Unaudited pro forma consolidated financial statements for ZoneCare

EX-99.4 5 dex994.htm UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR ZONECARE Unaudited pro forma consolidated financial statements for ZoneCare

Exhibit 99.4

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

On January 28, 2008, MSC – Medical Services Company, referred to herein as “the Company” or “MSC”, acquired 100% of the outstanding membership interests of ZoneCare USA of Delray, LLC, a Florida limited liability company (“ZoneCare”), and Speedy Re-employment, LLC, a Florida limited liability company (“Speedy”), and substantially all of the assets of SelectMRI, LLC, a Florida limited liability company (“Select MRI” and together with ZoneCare and Speedy, the “Acquisition Entities”) for $25,000,000, $7,000,000, and $500,000, respectively, paid in cash subject to escrows and holdbacks (the “Acquisition”). In connection with the purchase of the assets of SelectMRI, the Company formed a wholly-owned subsidiary, SelectMRI Acquisition, LLC, a Delaware limited liability company (“Select Acquisition”), which actually acquired the assets of SelectMRI.

The Acquisition is to be accounted for under Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations.” The preliminary accounting for the acquisition assumes that all tangible and intangible assets (excluding goodwill) of the Acquisition Entities are stated at fair market value in the historical financial statements. As such, the entire excess of purchase price over fair market value (historical book value of the Acquisition Entities) is attributable to goodwill. A subsequent valuation will be performed to appropriately value the tangible and intangible assets of the Acquisition Entities. The difference between the preliminary and final accounting is not expected to be material.

The following unaudited consolidated pro forma financial statements present MSC’s along with the Acquisition Entities’ historical audited financial statements as of and for the year ended December 31, 2006 as well as the historical unaudited historical financial statements for the nine month periods as of and for periods ended September 30, 2006 and 2007. The unaudited pro forma consolidated statements of continuing operations for the year ended December 31, 2006, and the nine month periods ended September 30, 2007 and 2006, are presented as if the acquisitions had been completed on January 1, 2006. The unaudited pro forma consolidated balance sheet as of September 30, 2006, is presented as if the acquisitions had been completed as of September 30, 2006.

The unaudited pro forma consolidated financial statements are not necessarily indicative of the results of operations or financial condition of MSC after the proposed transactions that would have been reported had the proposed transactions been completed as of the dates presented, and are not necessarily representative of the future consolidated results of operations or financial condition of MSC.

[Tables appear on the following pages]

New MSC

Unaudited Consolidated Balance Sheet

as of September 30, 2007

(Dollars in thousands)


	MSC (historical)			Acquisition Entities		Pro Forma Adjustments		Notes		Pro Forma
Assets
Current assets:
Cash	$	4,394		$	885	$	—			$	5,279
Accounts receivable		60,353			3,935		—				64,288
Other current assets		1,326			127		—				1,453
Current deferred income taxes		7,962			—		—				7,962

Total current assets		74,035			4,947		—				78,982
Property and equipment		8,319			389		—				8,708
Intangible assets:
Goodwill		236,207			—		31,325	(1	)		267,532
Other intangible assets		107,830			—		—				107,830

Total intangible assets		344,037			—		31,325				375,362
Other assets		4,115			38		—				4,153

	$	430,506		$	5,374	$	31,325			$	467,205

Liabilities and stockholders’ equity
Current liabilities:
Short-term debt	$	16,722		$	—	$	—			$	16,722
Accounts payable		13,107			1,458						14,565
Accrued expenses		33,393			521						33,914
Other current liabilities		428			1,594						2,022

Total current liabilities		63,650			3,573		—				67,223
Non-current liabilities:
Long-term debt		149,956			—		—				149,956
Deferred income taxes		26,790			—		—				26,790

Total non-current liabilities		176,746			—		—				176,746

Total liabilities		240,396			3,573		—				243,969
Stockholders’ equity:
Paid in capital		215,560			1,801		31,325	(1	)		248,686
Accumulated other comprehensive income		(136	)		—		—				(136	)
Retained (deficit) earnings		(25,314	)		—						(25,314	)

Total stockholders’ equity		190,110			1,801		31,325				223,236

Total liabilities and stockholders’ equity	$	430,506		$	5,374	$	31,325			$	467,205

New MSC

Unaudited Consolidated Balance Sheet

as of September 30, 2006

(Dollars in thousands)


	MSC (historical)			Acquisition Entities		Pro Forma Adjustments		Notes		Pro Forma
Assets
Current assets:
Cash	$	3,587		$	1,398	$	—			$	4,985
Accounts receivable		64,653			3,947		—				68,600
Other current assets		1,296			214		—				1,510
Current deferred income taxes		10,612			—		—				10,612

Total current assets		80,148			5,559		—				85,707
Property and equipment		6,001			224		—				6,225
Intangible assets:
Goodwill		236,208			—		31,325	(1	)		267,533
Other intangible assets		116,498			—		—				116,498

Total intangible assets		352,706			—		31,325				384,031
Other assets		5,953			15						5,968

	$	444,808		$	5,798	$	31,325			$	481,931

Liabilities and stockholders’ equity
Current liabilities:
Short-term debt	$	16,620		$	—	$	—			$	16,620
Accounts payable		13,394			1,554		—				14,948
Accrued expenses		41,379			656		—				42,035
Other current liabilities		3,665			1,357		—				5,022

Total current liabilities		75,058			3,567		—				78,625
Non-current liabilities:
Long-term debt		148,833			—		—				148,833
Deferred income taxes		34,809			—		—				34,809

Total non-current liabilities		183,642			—		—				183,642

Total liabilities		258,700			3,567		—				262,267
Stockholders’ equity:
Paid in capital		214,359			2,231		31,325	(1	)		247,915
Accumulated other comprehensive income		578			—		—				578
Retained (deficit) earnings		(28,829	)		—		—				(28,829	)

Total stockholders’ equity		186,108			2,231		31,325				219,664

Total liabilities and stockholders’ equity	$	444,808		$	5,798	$	31,325			$	481,931

New MSC

Unaudited Consolidated Balance Sheet

as of December 31, 2006

(Dollars in thousands)


	MSC (historical)			Acquisition Entities		Pro Forma Adjustments		Notes		Pro Forma
Assets
Current assets:
Cash	$	6,101		$	52	$	—			$	6,153
Accounts receivable		63,537			3,937		—				67,474
Other current assets		1,254			287		—				1,541
Current deferred income taxes		7,965			—		—				7,965

Total current assets		78,857			4,276		—				83,133
Property and equipment		5,801			308		—				6,109
Intangible assets:
Goodwill		236,207			—		31,325	(1	)		267,532
Other intangible assets		114,331			—		—				114,331

Total intangible assets		350,538			—		31,325				381,863
Other assets		5,880			563						6,443

	$	441,076		$	5,147	$	31,325			$	477,548

Liabilities and stockholders’ equity
Current liabilities:
Short-term debt	$	20,120		$	—	$	—			$	20,120
Accounts payable		11,874			1,015		—				12,889
Accrued expenses		42,369			1,729		—				44,098
Other current liabilities		3,599			547		—				4,146

Total current liabilities		77,962			3,291		—				81,253
Non-current liabilities:
Long-term debt		148,895			—		—				148,895
Deferred income taxes		30,544			—		—				30,544

Total non-current liabilities		179,439			—		—				179,439

Total liabilities		257,401			3,291		—				260,692
Stockholders’ equity:
Paid in capital		214,643			1,856		31,325	(1	)		247,824
Accumulated other comprehensive income		561			—		—				561
Retained (deficit) earnings		(31,529	)		—		—				(31,529	)

Total stockholders’ equity		183,675			1,856		31,325				216,856

Total liabilities and stockholders’ equity	$	441,076		$	5,147	$	31,325			$	477,548

New MSC

Unaudited Consolidated Statement of Operations

For the Nine Months Ended September 30, 2007

(Dollars in thousands)


	MSC (historical)			Acquisition Entities		Pro Forma Adjustments		Notes	Pro Forma
Net Revenue	$	241,321		$	21,000	$	—		$	262,321
Cost of Revenue		191,234			10,761		—			201,995

Gross profit		50,087			10,239		—			60,326
Operating expenses		34,996			6,338		—			41,334
Depreciation and amortization		8,559			61		—			8,620
Net loss on disposal of fixed assets		15			—		—			15
Litigation settlement		(12,363	)		—		—			(12,363	)

Total Expenses		31,207			6,399		—			37,606

Operating income (loss)		18,880			3,840		—
Interest expense (net)		15,983			—		—			15,983

Income (loss) before income taxes (benefit)		2,897			3,840		—			6,737
Income tax benefit (expense)		3,318			—		—			3,318

Net (loss) income	$	6,215		$	3,840	$	—		$	10,055

New MSC

Unaudited Consolidated Statement of Operations

For the Nine Months Ended September 30, 2006

(Dollars in thousands)


	MSC (historical)			Acquisition Entities		Pro Forma Adjustments		Notes	Pro Forma
Net Revenue	$	245,272		$	18,588	$	—		$	263,860
Cost of Revenue		196,383			10,288		—			206,671

Gross profit		48,889			8,300		—			57,189
Operating expenses		33,454			6,591		—			40,045
Depreciation and amortization		8,975			48		—			9,023
Litigation settlement		—			—		—			—

Total Expenses		42,429			6,639		—			49,068

Operating income (loss)		6,460			1,661		—
Interest expense (net)		15,705			—		—			15,705

Income (loss) before income taxes (benefit)		(9,245	)		1,661		—			(7,584	)
Income tax benefit (expense)		3,473			—		—			3,473

Net (loss) income	$	(5,772	)	$	1,661	$	—		$	(4,111	)

New MSC

Unaudited Consolidated Statement of Operations

For the Year Ended December 31, 2006

(Dollars in thousands)


	MSC (historical)			Acquisition Entities			Pro Forma Adjustments		Notes	Pro Forma
Net Revenue	$	324,890		$	25,165		$	—		$	350,055
Cost of Revenue		260,779			13,568			—			274,347

Gross profit		64,111			11,597			—			75,708
Operating expenses		44,741			8,867			—			53,608
Depreciation and amortization		11,990			70			—			12,060
Litigation settlement		—			—			—			—

Total Expenses		56,731			8,937			—			65,668

Operating income (loss)		7,380			2,660			—
Interest expense (net)		20,945			(46	)		—			20,899

Income (loss) before income taxes (benefit)		(13,565	)		2,706			—			(10,859	)
Income tax benefit (expense)		5,093			—			—			5,093

Net (loss) income	$	(8,472	)	$	2,706		$	—		$	(5,766	)

Notes to Unaudited Pro Forma Consolidated Balance Sheet as of September 30, 2006, September 30, 2007, and December 31, 2006

(1)	This represents the excess of the purchase price of the three companies over the fair value of the combined assets as of the closing date of the transactions (Opening of business February 28, 2008).