SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) July 6, 1997
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INTEGRATED HEALTH SERVICES, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-12306 23-2428312
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10065 Red Run Boulevard, Owings Mills, Maryland 21117
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (410) 998-8400
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS
On July 6, 1997, Integrated Health Services, Inc. ("IHS"), IHS
Acquisition XXIV, Inc., a wholly-owned subsidiary of IHS ("Merger Sub"), and
RoTech Medical Corporation ("RoTech") entered into a definitive agreement and
plan of merger (the "Agreement") providing for the merger of Merger Sub into
RoTech, with RoTech becoming a wholly-owned subsidiary of IHS. RoTech provides
comprehensive home healthcare and primary care physician services, principally
to patients in non-urban areas. RoTech's home healthcare business provides a
diversified range of products and services, with emphasis on respiratory and
home infusion services. RoTech currently operates over 600 home health locations
and approximately 26 primary care physicians practices.
Under the terms of the Agreement, which was approved by the Board of
Directors of both IHS and RoTech, holders of RoTech common stock ("RoTech Common
Stock") will receive for each share of RoTech Common Stock 0.5806 of a share of
IHS Common Stock (the "Exchange Ratio"), having a market value of $22.61 based
on the closing price of the IHS Common Stock on the last business day prior to
the signing of the Agreement. Options to purchase RoTech Common Stock will be
converted at the closing into options to purchase IHS Common Stock based on the
Exchange Ratio. At June 30, 1997 RoTech had outstanding 26,362,269 shares of
RoTech Common Stock and options to purchase 3,469,706 shares of RoTech Common
Stock ("RoTech Options"). IHS will issue approximately 15,306,000 shares of IHS
Common Stock under the Agreement, and will reserve for issuance approximately
2,014,000 shares of IHS Common Stock issuable upon exercise of RoTech Options.
In addition, RoTech's outstanding $110 million of subordinated convertible
debentures (the "RoTech Debentures") will become convertible into approximately
2,433,000 shares of IHS Common Stock following the closing at a conversion price
of $45.21 per share of IHS Common Stock. At June 30, 1997, IHS had outstanding
25,428,319 shares of IHS Common Stock and options and warrants to purchase
approximately 9,513,000 shares of IHS Common Stock, and had reserved for
issuance 7,989,275 shares upon conversion of $258,750,000 principal amount of
outstanding convertible debentures. IHS will assume approximately $300 million
of debt in the transaction, including $110 million of the RoTech Debentures.
The merger is intended to qualify as a tax free reorganization, as
permitted by the Internal Revenue Code, and will be treated as a purchase for
accounting and financial reporting purposes. Completion of the transaction,
which is expected to occur in the fourth quarter of 1997, is subject to, among
other things, approval by each company's stockholders, receipt of required
regulatory approvals, consent of senior bank lenders and other customary
conditions. Each party may terminate the Agreement if the average trading price
of the IHS Common Stock over the 10 trading days ending on the fifth trading day
prior to the RoTech stockholders meeting to approve the merger is less than
$33.00. The Agreement also provides for the payment of break-up fees under
certain circumstances.
Donaldson Lufkin & Jenrette Securities Corporation acted as financial
advisor to IHS in the transaction.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS.
2 Agreement and Plan of Merger entered into as of July 6, 1997,
among Integrated Health Services, Inc., IHS Acquisition XXIV,
Inc. and RoTech Medical Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTEGRATED HEALTH SERVICES, INC.
Date: July 10, 1997 By: /s/ W. Bradley Bennett
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Name: W. Bradley Bennett
Title: Executive Vice President -
Chief Accounting Officer