8-K
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
Date of Report (Date of earliest event reported): September 13, 2006
HMS Holdings Corp.
(Exact Name of Registrant as Specified in Charter)
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New York
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0-50194
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11-3656261 |
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(State or Other Jurisdiction of
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(Commission
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(IRS Employer |
Incorporation)
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File Number)
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Identification No.) |
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401 Park Avenue South
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10016 |
New York, New York |
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(Address of Principal Executive Offices)
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(Zip Code) |
Registrants telephone number, including area code: (212) 725-7965
Not applicable.
(Former Name or Former 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):
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
TABLE OF CONTENTS
Item 1.01. Entry into a Material Definitive Agreement.
Amendment to Purchase Agreement
On September 13, 2006, HMS Holdings Corp. (the Company) and its wholly-owned subsidiary,
Health Management Systems, Inc. (HMS), entered into an amendment (the Amendment) of the Asset
Purchase Agreement, dated as of June 26, 2006 (the Asset Purchase Agreement), by and among the
Company, HMS and Public Consulting Group, Inc. (PCG) pursuant to which HMS will acquire the
assets used exclusively or primarily in PCGs Benefits Solutions Practice Area (the BSPA Assets).
The Amendment requires (i) PCG to indemnify the Company and HMS for certain specified liabilities
under agreements to be retained by PCG and (ii) the Company to indemnify PCG for certain specified
liabilities to be assumed by the Company, in each case upon the closing of the transactions
contemplated by the Asset Purchase Agreement.
The foregoing description of the Amendment does not purport to be complete and is qualified in
its entirety by reference to the full text of the Amendment, which is filed with this report as
Exhibit 99.1 and incorporated herein by reference.
Master Teaming Agreement
In connection with the closing under the Asset Purchase Agreement on September 13, 2006, HMS
entered into a Master Teaming Agreement (the Teaming Agreement) with PCG. Pursuant to the
Teaming Agreement, HMS has agreed to make PCG its exclusive supplier of certain services offered by
PCG for future new business opportunities, and PCG has agreed to make HMS its exclusive supplier
for certain services offered by HMS for future new business opportunities. In addition, with
respect to those services that both HMS and PCG provide to clients and customers, HMS and PCG have
agreed to consider in good faith whether it is in the economic and business interests of each of
them to bid jointly on future business opportunities.
The foregoing description of the Teaming Agreement does not purport to be complete and is
qualified in its entirety by reference to the full text of the Teaming Agreement, which is filed
with this report as Exhibits 99.2 and incorporated herein by reference.
Credit Agreement
On September 13, 2006, the Company entered into a credit agreement (the Credit Agreement)
among the Company, the several banks and other financial institutions or entities from time to time
parties thereto, JPMorgan Chase Bank, N.A. (JPMCB), as administrative agent, to fund a portion of
the purchase price for the Companys acquisition of the BSPA Assets described in Item 2.01 below.
The Credit Agreement provides for a term loan of $40 million (the Term Loan) and revolving credit
loans of up to $25 million (the Revolving Loan). Borrowings under the Credit Agreement mature on
September 13, 2011. The loans are secured by a security interest in favor of the lenders covering
the assets of the Company and its subsidiaries. Interest on borrowings under the Credit Agreement
is calculated, at the Companys option, at either (i) LIBOR, including statutory reserves, plus a
variable margin based on the Companys leverage ratio, or (ii) the higher of (a) the prime lending
rate of JPMCB, and (b) the Federal Funds Effective Rate plus 0.50%, in each case plus a variable
margin based on the Companys leverage ratio. In connection with the Revolving Loan, the Company
agreed to pay a commitment fee, payable quarterly in arrears, at a variable rate based on the
Companys leverage ratio, on the unused portion of the Revolving Loan.
Commitments under the Credit Agreement will be reduced and borrowings are required to be
repaid with the net proceeds of, among other things, sales or issuances of equity (excluding equity
issued under employee benefit plans and equity issued to sellers as consideration in acquisitions),
sales of assets by the Company and any incurrence of indebtedness by the Company, subject, in each
case, to limited exceptions. The obligations of the Company under the Credit Agreement may be
accelerated upon the occurrence of an event of default under the Credit Agreement, which includes
customary events of default including, without limitation, payment defaults, defaults in the
performance of affirmative and negative covenants, the inaccuracy of representations or warranties,
bankruptcy and insolvency related defaults, defaults relating to such matters as ERISA, uninsured
judgments and the failure to pay certain indebtedness, and a change of control default.
In addition, the Credit Agreement contains affirmative, negative and financial covenants
customary for financings of this type. The negative covenants include restrictions on indebtedness,
liens, fundamental changes, dispositions of property, investments, dividends and other restricted
payments. The financial covenants include fixed charge coverage and leverage ratios.
The forgoing description of the Credit Agreement does not purport to be complete and is
qualified in its entirety by reference to the full text of the Credit Agreement, which is filed
with this report as Exhibit 99.3 and is incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On September 13, 2006, HMS acquired the BSPA Assets pursuant to the Asset Purchase Agreement
for $80 million in cash, 1,749,800 shares of Holdings common stock and a contingent cash payment of
up to $15 million if certain revenue targets are met for the twelve months ending June 30, 2007.
The cash portion of the purchase price was funded with cash on hand and $40 million in proceeds
under the credit facility described in Item 1.01 above.
The forgoing description of the transaction contemplated by the Purchase Agreement does not
purport to be complete and is qualified in its entirety by reference to the full text of the
Purchase Agreement, which was filed with the Securities and Exchange Commission on June 26, 2006 as
Exhibit 99.1 to the Companys Current Report on Form 8-K, as well as the Amendment described in
Item 1.01 above, each of which are incorporated herein by reference. A copy of the press release
announcing the closing of the acquisition of the BSPA Assets is filed with this report as Exhibit
99.4.
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Item 2.03. |
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant |
The information set forth in Item 1.01 above with respect to the Credit Agreement is
incorporated herein in its entirety.
Item 9.01. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
The financial statements required by this item are not included with this initial report. The
required financial statements will be filed by amendment as soon as practicable, but not later than
71 days after the date this Current Report on Form 8-K was required to be filed.
(b) Pro Forma Financial Information.
The pro-forma financial statements required by this item are not included with this initial
report. The required pro-forma financial statements will be filed by amendment as soon as
practicable, but not later than 71 days after the date this Current Report on Form 8-K was required
to be filed.
(c) Exhibits. See Exhibit Index attached hereto.
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.
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HMS HOLDINGS CORP.
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Date: September 14, 2006 |
By: |
/s/ THOMAS G. ARCHBOLD
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Thomas G. Archbold |
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Chief Financial Officer |
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EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1
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Amendment No.1 to Asset Purchase Agreement, dated as of
September 13, 2006, by and among HMS Holdings Corp., Health
Management Systems, Inc. and Public Consulting Group, Inc. |
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99.2
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Master Teaming Agreement, dated as of September 13, 2006, by
and between Health Management Systems, Inc. and Public
Consulting Group, Inc. |
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99.3
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Credit Agreement, dated as of September 13, 2006, among HMS
Holdings Corp., the Guarantors named therein, the Lenders
named therein, JPMorgan Chase Bank, N.A., as administrative
agent, J.P. Morgan Securities, Inc., as sole lead arranger and
sole bookrunner, Bank of America, N.A., as syndication agent
and Citizens Bank of Massachusetts, as documentation agent. |
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99.4
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Press Release dated September 13, 2006 announcing the closing
of the acquisition of the BSPA Assets. |