Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. TEAM HEALTH HOLDINGS INC. (1082754) 10-Q published on Nov 04, 2016 at 4:43 pm
Reporting Period: Sep 29, 2016
On June 14, 2016, the Company entered into a Tolling Agreement, which was extended on November 3, 2016, with the United States of America, through the United States Attorney’s Office for the Eastern District of Tennessee and the United States Department of Health and Human Services, and the State of Tennessee, through the Tennessee Attorney General’s Office, to continue ongoing discussions related to emergency department coding practices for professional services rendered in the State of Tennessee. On June 9, 2014, the Attorney General for the State of Tennessee issued a CID to one of the Company's affiliated entities, Southeastern Emergency Physicians, LLC, about possible false claims for payments associated with professional services furnished to Bureau of TennCare patients. The CID requested that the Company produce records and documents. In conjunction with the inquiry of the Attorney General for the State of Tennessee, the United States Department of Justice, U.S. Attorney’s Office for the Eastern District of Tennessee, on May 26, 2015, sent an informal request for information and documentation to Southeastern Emergency Physicians, LLC, HCFS Health Care Financial Services and TeamHealth. The request sought information relating to the Company's emergency department coding practices for professional services rendered in the State of Tennessee and the production of training and compliance materials. The Company has been timely responding to requests for information and documentation and is continuing to cooperate with the Tennessee Attorney General and the U.S. Attorney’s Office. The Company is currently unable to determine the potential impact, if any, that will result from this matter.
On October 31, 2016, the Company announced that it entered into an Agreement and Plan of Merger (the Merger Agreement) to be acquired by funds affiliated with The Blackstone Group L.P. and certain co-investors. The Company entered into a Merger Agreement with Tennessee Parent, Inc., a Delaware corporation (Parent) and Tennessee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will be merged with and into the Company (the Merger) with the Company surviving the Merger as a wholly owned subsidiary of Parent. The Company's Board of Directors unanimously approved the Merger Agreement and resolved to recommend that the Company's stockholders vote to adopt the Merger Agreement. Until the tenth business day following the end of the go-shop period, the Company may continue to engage with any third party that made an acquisition proposal prior to the end of the go-shop period that the Board of Directors has determined in good faith, after consultation with outside counsel and its financial advisors, is or could reasonably be expected to result in a superior proposal as defined in the Merger Agreement (each, an Excluded Party).
Pursuant to the Merger Agreement, (i) each outstanding Company stock option will immediately vest and be canceled and converted into the right to receive an amount in cash equal to the product of (x) the total number of shares of Company common stock subject to each Company stock option multiplied by (y) the excess, if any, of the Merger Consideration over the per share exercise price under such Company stock option and (ii) each outstanding Company restricted stock unit or similar stock right (other than Company performance share units and market stock units, each a “Company stock unit”) will be canceled and converted into the right to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company stock unit multiplied by (y) the Merger Consideration. Each outstanding Company performance share unit will be canceled at the Effective Time, and the holder of such Company performance share unit will be entitled to receive an amount in cash equal to the product of (x) the number of shares of Company common stock subject to such Company performance share unit (assuming performance resulted in a payout at the target level award) multiplied by (y) the Merger Consideration. Performance options will vest to the extent the relevant performance vesting thresholds are achieved based on the per share Merger Consideration and, with respect to market share units, a holder of market share units will be entitled to receive an amount in cash equal to the product of (x) the MSU End Price (as set forth in his applicable award agreement) and (y) the relevant performance multiplier (as set forth in his applicable award agreement) that is determined by reference to the per share Merger Consideration. The cash payments in respect of the canceled equity awards will generally be paid as soon as reasonably practicable after the Effective Time, subject to potential delayed payment in the case of any equity awards subject to existing deferral elections.
On October 31, 2016, we announced that we entered into an Agreement and Plan of Merger (the Merger Agreement) to be acquired by funds affiliated with The Blackstone Group L.P. and certain co-investors. We entered into a Merger Agreement with Tennessee Parent, Inc., a Delaware corporation (Parent) and Tennessee Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (Merger Sub), pursuant to which Merger Sub will be merged with and into the Company (the Merger) with the Company surviving the Merger as a wholly owned subsidiary of Parent. Our Board of Directors unanimously approved the Merger Agreement and resolved to recommend that our stockholders vote to adopt the Merger Agreement. Until the tenth business day following the end of the go-shop period, we may continue to engage with any third party that made an acquisition proposal prior to the end of the go-shop period that the Board of Directors has determined in good faith, after consultation with outside counsel and its financial advisors, is or could reasonably be expected to result in a superior proposal as defined in the Merger Agreement (each, an Excluded Party).
As described in the following risk factor, we could experience certain consequences related to the termination of the Merger Agreement and failure to consummate the Merger. The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company to terminate the Merger Agreement to accept a superior proposal, subject to specified limitations, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company will be required to pay Parent a termination fee of $50.4 million under specified conditions where the Company terminates the Merger Agreement in connection with its entry into a superior proposal with an Excluded Party and of $100.8 million under other specified conditions. The Merger Agreement also provides that Parent will be required to pay the Company a reverse termination fee of $201.7 million upon the termination of the Merger Agreement by the Company under specified conditions. There can be no assurance that approval of our stockholders will be obtained or that the Merger Agreement will not be otherwise terminated under the circumstances triggering these obligations. If triggered, payment of these fees and costs will negatively impact our results of operations, financial condition and cash flows and such impact will be over and above the consequences described below related to the failure to consummate the Merger.
The proposed Merger may not be consummated or may not be consummated in the timeframe or manner currently anticipated, which could have a material adverse effect on us and our stock price.