Exhibit 99.3
MIM CORPORATION
UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
On January 31, 2002, MIM Corporation (the "Company") acquired from Marc Wiener
and Barbara Kammerer all of the issued and outstanding common stock of Vitality
Home Infusion Services, Inc., a New York corporation ("Vitality"), pursuant to a
Stock Purchase Agreement dated as of January 9, 2002 (the "Purchase Agreement")
among Vitality, Marc Wiener, Barbara Kammerer and the Company. Vitality, located
in Roslyn Heights, New York, distributes specialty pharmaceutical services, on a
national basis, to chronically ill and genetically impaired patients,
particularly focusing on oncology, infectious disease, immunology and rheumatory
disease.
The aggregate purchase price for Vitality was $45,000,000, consisting of
$35,000,000 in cash and the balance in Company common stock, a portion of which
is being held in escrow to secure potential indemnification claims for breaches
of Vitality and/or the individual seller's representations and warranties and
covenants under the Purchase Agreement. The cash portion of the purchase price
was funded through borrowings under the Company's existing $45,000,000 revolving
credit facility. The transaction was accounted for as a purchase.
The following unaudited pro forma combined condensed financial statements are
based on the respective historical consolidated financial statements of the
Company and Vitality. The unaudited pro forma combined condensed balance sheet
assumes the acquisition was completed on December 31, 2001. The unaudited pro
forma combined condensed statement of income assumes the acquisition was
completed on January 1, 2001.
The unaudited pro forma combined condensed financial statements are based on the
estimates and assumptions set forth in the notes to such statements. The pro
forma adjustments made in connection with the development of the pro forma
information are preliminary and have been made solely for purposes of developing
such pro forma information for illustrative purposes. The purchase price of the
acquisition was allocated to the net assets acquired based on management's
estimates of their fair values at the date of acquisition. Although the Company
does not expect that the final allocation will be materially different from
these estimates, there can be no assurances that such differences, if any, will
not be material. The unaudited pro forma combined condensed financial statements
do not purport to be indicative of the results of operations for future periods
or the combined financial position or the results that actually would have
resulted had the entity been a single entity during these periods.
These unaudited pro forma combined condensed financial statements should be read
in conjunction with the historical financial statements and the related notes
thereto of the Company and Vitality.
MIM Corporation
Unaudited Pro Forma Combined Condensed Balance Sheet
(In Thousands)
As of December 31, 2001
-----------------------------------------------------------
MIM Vitality Pro Forma MIM
(Historical) (Historical) Adjustments Pro Forma
---------------- ---------- ---------- ------------
ASSETS
Cash and cash equivalents $ 12,487 $ 4,080 $ - $ 16,567
Marketable securities - 107 - 107
Accounts receivable, net of allowance for doubtful accounts 70,089 5,205 - 75,294
Inventory 3,726 4,534 - 8,260
Prepaid expenses and other current assets 1,439 98 - 1,537
---------------- ---------- ---------- ------------
Total current assets 87,741 14,024 - 101,765
Property, plant and equipment, net 9,287 80 - 9,367
Due from officer 2,132 - - 2,132
Other assets 1,650 3 - 1,653
Intangible assets, net 39,009 - 38,828 (1) 77,837
---------------- ---------- ---------- ------------
TOTAL ASSETS $ 139,819 $ 14,107 $ 38,828 $ 192,754
================ ========== ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of capital lease obligations $ 594 $ 7 $ - $ 601
Line of credit - - 35,000 (1) 35,000
Accounts payable 4,468 5,323 - 9,791
Claims payable 46,564 - - 46,564
Payables to plan sponsors 21,063 - - 21,063
Accrued expenses and other current liabilities 5,745 1,267 961 (1) 7,973
---------------- ---------- ---------- ------------
Total current liabilities 78,434 6,597 35,961 120,992
Capital lease obligations, net of current portion 1,031 11 - 1,042
Other non-current liabilities 58 - - 58
---------------- ---------- ---------- ------------
Total liabilities 79,523 6,608 35,961 122,092
Stockholders' Equity:
Preferred stock - - -
Common stock 2 2 (2)(1) 2
Additional paid-in capital 105,424 - 10,000 (1) 115,779
355 (1)
(Accumulated deficit)/Retained earnings (42,196) 7,486 (7,486)(1) (42,196)
Treasury stock (2,934) - - (2,934)
Accumulated other comprehensive income - 11 - 11
---------------- ---------- ---------- ------------
Total stockholders' equity 60,296 7,499 2,867 70,662
---------------- ---------- ---------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 139,819 $ 14,107 $ 38,828 $ 192,754
================ ========== ========== ============
MIM Corporation
Unaudited Pro Forma Combined Condensed Statement of Income
(In Thousands, Except Per Share Amounts)
Year ended December 31, 2001
-----------------------------------------------------------------
MIM Vitality Pro Forma MIM
(Historical) (Historical) Adjustments Pro Forma
------------ ----------- ---------- ------------
Revenue $ 456,646 $ 74,770 $ - $ 531,416
Cost of revenue 403,243 63,396 - 466,639
------------ ----------- ---------- ------------
Gross profit 53,403 11,374 - 64,777
General and administrative expenses 38,489 7,078 126 (5) 45,693
Amortization of goodwill and other intangibles 2,200 - (2,065) (2) 928
793 (3)
Special credits (2,476) - - (2,476)
------------ ----------- ---------- ------------
Income from operations 15,190 4,296 1,146 20,632
Other expense, net (56) (1,562) (1,488) (4) (3,106)
------------ ----------- ---------- ------------
Income (loss) before provision for income taxes 15,134 2,734 (342) 17,526
Provision for income taxes 932 57 90 (6) 1,079
------------ ----------- ---------- ------------
Net income $ 14,202 $ 2,677 $ (432) $ 16,447
============ =========== ========== ============
Basic income per common share $ 0.67 $ 0.75
============ ============
Diluted income per common share $ 0.64 $ 0.72
============ ============
Weighted average common shares used in
computing basic income per share 21,273 592 (1) 21,865
============ ========== ============
Weighted average common shares used in
computing diluted income per share 22,289 592 (1) 22,881
============ ========== ============
MIM Corporation
Notes to Unaudited Pro Forma Combined Condensed
Financial Information (In Thousands)
The unaudited pro forma combined condensed statement of income has been prepared
to reflect the acquisition of Vitality as if the acquisition occurred on January
1, 2001, utilizing the purchase method of accounting. The unaudited pro forma
combined condensed balance sheet was prepared to reflect the acquisition as of
December 31, 2001, utilizing the purchase method of accounting.
The following is a summary of the adjustments reflected in the unaudited pro
forma combined condensed balance sheet and income statement:
(1) Represents the elimination of Vitality's historical equity and the
preliminary estimates of the excess of the purchase price over the fair value of
the net tangible assets acquired:
Purchase price:
Funded from the Company's line of credit $35,000
Common stock value 10,000
Transaction costs 1,316
-----
Total purchase price 46,316
Less - Net tangible assets as of December 31, 2001 7,488
-----
Excess of purchase price over net tangible assets acquired $38,828
=======
Preliminary allocation of excess purchase price and
amortizable life:
Customer relationships (20 years) $11,000
Trademarks (Indefinite) 4,700
Non-compete agreements (3 years) 730
Goodwill 22,398
------
$38,828
=======
The total estimated purchase price of the acquisition has been allocated on a
preliminary basis to assets and liabilities based on management's best estimates
of fair value. These allocations are subject to change pending a final appraisal
of the total purchase price and the fair value of the assets acquired and
liabilities assumed.
On January 31, 2002, the Company acquired from Marc Wiener and Barbara Kammerer
all of the issued and outstanding common stock of Vitality, pursuant to a Stock
Purchase Agreement dated as of January 9, 2002 (the "Purchase Agreement") among
Vitality, Marc Wiener, Barbara Kammerer and the Company. Vitality, located in
Roslyn Heights, New York, distributes specialty pharmaceutical products, on a
national basis, to the chronically ill and genetically impaired, particularly
focusing on oncology, infections disease, immunology and rheumatory disease.
The aggregate purchase price for Vitality was $45,000 consisting of $35,000 in
cash and the balance in the Company's common stock, a portion of which is being
held in escrow to secure potential indemnification claims for breaches of
Vitality and/or the individual seller's representations and warranties and
covenants under the Purchase Agreement. The cash portion of the purchase price
was funded through borrowings under the Company's existing $45,000 revolving
credit facility.
Included in the purchase price is an accrual for transaction costs for certain
merger legal, accounting and other miscellaneous expenses associated with the
acquisition totaling approximately $1,316. Included in this amount is
approximately $355 common stock provided for these services.
(2) Represents the reversal of amortization of goodwill incurred in 2001.
On January 1, 2002, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets," and is no longer amortizing goodwill and intangible assets
with indefinite lives.
(3) Represents amortization expense related to intangible assets, with
definite lives, based on preliminary estimates of the allocation of the
purchase price.
(4) Represents interest expense on amounts to fund the acquisition under
the Company's line of credit. The interest expense was calculated using
the Company's borrowing rate (4.25% on December 31, 2001).
(5) Represents rent expense for use of the facility owned by the former
stockholders of Vitality.
(6) Represents the state income tax effect of the pro forma adjustments
related to the acquisition. There was available Federal net operating
loss carryforwards to offset Federal taxable income.