SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): June 15, 2000 LEXINGTON HEALTHCARE GROUP, INC. -------------------------------- (Exact name of registrant as specified in its charter) Delaware 06-1468252 - -------- -------- ---------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of organization) Identification No.) 1557 New Britain Avenue Farmington, Connecticut 06032 - ----------------------- ----- (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code: (860) 674-2700 Not Applicable ------------------------------------------------------------- (Former name or former address; if changed since last report) ITEM 2. DISPOSITION OF ASSETS On June 15, 2000 Balz Medical Services, Inc., a subsidiary of the Company, entered into an ASSET PURCHASE AND SALE AGREEMENT to sell its tangible property (principally fixed assets and inventory, leasehold rights, certain business records, licenses, permits and authorizations relating to the conduct of its business) to an unrelated company, MedixDirect.com, LLC. The sale did not include cash, accounts receivable or other business records. The buyer also assumed approximately $130,000 of liabilities which were related to the assets acquired. The purchase price for the assets sold, other than inventory, was $300,000, payable $40,000 in cash and $260,000 in a note payable in 12 monthly installments with interest. Inventory was sold at book value to be determined by physical inventory, which value is payable in cash within 90 days of the closing. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS The following historical and pro forma financial statements which disclose the effect of the asset disposition are attached hereto: Pro Forma Consolidated Balance Sheet at March 31, 2000 Pro Forma Consolidated Statements of Operations for the year ended June 30, 1999 and for the nine-month period ended March 31, 2000 A copy of the ASSET PURCHASE AND SALE AGREEMENT is attached hereto as Exhibit 1. ****** 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 hereunder duly authorized. LEXINGTON HEALTHCARE GROUP, INC. By:_____________________________ Harry Dermer Chairman Dated: June 30, 2000 LEXINGTON HEALTHCARE GROUP, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET MARCH 31, 2000 (UNAUDITED) Pro Forma Historical Adjustments Pro Forma -------------- ------------------- -------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,388,000 $ 40,000 $ 1,428,000 Accounts receivable - net 15,117,000 547,000 15,664,000 Inventories 940,000 (287,000) 653,000 Prepaid and other current assets 1,354,000 1,354,000 -------------- -------------- Total current assets 18,799,000 19,099,000 PROPERTY, EQUIPMENT & LEASEHOLD IMPROVEMENTS, net 4,408,000 (193,000) 4,215,000 OTHER ASSETS Security deposits - related parties 2,337,000 2,337,000 Security deposits - other 543,000 543,000 Residents' funds 388,000 388,000 Goodwill - net 2,886,000 (972,000) 1,914,000 Bed licenses - net 1,423,000 1,423,000 Operating subsidy receivable (less current portion of $104,000) 299,000 299,000 Other assets, net 217,000 217,000 -------------- -------------- 8,093,000 7,121,000 -------------- ------------------- -------------- $ 31,300,000 $ (865,000) $ 30,435,000 ============== =================== ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 11,604,000 $ 400,000 $ 12,004,000 Due to SunBridge - purchased receivables 2,157,000 2,157,000 Estimated third-party payor settlements 331,000 331,000 Notes and capital leases payable (current portion) 3,840,000 (33,000) 3,807,000 Income taxes payable 25,000 25,000 -------------- -------------- Total current liabilities 17,957,000 18,324,000 OTHER LIABILITIES Notes payable and capital leases payable (less current portion) 7,754,000 (86,000) 7,668,000 Deferred rent 708,000 708,000 Residents' funds payable 388,000 388,000 Other liabilities 120,000 120,000 -------------- -------------- 8,970,000 8,884,000 -------------- -------------- Total liabilities 26,927,000 27,208,000 -------------- -------------- MINORITY INTERESTS 656,000 656,000 STOCKHOLDERS' EQUITY Common stock, par value $.01 per share, authorized 15,000,000 shares 41,000 41,000 Additional paid-in capital 6,126,000 6,126,000 Treasury stock, at cost, 600,000 shares (576,000) (576,000) Deficit (1,874,000) (1,146,000) (3,020,000) -------------- -------------- Total stockholders' equity 3,717,000 2,571,000 -------------- ------------------- -------------- $ 31,300,000 $ (865,000) $ 30,435,000 ============== =================== ============== The accompanying notes are an integral part of these pro forma consolidated financial statements. LEXINGTON HEALTHCARE GROUP, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2000 (UNAUDITED) Pro Forma Historical Adjustments Pro Forma ------------------ --------------- --------------- REVENUES Net patient service revenue $ 55,586,000 $ (1,287,000) $ 54,299,000 Management fee revenue 4,478,000 - 4,478,000 Other revenue 250,000 (8,000) 242,000 ------------------ --------------- --------------- Total revenues 60,314,000 (1,295,000) 59,019,000 EXPENSES Facility operating expenses: Salaries and benefits 44,038,000 (225,000) 43,813,000 Food, medical and other supplies 6,295,000 (454,000) 5,841,000 Other operating expenses 7,126,000 (108,000) 7,018,000 Corporate, general and administrative expenses 2,367,000 (197,000) 2,170,000 Interest expense 890,000 (11,000) 879,000 ------------------ --------------- --------------- Total expenses 60,716,000 (995,000) 59,721,000 ------------------ --------------- --------------- Loss from operations (402,000) (300,000) (702,000) OTHER EXPENSE Loss on disposition of certain Balz Medical Services assets and liabilities - (1,146,000) (1,146,000) ------------------ --------------- --------------- Loss before minority interest (402,000) (1,446,000) (1,848,000) MINORITY INTEREST IN INCOME OF CONSOLIDATED JOINT VENTURES (111,000) - (111,000) ------------------ --------------- --------------- Net loss $ (513,000) $ (1,446,000) $ (1,959,000) ================== =============== =============== Basic loss per common share $ (0.14) $ (0.41) $ (0.55) ================== =============== =============== Weighted average number of common shares outstanding 3,582,000 3,582,000 3,582,000 ================== =============== =============== The accompanying notes are an integral part of these pro forma consolidated financial statements. LEXINGTON HEALTHCARE GROUP, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 1999 (UNAUDITED) Pro Forma Historical Adjustments Pro Forma ------------------ ---------------- ---------------- REVENUES Net patient service revenue $ 58,867,000 $ (1,469,000) $ 57,398,000 Management fee revenue 17,620,000 17,620,000 Other revenue 405,000 (3,000) 402,000 ------------------ ---------------- ---------------- Total revenues 76,892,000 (1,472,000) 75,420,000 EXPENSES Facility operating expenses: Salaries and benefits 57,109,000 (270,000) 56,839,000 Food, medical and other supplies 7,778,000 (410,000) 7,368,000 Other operating expenses 8,845,000 (42,000) 8,803,000 Corporate, general and administrative expenses 2,953,000 (195,000) 2,758,000 Interest expense 1,040,000 (14,000) 1,026,000 ------------------ ---------------- ---------------- Total expenses 77,725,000 (931,000) 76,794,000 ------------------ ---------------- ---------------- Loss from operations (833,000) (541,000) (1,374,000) OTHER EXPENSES Provision for lawsuit settlement (539,000) - (539,000) Loss on disposition of certain Balz Medical Services assets and liabilities - (1,332,000) (1,332,000) ------------------ ---------------- ---------------- Loss before income taxes and minority interest (1,372,000) (1,873,000) (3,245,000) PROVISION FOR (BENEFIT FROM) INCOME TAXES 15,000 (35,000) (20,000) MINORITY INTEREST IN INCOME OF CONSOLIDATED JOINT VENTURES (190,000) - (190,000) ------------------ ---------------- ---------------- Net loss $ (1,577,000) $ (1,838,000) $ (3,415,000) ================== ================ ================ Basic loss per common share $ (0.38) $ (0.45) $ (0.83) ================== ================ ================ Weighted average number of common shares outstanding 4,125,000 4,125,000 4,125,000 ================== ================ ================ The accompanying notes are an integral part of these pro forma consolidated financial statements. LEXINGTON HEALTHCARE GROUP, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Pro Forma Consolidated Balance Sheet at March 31, 2000 The pro forma consolidated balance sheet includes adjustments to record the sale of inventory and fixed assets and to record the assumption of related notes payable and capital lease liabilities. The pro forma entries also reflect the write off of related goodwill and a severance agreement with a key employee. Pro forma Consolidated Statement of Operations for the nine-month period ended March 31, 2000 The pro forma entries remove all revenues and expenses of Balz Medical Services, Inc. during the period ended March 31, 2000 and record an overall loss on the disposition of certain assets and liabilities which includes the write off of related goodwill and a severance agreement with a key employee. Pro forma Consolidated Statement of Operations for the year ended June 30, 1999 The pro forma entries remove all revenues and expenses of Balz Medical Services, Inc. during the year ended June 30, 1999 and record an overall loss on the disposition of certain assets and liabilities which includes the write off of related goodwill and a severance agreement with a key employee.