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): June 28, 2002
CURATIVE HEALTH SERVICES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 000-19370 41-1503914
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
150 Motor Parkway, Hauppauge, NY 11788-5145
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (631) 232-7000
Item 2. Acquisition or Disposition of Assets
On June 28, 2002, Infinity Infusion, LLC and Infinity Infusion II, LLC
(together, "Buyers"), both Delaware limited liability companies and wholly owned
subsidiaries of Curative Health Services, Inc., a Minnesota corporation
("Curative"), acquired all of the outstanding partnership interests of Infinity
Infusion Care, Ltd., a Texas limited partnership ("Infinity") pursuant to a
Purchase Agreement by and among Curative, Buyers and IIC GP, LLC, Azar I.
Delpassand, Dr. Ebrahim Delpassand, Tara Imani, Maryam Panahi and Yassamin
Norouzian (together, the "Sellers"), dated as of June 10, 2002, as amended by an
Amendment No. 1 to Purchase Agreement, dated as of June 28, 2002 by and among,
Curative, the Buyers and Bijan Imani, as Sellers' Representative, on behalf of
the Sellers. Through its acquisition of Infinity, Curative has acquired all of
the assets of Infinity including customer and supplier contracts, licenses,
inventory, real estate leases and office equipment. The aggregate consideration
paid by Curative consisted of $18,000,000 cash and promissory notes in an
aggregate principal amount of $6,000,000, convertible into an aggregate of
373,111 shares of Curative common stock. The purchase price for Infinity was
determined through arms'-length negotiations between Curative and the Sellers.
The cash portion of the consideration was funded in part by cash on hand and in
part by borrowing on Curative's credit lines with Healthcare Business Credit
Corporation. Prior to the acquisition of Infinity, the Sellers were not
affiliated with Curative or the Buyers.
Infinity's business focuses on the specialty infusion market primarily
in immunoglobulin ("IVIG") therapy. IVIG therapy is prescribed for individuals
whose immune systems cannot function sufficiently to fight infectious or
inflammatory diseases. Most commonly, IVIG therapy is used for primary immune
deficiencies and autoimmune disorders. Curative intends to continue to use the
acquired assets in the same capacity.
The foregoing is a summary of certain terms and conditions, is not
intended to be complete and is qualified by reference to the Purchase Agreement,
as amended and press release describing the transaction. A copy of the press
release is filed as an exhibit to this Form 8-K, and is hereby incorporated
herein by reference.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Not required.
(b) Pro Forma Financial Information
Not required.
(c) Exhibits
Exhibit Description of Exhibit
2.1 Purchase Agreement, dated as of June 10, 2002, by
and among Curative Health Services, Inc., Infinity
Infusion, LLC and Infinity Infusion II, LLC, and
IIC GP, LLC, Azar I. Delpassand, Dr. Ebrahim
Delpassand, Tara Imani, Maryam Panahi and
Yassamin Norouzian, (incorporated by reference to
Exhibit 99.2 to Curative's Current Report on
Form 8-K dated June 10, 2002)
2.2 Amendment No. 1 to Purchase Agreement, dated
June 28, 2002,by and among Curative Health
Services, Inc., Infinity Infusion, LLC and
Infinity Infusion II, LLC, and Bijan Imani,
as Sellers' Representative on behalf of the
Sellers
99.1 Press Release dated June 28, 2002
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, hereunto duly authorized.
CURATIVE HEALTH SERVICES, INC.
Date: July 2, 2002 By /s/ Thomas Axmacher
--------------------------
Thomas Axmacher
Chief Financial Officer
EXHIBIT INDEX
Exhibit Description of Exhibit
2.2 Amendment No. 1 to Purchase Agreement dated as of June 28, 2002, by
and among Infinity Infusion, LLC and Infinity Infusion II, LLC,
Curtative Health Services, Inc. and Bijan Imani, as Sellers'
Representative
99.1 Press Release dated June 28, 2002
Exhibit 2.2
AMENDMENT NO. 1 TO PURCHASE AGREEMENT
This Amendment No. 1. to Purchase Agreement (this "Amendment") is dated
as of June 28, 2002, by and among Curative Health Services, Inc., a Minnesota
corporation ("Parent"), Infinity Infusion, LLC, a Delaware limited liability
company and wholly owned subsidiary of Parent (the "LLC"), Infinity Infusion II,
LLC, a Delaware limited liability company and wholly owned subsidiary of Parent
(the "LLC II," and together with the LLC, the "Buyers"), and Bijan Imani, as
Sellers' Representative.
WHEREAS, Parent, Buyers and IIC GP, LLC, Azar I. Delpassand, Dr.
Ebrahim Delpassand, Tara Imani, Maryam Panahi and Yassamin Norouzian (together
the "Sellers") entered into that certain Purchase Agreement (the "Purchase
Agreement") dated as of June 10, 2002.
WHEREAS, pursuant to Section 1.4 of the Purchase Agreement, Sellers
appointed Bijan Imani to act as Sellers' Representative.
WHEREAS, Section 9.1 of the Purchase Agreement provides that the
Purchase Agreement may be amended by a written agreement executed and delivered
by the Sellers' Representative, on behalf of all Sellers, and a duly authorized
officer of the Buyers specifically stating that it amends this Agreement.
WHEREAS, Parent, Buyers and Sellers desire to amend the Purchase
Agreement on the terms set forth herein.
WHEREAS, capitalized terms used herein but not otherwise defined shall
have the meanings given such terms under the Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Parent, Buyers and the Sellers' Representative agree that Section
1.5(a) of the Purchase Agreement shall be deleted in its entirety and replaced
with the following:
"(a) The Purchase Price shall be decreased or increased, on a dollar
for dollar basis, to the extent that the Working Capital of the Partnership as
of the Closing (as defined below) is less or more than $1,461,782 (the "Working
Capital Amount"); provided, that, in no event shall the Purchase Price be
increased by more than Three Hundred Forty Nine Thousand Seven Hundred Seventy
Six Dollars ($349,776) (the "Cap"), determined in accordance with the procedures
contained in this Section 1.5. The amount of any such payment is referred to as
the "Working Capital Payment."
(b) For purposes of this Agreement, "Working Capital of the
Partnership" shall mean cash, the accounts receivable, allowance for doubtful
accounts, inventory and accounts receivable--employees of the Partnership, less
the accounts payable, accrued payroll and retirement plan liabilities of the
Partnership, each determined in accordance with GAAP applied on a basis
consistent with the preparation of the Annual Financial Statements (except that
inventory shall be valued in accordance with the provisions of Section 1.5(c)),
provided that any amounts attributable to Indebtedness of the Partnership or to
the investment account of the Partnership with Brown & Company Securities shall
not be included in the calculation of Working Capital of the Partnership.
(c) At such time as Buyers and the Sellers' Representative may agree,
but no later than the Closing Date (the "Inventory Date"), a physical inventory
of all pharmaceutical and biological inventory and disposable supplies (the
"Inventory") maintained by the Partnership shall be taken by the Sellers'
Representative or his agent and may be observed and checked by Buyers or their
agent. The Sellers' Representative shall cause a statement (the "Inventory
Statement") to be prepared in connection with the Inventory that lists, by
product category or as is otherwise customary, the number and cost of each item
of Inventory, on hand as of the Inventory Date. The cost of the Inventory shall
be determined on the basis of its historical cost, determined on a first in,
first out basis, except that Inventory that is not saleable in the Ordinary
Course of Business, including without limitation, Inventory with an expiration
date at or prior to the Closing Date shall have not be included in the
Inventory. In the event of any disparity between the Partnership's inventory
records and the Inventory, the Partnership's inventory records will be adjusted
to conform to the listing of Inventory quantities developed during the physical
inventory. If the physical inventories are undertaken other than on the date
preceding the Closing Date, such quantities will be adjusted for all
transactions subsequent to the date of the physical inventory and to and
including the Closing Date. Inventory shall not include any durable medical
equipment.
(d) Within 30 days following the Closing Date, the Sellers'
Representative shall prepare and deliver to Parent and Buyers, a statement (the
"Working Capital Statement") setting forth in reasonable detail (i) the
aggregate value of the Inventory as shown on the Inventory Statement, (ii) the
Working Capital of the Partnership as of the Closing Date, and (iii) the amount
of the Working Capital Payment, if any.
(e) The Buyers will each cause the Partnership to provide the Sellers'
Representative access to those books and records and other documents of the
Partnership that are reasonably requested by the Sellers' Representative to
prepare the Working Capital Statement.
(f) The Sellers' Representative shall permit Buyers and Parent
reasonable access to the data and information on which the Working Capital
Statement was prepared and to any representatives and agents, including any
accountants, who assisted in the preparation, including without limitation
access to any accountant's working papers. Buyers and Parent shall be deemed to
have accepted the Working Capital Statement unless, within 15 Business Days
after delivery of such Working Capital Statement (the "Objection Period"),
Buyers provide written notice to the Sellers' Representative of any objection
thereto (an "Objection Notice"), setting forth in reasonable detail the item to
which any objection relates and the basis for such objection. If Buyers give an
Objection Notice within the Objection Period, then Buyers and the Sellers'
Representative shall attempt in good faith to resolve any dispute concerning the
item(s) subject to such objection.
(g) If Buyers and the Sellers' Representative have not been able to
resolve a dispute within 15 Business Days after the date of delivery of the
Objection Notice, Buyers and the Sellers' Representative shall, within an
additional 10 days, retain an independent national accounting firm mutually
agreed to by Buyers and the Sellers' Representative with offices in New York
City, New York, to serve as arbitrator (the "Working Capital Arbitrator") to
resolve such dispute. In the event Buyers and the Sellers' Representative cannot
mutually agree on the identity of the Working Capital Arbitrator within such
additional 10 day period, then within 3 days after such additional 10 day
period, each of the Sellers' Representative and Buyers shall pick an independent
national accounting firm and such two firms shall, within 3 additional days,
select an alternate independent national accounting firm to serve as the Working
Capital Arbitrator. The Working Capital Arbitrator's work shall be limited to
resolving the dispute arising in connection with the Working Capital Payment,
the Working Capital Statement and the Inventory Statement, including, without
limitation, determining the consistent application of the accounting principles
employed; provided, however, that the Working Capital Arbitrator shall not
override any provision in this Agreement. The Working Capital Arbitrator shall
make a decision concerning the dispute within 60 days of the Working Capital
Arbitrator's engagement. The decision of the Working Capital Arbitrator shall be
final and binding and unreviewable for error of any kind. Each party shall bear
its own costs in the resolution of any disputes, except that the fees and costs
of the Working Capital Arbitrator, if one is retained, shall be paid one-half by
the Sellers and one-half by the Buyers.
(h) Within five days after final determination of the amount of the
Working Capital Payment, if any, (x) if the amount of the Working Capital
Payment is a negative number, at Buyers' option (i) Buyers shall be entitled to
offset the amount of the Working Capital Payment from the Escrow Note; or (ii)
Sellers shall pay the Working Capital Payment to the Partnership by wire
transfer of immediately available funds; and (y) if the amount of the Working
Capital Payment is a positive number Buyers shall pay the amount of the Working
Capital Payment, to the Sellers, pro rata in accordance with their respective
Partnership Interests in the Partnership as set forth in Section 3.2 of the
Disclosure Schedule, by wire transfer of immediately available funds to each
Seller's account (pursuant to instructions which will be provided to the Buyers
by the Seller at least three Business Days prior to the date of such payment);
provided, that the amount of the Working Capital Payment shall not exceed the
Cap.
2. Parent, Buyers and the Sellers' Representative agree that
5.1(h) of the Purchase Agreement shall be amended and
restated in its entirety to read as follows:
"(h) Except as set forth in Section 5.1(h) of the Disclosure Schedule,
the Partnership shall not take any action referred to in Section 3.9; provided,
that, the occurrence of an action covered by Section 3.9(j) or (m) or receipt of
a notification under Section 3.9(k) will not be considered to be a violation of
this Section 5.1 (provided, further, that this Section 5.1(h) shall not relieve
the Sellers from their obligations under Section 5.5 or operate as a waiver of
Buyers' rights under Section 6.1(a))."
3. Except as set forth above, all other provisions of the
Purchase Agreement shall remain in full force and effect.
4. This Amendment may be executed in any number of original or
facsimile counterparts, each such counterpart being deemed to be an original
instrument, and all such counterparts shall together constitute the same
agreement.
5. This Amendment shall be deemed to be made in and in all respects
shall be interpreted, construed and governed by and in accordance with the law
of the state of New York without regard to the conflict of law principles
thereof.
IN WITNESS WHEREOF, the Parent, Buyers and the Sellers' Representative,
on behalf of the Sellers, have caused this Amendment No. 1 to Purchase Agreement
to be duly executed as of the date first above written.
CURATIVE HEALTH SERVICES, INC. INFINITY INFUSION, LLC
By: /s/ William C. Tella By: /s/ William C. Tella
------------------------- --------------------------
Name: William C. Tella Name: William C. Tella
------------------------- -------------------------
Title: President, SPS Title: President
------------------------- -------------------------
INFINITY INFUSION II, LLC SELLERS' REPRESENTATIVE
By: /s/ William C. Tella By: /s/ Bijan Imani
------------------------ -------------------------
Name: William C. Tella Name: Bijan Imani
------------------------ -------------------------
Title: President
------------------------
Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Thomas Axmacher Richard Moyer
Chief Financial Officer Investor Relations
Curative Health Services Cameron Associates
631-232-7015 212-554-5466
taxmacher@curativehealth.com richard@cameronassoc.com
Curative Health Services Completes Acquisition of
Infinity Infusion Care
HAUPPAUGE, N.Y. - June 28, 2002 - Curative Health Services, Inc.
(NASDAQ: CURE), a leading disease management company, today
announced that it has completed its acquisition of Infinity Infusion Care,
a distributor of specialty pharmaceuticals and a provider
of infusion therapy services.
Founded in 1993, Infinity focuses on the specialty infusion market
primarily in immunoglobulin ("IVIG") therapy. IVIG therapy is prescribed for
individuals whose immune systems cannot function sufficiently to fight
infectious or inflammatory diseases. Most commonly, IVIG therapy is used for
primary immune deficiencies and autoimmune disorders.
The Company expects the Infinity acquisition to add $.07 cents to
earnings per share for the July to December period of 2002 and $.14 cents
earnings per share on an annualized basis. The Company now anticipates 2002
earnings per share of between $.90 and $.92 cents per share. These projections
exclude any possible one-time charges related to the departure of the former CEO
in the first quarter.
About Curative Health Services
Curative Health Services (CURE) delivers superior clinical outcomes and
unmatched patient satisfaction for patients experiencing serious medical
conditions through two unique business units.
Curative's Specialty Pharmacy Services business unit provides services
to help patients manage the health care process, and offers related pharmacy
products to patients for chronic and critical disease states such as Hemophilia.
Curative Health Services' Specialty Healthcare Services business unit
is an industry leader in chronic wound care management, consistently achieving
an outcome success rate of more than 80 percent. Specialty Healthcare Services
provides a broad continuum of services to health care providers through a
nationwide network of Wound Care Center programs. This national network of
approximately 100 hospital-based Wound Care Center programs has offered
comprehensive treatment to over 300,000 patients, achieving more than a 95
percent patient satisfaction rate.
For more information, visit www.curative.com
----------------
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any future
results, performance, or achievements expressed or implied by such
forward-looking statements. Factors that might cause such differences include,
but are not limited to, the termination or non-renewal of a material number of
contracts, an inability to obtain new contracts, changes in the government
regulations relating to the Company's Specialty Healthcare Services or Specialty
Pharmacy Services business units, changes in the regulations governing third
party reimbursements for the Company's services, manufacturing shortages of
products sold by Curative's Specialty Pharmacy Services business unit and the
other risks and uncertainties detailed in the Company's filings with the
Securities and Exchange Commission. Readers of this release are referred to the
Company's Annual Report on Form 10-K for the year ended December 31, 2001, Form
10Q for the quarter ended March 31, 2002, Amendment No. 3 to its Form S-3 filed
May 23, 2002 and Form S-3 filed on May 28, 2002 for further discussion of these
and other factors that could affect future results.
###