EMDEON CORPORATION
UNITED STATES
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
September 14, 2006
Date of Report (Date of earliest event reported)
EMDEON CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
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0-24975
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94-3236644 |
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(State or other jurisdiction of
incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.) |
669 River Drive, Center 2
Elmwood Park, New Jersey 07407-1361
(Address of principal executive offices, including zip code)
(201) 703-3400
(Registrants telephone number, including area code)
(Former name or address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
TABLE OF CONTENTS
All statements contained in this Current Report on Form 8-K, other than statements
of historical fact, are forward-looking statements, including those regarding the tax consequences
from the disposition transaction referred to below and ongoing relationships between the
Registrant and the business that was sold. These statements are based on our current plans and
expectations and involve risks and uncertainties that could cause actual future events or results
to be different from those described in or implied by such forward-looking statements. These risks
and uncertainties include those relating to: relationships with customers or strategic partners;
and changes in economic, political or regulatory conditions or other trends affecting the
healthcare, Internet, and information technology industries. Further information about these
matters can be found in our other Securities and Exchange Commission filings. We expressly disclaim
any intent or obligation to update these forward-looking statements.
Item 2.01. Completion of Acquisition or Disposition of Assets
As previously announced, Emdeon Corporation entered into a Stock Purchase Agreement, dated as
of August 8, 2006 (which we refer to as the Purchase Agreement), with Sage Software, Inc. (which we
sometimes refer to as the Purchaser), an indirect wholly-owned subsidiary of The Sage Group plc,
pursuant to which the Purchaser agreed to purchase all of the
outstanding capital stock of Emdeon Practice Services, Inc., which,
collectively with its subsidiaries, comprised the Emdeon Practice
Services segment (we refer below to Emdeon Practice
Services, Inc. and its subsidiaries, collectively, as Practice
Services). That transaction was completed on September 14, 2006. The purchase price was $565 million in cash and will be subject to customary adjustments based on
net working capital as of the closing.
The Board of Directors of Emdeon has not made any determination regarding the use of the
proceeds of the sale of Practice Services and, in accordance with Emdeons investment policy, the
proceeds have been invested in money market accounts.
The Purchase Agreement contains representations and warranties, covenants, indemnification
provisions and closing conditions that are customary for transactions of this type. At the closing
of the transaction on September 14, 2006, $35 million of the purchase price was placed into escrow
as security for Emdeons indemnification obligations under the transaction agreements, with
one-third of that amount scheduled to be released 12 months after the closing and the remaining
two-thirds scheduled to be released 18 months after the closing, in each case subject to any paid
or pending claims.
As previously disclosed, Emdeon and Sage Software will make an IRC Section 338(h)(10) election
and will treat this transaction as a sale of assets for tax purposes. Emdeon expects to recognize a
taxable gain on the sale of Practice Services and to utilize a portion of its federal net operating
loss (NOL) carryforwards to offset the gain on this transaction. Under the existing Tax Sharing
Agreement between Emdeon and WebMD Health Corp. (which we refer to as
WHC), an 85.8% owned
subsidiary of Emdeon, Emdeon has agreed to reimburse WHC for any of its NOL carryforwards
utilized by Emdeon in this transaction at the current federal statutory tax rate of 35%. Emdeon
currently estimates that the amount of WHCs NOL carryforwards to be utilized in this transaction
will be approximately $240 million to $260 million,
resulting in a cash reimbursement to WHC of
$84 million to $91 million. Emdeons estimates of the
amount of WHCs NOL carryforwards to
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be utilized and of the related reimbursement is based on various assumptions and will not be
finalized until the filing of Emdeons 2006 consolidated tax return.
The Purchase Agreement is filed as Exhibit 2.1 to this Current Report and is incorporated
herein by reference. This summary of the provisions of the Purchase Agreement is qualified in its
entirety by reference to the Purchase Agreement.
The terms of the Purchase Agreement were determined on the basis of arms-length negotiations.
Prior to the execution of the Purchase Agreement, there was no material relationship between the
Purchaser and Emdeon, any affiliate of the Registrant, or any director or officer of Emdeon, and,
to the knowledge of Emdeon, there was no material relationship between the Purchaser and any
associate of any director or officer of Emdeon.
Item 9.01. Financial Statements and Exhibits
(b) Pro Forma Financial Information.
The unaudited pro forma condensed consolidated financial statements of Emdeon Corporation, as
of and for the six months ended June 30, 2006 and for the years ended December 31, 2005, 2004 and
2003 are filed as Exhibit 99.1 to this Current Report and incorporated by reference herein.
(d) Exhibits.
The following exhibits are filed herewith:
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2.1 |
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Stock Purchase Agreement, dated as of August 8, 2006, between the
Registrant and Sage Software, Inc. (incorporated by reference from
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed on
August 11, 2006)* |
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99.1 |
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Unaudited pro forma condensed consolidated financial statements of
Emdeon Corporation, as of and for the six months ended June 30, 2006
and for the years ended December 31, 2005, 2004 and 2003 |
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The exhibits and schedules to the Stock Purchase Agreement have
been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K.
The Registrant will furnish copies of any of the exhibits and schedules to the
Securities and Exchange Commission upon request. |
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SIGNATURE
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 thereunto duly authorized.
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EMDEON CORPORATION
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Dated: September 20, 2006 |
By: |
/s/ Lewis H. Leicher
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Lewis H. Leicher |
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Senior Vice President |
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EXHIBIT INDEX
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Exhibit |
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Number |
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Description |
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2.1
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Stock Purchase Agreement, dated as of August 8, 2006, between the
Registrant and Sage Software, Inc. (incorporated by reference from
Exhibit 10.1 to the Registrants Current Report on Form 8-K filed
on August 11, 2006) |
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99.1
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Unaudited pro forma condensed consolidated financial statements of
Emdeon Corporation, as of and for the six months ended June 30,
2006 and for the years ended December 31, 2005, 2004 and 2003 |