consolidation, but rather
strategic expansion of complimentary businesses.
We see meaningful opportunities to cross sell our complimentary solutions into
an expanded customer base. The new Per-Se will have direct touch points with
more key healthcare constituents, patients, physician, hospitals, payers and
pharmacies, representing a reach greater than either individual company has
today.
Let me give you some statistics. NDCHealth will add 100,000 physicians, 1,800
hospitals, and 50,000 pharmacies to Per-Se's customer base of 19,000 physicians
and 2,000 hospitals. In addition to cross selling opportunities, our enlarged
customer footprint will improve the data capture and flow of information among
providers, payers and patients. And to access intelligent information will help
us to further improve our financial success of providers and lower the cost of
healthcare.
As I mentioned earlier, this is a transformational event, one that will create
many opportunities for Per-Se's customers and our employees. Okay, what do we do
next? And now that we have announced this agreement, an acquisition of this size
will take a lot of teamwork and time. I want each of you to understand that at
this moment, not one thing will change for us, our customers and NDCHealth and
its customers. This is an important point to keep in mind. While this agreement
is great news, it is subject to regulatory and shareholder approvals before it
is considered final.
As a result, both Per-Se and NDCHealth continue to operate independently with no
joint efforts at this time. We are communicating separately with our customer
base in sharing our news, independent of one another at this time. We expect the
agreement to be completed within 3 to 6 months of signing. If you have questions
about this announcement, as I am sure you do, please talk with your respective
business unit managers.
We will do our best to provide answers, but please keep in mind that the
acquisition has just signed. There maybe questions we can not answer today. But
we will continue to communicate more detailed information as this agreement
closes, so you can understand fully our future plans and strategies.
As in the past, our future plans can only happen with your continued dedication
and support. At this time, the priority is to support business as we do today
and to focus and build on our current successes. With your help we will grow to
offer our provider customers more best of briefs business solutions and continue
our momentum to help make healthcare more efficient. It is really important as
we digest this announcement that we will have a lot of questions from our
customers, you will have a lot of questions from fellow employees. But, I think
it is really important, and the message that I want to deliver to you today, is
that we not get distracted in our business.
As I just previously mentioned, the reason that we are able to grow through an
acquisition and to be able to grow our business organically, adding new
customers. Is because all of us are focused on doing what we do best everyday,
which is helping providers to either reduce their costs or improve their income.
If we fail to do that over the next few months because we are excited about the
opportunity to work with the NDC customer base. Then clearly we will lose the
momentum on our side and that is just not something that we need to do at this
point.
So, while this is great news and I am very excited about and I am sure you all
are too, it is really important that when the call ends we get back to doing
what we do, which is take care of our customers. I know, as I said, you all have
lots of questions. We are going to try and over communicate with you as much as
we can, so that all of you can be knowledgeable about what this means.
The message for our customers is that we will not be distracted during this
process and even when the acquisition becomes complete and final, subject to the
appropriate reviews. Because these are very complimentary businesses, so much of
what we are doing here is going to stand alone. So, we -
- - the message to the customers are we are not going to be distracted, we will
continue to focus on the needs of our customers and to continue to provide a
high level of service.
So, I thank you all for joining us today. I hope that those that didn't get to
participate will be able to hear a recorded version of this. But again, any
questions that you may have, we are trying to give all of your business unit
managers as many of the Q and As that we can so that they can respond to you.
So, exciting news for everyone, and again, thanks a lot for joining us. Look
forward to talking to you soon.
Bye, bye.
Operator: This concludes today's Per-Se Technologies Conference Call.
You may now disconnect.
THIS TRANSCRIPT SHALL NOT CONSTITUTE AN OFFER OF ANY SECURITIES FOR SALE. The
proposed transaction will be submitted to Per-Se's and NDC's stockholders for
their consideration. Per-Se and NDC will file a registration statement, a joint
proxy statement/prospectus and other relevant documents concerning the proposed
transaction with the SEC. STOCKHOLDERS OF PER-SE AND NDC ARE URGED TO READ THE
REGISTRATION STATEMENT AND THE JOINT PROXY STATEMENT/PROSPECTUS, AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC, WHEN THEY BECOME AVAILABLE, AS WELL AS
ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION.
You will be able to obtain a free copy of the proxy statement/prospectus, as
well as other filings containing information about Per-Se and NDC, at the SEC's
Internet site (www.sec.gov). Copies of the joint proxy statement/prospectus and
the SEC filings that will be incorporated by reference in the joint proxy
statement/prospectus can also be obtained, without charge, from Per-Se's
Internet site (www.per-se.com) under the tab "Investors") through the "SEC
Filing" link or from NDC's Internet site (www.ndchealth.com) under the tab
"Investor Relations" through the "SEC Filing" link.
Per-Se, NDC and their respective directors and executive officers may be deemed
to be participants in the solicitation of proxies from the stockholders of
Per-Se and NDC in connection with the merger. Information about the directors
and executive officers of Per-Se and their ownership of Per-Se common stock is
set forth in the proxy statement on Schedule 14A for Per-Se's 2005 annual
meeting of stockholders, as filed with the SEC on March 25, 2005. Information
about the directors and executive officers of NDC and their ownership of NDC
common stock is set forth in the proxy statement on Schedule 14A for NDC's 2004
annual meeting of stockholders, as filed with the SEC on September 14, 2004.
Additional information regarding participants in the proxy solicitation may be
obtained by reading the joint proxy statement/prospectus regarding the proposed
transaction when it becomes available.