Attached files
file | filename |
---|---|
EX-99.3 - EX-99.3 - Foundation Healthcare, Inc. | d70402exv99w3.htm |
EX-99.2 - EX-99.2 - Foundation Healthcare, Inc. | d70402exv99w2.htm |
8-K/A - AMENDMENT TO FORM 8-K - Foundation Healthcare, Inc. | d70402e8vkza.htm |
EX-99.4 - EX-99.4 - Foundation Healthcare, Inc. | d70402exv99w4.htm |
Exhibit 99.5
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
On August 24, 2009, we at Graymark Healthcare, Inc. (the Company), completed the
purchase of the outstanding stock of somniTech, Inc. and somniCare, Inc. (collectively
Somni) and on September 14, 2009, we completed the purchase of the outstanding stock of
Avastra Eastern Sleep Centers, Inc. (Eastern). Somni and Eastern were purchased from
AvastraUSA, Inc. and Avastra Sleep Centres Limited. (collectively Avastra). Somni
provides diagnostic sleep testing services and treatment for sleep disorders at sleep
diagnostic centers in Iowa, Kansas, Minnesota, Missouri, Nebraska and South Dakota.
Eastern manages sleep diagnostic in Florida and New York. As purchase consideration for
Somni, the Company paid Avastra cash of $5.9 million. As purchase consideration for
Eastern, the Company paid Avastra cash of $3.2 million and issued Avastra 752,795 shares of
our common stock which had a value of $1.5 million.
The unaudited pro forma condensed combined balance sheet as of September 30, 2009 was
prepared as if the acquisitions had occurred on that date and combines the historical
consolidated balance sheet of the Company with the unaudited balance sheets of Somni and
Eastern as of September 30, 2009. The unaudited pro forma condensed combined statements of
operations for the nine months ended September 30, 2009 and the year ended December 31,
2008 were prepared as if the acquisition had occurred on the first day of the period
presented and combines the historical consolidated statements of operations of the Company
with the unaudited historical consolidated statements of operations of Somni and Eastern.
The unaudited pro forma condensed combined financial statements have been prepared for
informational purposes only, to show the effect of the combination of the Company, Somni
and Eastern on a historical basis. These financial statements do not purport to be
indicative of the financial position or results of operations that would have actually
occurred had the business combination been in effect at those dates, nor do they project
the expected results of operations or financial position for any future period or date.
The unaudited pro forma condensed combined financial statements do not reflect any
adjustments for non-recurring items or anticipated synergies resulting from the
acquisition. The purchase price allocation is not finalized, because the Company is still
in the process of finalizing our estimates of fair value for property, equipment and
intangible assets acquired. Accordingly, the Company has prepared the pro forma
adjustments based on assumptions that the Company believes are reasonable but that are
subject to change as additional information becomes available and the preliminary purchase
price allocation is finalized.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of September 30, 2009
As of September 30, 2009
Historical | Pro Forma | Pro Forma | ||||||||||||||||||
Graymark | Somni | Eastern | Adjustments | Combined | ||||||||||||||||
(Notes 2-4) | ||||||||||||||||||||
ASSETS |
||||||||||||||||||||
Cash and cash equivalents |
$ | 3,827,346 | $ | 352,550 | $ | 105,506 | $ | | $ | 4,285,402 | ||||||||||
Accounts receivable, net |
9,439,848 | 1,014,039 | 805,120 | | 11,259,007 | |||||||||||||||
Inventories |
8,559,861 | 73,318 | | | 8,633,179 | |||||||||||||||
Other current assets |
474,258 | 16,361 | 167,087 | | 657,706 | |||||||||||||||
Total current assets |
22,301,313 | 1,456,268 | 1,077,713 | | 24,835,294 | |||||||||||||||
Fixed assets, net |
5,059,869 | 1,035,468 | 157,109 | | 6,252,446 | |||||||||||||||
Intangible assets, net |
7,701,898 | | | | 7,701,898 | |||||||||||||||
Goodwill |
29,694,923 | 4,930,761 | 3,657,557 | | 38,283,241 | |||||||||||||||
Other assets |
801,688 | 132,750 | | | 934,438 | |||||||||||||||
Total assets |
$ | 65,559,691 | $ | 7,555,247 | $ | 4,892,379 | $ | | $ | 78,007,317 | ||||||||||
LIABILITIES AND
SHAREHOLDERS EQUITY |
||||||||||||||||||||
Liabilities: |
||||||||||||||||||||
Accounts payable |
$ | 3,475,025 | $ | 77,337 | $ | 26,585 | $ | | $ | 3,578,947 | ||||||||||
Accrued liabilities |
4,274,457 | 199,799 | 72,271 | | 4,546,527 | |||||||||||||||
Intercompany |
(6,991,001 | ) | 2,218,645 | 4,772,356 | | | ||||||||||||||
Short-term debt |
127,500 | | | | 127,500 | |||||||||||||||
Current portion of long-term debt |
3,020,175 | 24,713 | | | 3,044,888 | |||||||||||||||
Total current liabilities |
3,906,156 | 2,520,494 | 4,871,212 | | 11,297,862 | |||||||||||||||
Long-term debt, net of current current portion |
41,414,178 | 4,920,699 | | | 46,334,877 | |||||||||||||||
Total liabilities |
45,320,334 | 7,441,193 | 4,871,212 | | 57,632,739 | |||||||||||||||
Shareholders Equity: |
||||||||||||||||||||
Common stock $0.0001 par value,
500,000,000 shares authorized;
28,756,693 issued and outstanding
outstanding |
2,876 | | | | 2,876 | |||||||||||||||
Paid-in capital |
29,175,377 | | | | 29,175,377 | |||||||||||||||
Accumulated deficit |
(8,462,358 | ) | 114,054 | 21,167 | | (8,327,137 | ) | |||||||||||||
Deferred compensation |
(507,256 | ) | | | | (507,256 | ) | |||||||||||||
Total Graymark Healthcare
shareholders equity |
20,208,639 | 114,054 | 21,167 | | 20,343,860 | |||||||||||||||
Noncontrolling interest |
30,718 | | | | 30,718 | |||||||||||||||
Total equity |
20,239,357 | 114,054 | 21,167 | | 20,374,578 | |||||||||||||||
Total liabilities and
shareholders equity |
$ | 65,559,691 | $ | 7,555,247 | $ | 4,892,379 | $ | | $ | 78,007,317 | ||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2009
For the Nine Months Ended September 30, 2009
Historical | ||||||||||||||||||||
For the Nine Months Ended | ||||||||||||||||||||
September 30, 2009 | Pro Forma | Pro Forma | ||||||||||||||||||
Graymark | Somni | Eastern | Adjustments | Combined | ||||||||||||||||
(Notes 2-4) | ||||||||||||||||||||
Revenues |
$ | 76,971,875 | $ | 7,540,661 | $ | 4,145,694 | $ | (2,289,174 | ) | $ | 86,369,056 | |||||||||
Costs and Expenses: |
||||||||||||||||||||
Cost of sales and services |
55,178,284 | 3,119,483 | 1,713,322 | (1,713,322 | ) | 58,297,767 | ||||||||||||||
Selling, general and administrative |
20,159,392 | 3,647,213 | 1,584,217 | (560,988 | ) | 24,829,834 | ||||||||||||||
Change in accounting estimate |
2,648,207 | | | | 2,648,207 | |||||||||||||||
Depreciation and amortization |
1,575,872 | 293,182 | 127,864 | | 1,996,918 | |||||||||||||||
79,561,755 | 7,059,878 | 3,425,403 | (2,274,310 | ) | 87,772,726 | |||||||||||||||
Net other (expense) |
(1,643,477 | ) | (116,743 | ) | (69,129 | ) | | (1,829,349 | ) | |||||||||||
Income (loss) from continuing
operations , before taxes |
(4,233,357 | ) | 364,040 | 651,162 | (14,864 | ) | (3,233,019 | ) | ||||||||||||
Benefit (provision) for income taxes |
208,000 | (145,616 | ) | (260,465 | ) | 406,081 | 208,000 | |||||||||||||
Income (loss) from continuing
operations, net of taxes |
(4,025,357 | ) | 218,424 | 390,697 | 391,217 | (3,025,019 | ) | |||||||||||||
Discontinued operations, net of taxes |
2,805 | | | | 2,805 | |||||||||||||||
Net income (loss) |
(4,022,552 | ) | 218,424 | 390,697 | 391,217 | (3,022,214 | ) | |||||||||||||
Less: Net income (loss) attributable
to noncontrolling interest |
(241,768 | ) | | | | (241,768 | ) | |||||||||||||
Net income (loss) attributable
to Graymark Healthcare |
$ | (3,780,784 | ) | $ | 218,424 | $ | 390,697 | $ | 391,217 | $ | (2,780,446 | ) | ||||||||
Net loss per share of common
stock, basic and diluted |
$ | (0.13 | ) | $ | (0.10 | ) | ||||||||||||||
Weighted average number of
common shares outstanding,
basic and diluted |
28,116,089 | 28,822,006 | ||||||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2008
For the Year Ended December 31, 2008
Historical | Pro Forma | Pro Forma | ||||||||||||||||||
Graymark | Somni | Eastern | Adjustments | Combined | ||||||||||||||||
(Notes 2-4) | ||||||||||||||||||||
Revenues |
$ | 96,621,322 | $ | 9,551,447 | $ | 5,544,843 | $ | (2,947,088 | ) | $ | 108,770,524 | |||||||||
Costs and Expenses: |
||||||||||||||||||||
Cost of sales and services |
67,803,667 | 4,180,074 | 2,342,821 | (2,342,821 | ) | 71,983,741 | ||||||||||||||
Selling, general and administrative |
23,818,864 | 4,292,453 | 1,806,400 | (444,505 | ) | 29,473,212 | ||||||||||||||
Depreciation and amortization |
1,571,292 | 398,976 | 162,959 | | 2,133,227 | |||||||||||||||
93,193,823 | 8,871,503 | 4,312,180 | (2,787,326 | ) | 103,590,180 | |||||||||||||||
Net other (expense) |
(2,055,063 | ) | (85,104 | ) | (76,111 | ) | | (2,216,278 | ) | |||||||||||
Income from continuing
operations , before taxes |
1,372,436 | 594,840 | 1,156,552 | (159,762 | ) | 2,964,066 | ||||||||||||||
Benefit (provision) for income
taxes |
(136,000 | ) | (237,936 | ) | (462,621 | ) | 63,905 | (772,652 | ) | |||||||||||
Income from continuing
operations, net of taxes |
1,236,436 | 356,904 | 693,931 | (95,857 | ) | 2,191,414 | ||||||||||||||
Discontinued operations, net of
taxes |
60,932 | | | | 60,932 | |||||||||||||||
Net income |
1,297,368 | 356,904 | 693,931 | (95,857 | ) | 2,252,346 | ||||||||||||||
Less: Net income (loss)
attributable
to noncontrolling interest |
552,970 | | | | 552,970 | |||||||||||||||
Net income (loss) attributable
to Graymark Healthcare |
$ | 744,398 | $ | 356,904 | $ | 693,931 | $ | (95,857 | ) | $ | 1,699,376 | |||||||||
Net income per share of
common stock: |
||||||||||||||||||||
Basic |
$ | 0.03 | $ | 0.06 | ||||||||||||||||
Diluted |
$ | 0.03 | $ | 0.06 | ||||||||||||||||
Weighted average number of
common shares outstanding: |
||||||||||||||||||||
Basic |
25,885,628 | 26,638,423 | ||||||||||||||||||
Diluted |
26,102,841 | 26,855,636 | ||||||||||||||||||
See accompanying notes to unaudited pro forma condensed combined financial statements
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
COMBINED FINANCIAL STATEMENTS
(1) BASIS FOR PRESENTATION
The pro forma condensed combined financial statements present the pro forma effects of
the acquisition by Graymark Healthcare, Inc. (Graymark) of the outstanding equity
ownership interests in somniTech, Inc. and somniCare, Inc. (collectively Somni) for $5.9
million in cash the outstanding equity ownership interests in Avastra Eastern Sleep
Centers, Inc. (Eastern) for $3.2 million in cash and 752,792 shares of Graymark common
stock (the Acquisition). The Acquisition will be accounted for as a purchase of Somni
and Eastern by Graymark using the acquisition method of accounting.
The accompanying unaudited pro forma combining consolidated statements of operations
are presented assuming the Acquisition was consummated on the first day of the period
presented. The unaudited pro forma combining consolidated balance sheet as of September
30, 2009, is presented assuming the actual date of the Acquisition.
The historical information presented for Graymark (i) as of September 30, 2009 and the
nine months then ended, is derived from the unaudited consolidated financial statements
contained in our Quarterly Report on Form 10-Q, and (ii) the year ended December 31, 2008, is derived from the audited consolidated financial
statements of Graymark contained in our Annual Report on Form 10-K.
The historical information presented for Somni (i) as of and for the nine months ended
September 30, 2009, and (ii) the year ended December 31, 2008, is derived from the
unaudited financial statements of somniTech, Inc. and somniCare, Inc.
The historical information presented for Eastern (i) as of and for the nine months
ended September 30, 2009, and (ii) the year ended December 31, 2008, is derived from the
unaudited financial statements of Eastern.
The pro forma financial information presented in the unaudited pro forma combining
consolidated financial statements is not necessarily indicative of the financial position
and results of operations that would have been achieved had the assets and liabilities been
owned by a single corporate entity. The results of operations presented in the unaudited
pro forma combining statements of operations are not necessarily indicative of the results
of future operations of Graymark following consummation of the Acquisition.
(2) ADJUSTMENTS THE ACQUISITION:
The accompanying unaudited pro forma consolidated financial statements have been
adjusted to give effect to the Acquisition as follows:
(a) | Income taxes reflect the effect of the historical earnings of Somni and Eastern and the pro forma adjustment for the nine months ended September 30, 2009 to reflect the offset of Somni and Eastern earnings against the losses of Graymark. | ||
(b) | Revenue, cost of services and selling, general and administrative expenses have been reduced to reflect the management services agreement (MSA) operating model that was implemented at Eastern after the Acquisition. Under the MSA, Eastern receives management fee income for operating the respective sleep center and providing additional services to the physician group. The cost of the sleep studies performed and the personnel costs of sleep technicians are born by the physician group that performs the sleep studies. |
Since the Acquisition was consummated prior to September 30, 2009, the following
post-Acquisition transactions are already reflected in the unaudited pro forma information,
including the following:
(a) | The recording of the excess fair value over the net assets acquired (goodwill) of Somni and |
Eastern of $4,930,761 and $3,657,557, respectively. The fair values of the assets acquired and liabilities assumed were preliminarily determined to be the net book values previously recorded by Somni and Eastern. Due to the timing of the acquisitions, it was not practical for the fair value appraisals of Somni and Eastern to be completed at the time of this report. Management expects that the final appraisals of Somni and Eastern will result in changes, which could be significant, including the establishment of values for identifiable intangible assets which are not part of the preliminary purchase allocation. |
(3) NET INCOME PER SHARE
Pro forma per share calculations for Graymark are based upon the weighted average
number of common stock shares assuming the Acquisition occurred on the first day of the
period presented.
(4) INCOME TAXES
The provision for income taxes is based on the federal corporate statutory 35% income
tax rate, plus an estimated 5% rate for state income taxes.