Neoforma Provides Update Regarding Evaluation of Strategic Alternatives
19 April 2005 - 1:19AM
PR Newswire (US)
Neoforma Provides Update Regarding Evaluation of Strategic
Alternatives SAN JOSE, Calif., April 18 /PRNewswire-FirstCall/ --
Neoforma, Inc. (NASDAQ:NEOF) is confirming that VHA Inc. and the
University HealthSystem Consortium (UHC) have announced, through
Schedule 13D filings, their current intent to support Neoforma's
evaluation of strategic alternatives, including a possible sale or
merger of the Company, and to sell their shares of Neoforma common
stock in a transaction on terms that are acceptable to them. VHA
and UHC are the two largest stockholders of Neoforma, owning 41.8%
and 10.4%, respectively, of the Company's outstanding common stock.
VHA and UHC own Novation, LLC, their supply company and Neoforma's
largest customer. (Logo:
http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO ) In late
2004, Neoforma's board of directors appointed a special committee
of independent directors to supervise the evaluation of strategic
alternatives that Neoforma has undertaken, as previously disclosed
in Neoforma's Form 10-K for the year ended December 31, 2004. As
announced on January 11, 2005, Neoforma has retained Merrill Lynch
& Co. as its financial advisor to assist the Company and the
special committee in this evaluation. Now that VHA and UHC have
determined their current intent, Neoforma and its advisors intend
to accelerate their investigation of strategic alternatives for
enhancing stockholder value, including a potential sale or merger
of the Company, and to enter into negotiations with prospective
parties in connection with certain alternatives. In the context of
a sale or merger transaction, VHA and UHC also have indicated that,
based in part on the findings of their consultant, they believe a
market competitive price of the services provided by Neoforma
should be significantly less than the current fee. They also have
indicated that they intend to renegotiate the outsourcing agreement
to which Neoforma, VHA, UHC and Novation are all parties, and that
such a renegotiation is a condition of continuing the outsourcing
agreement after any sale or merger transaction. Neoforma, however,
based on the findings of its own consultant, believes its current
fee is reasonable and market competitive. Neoforma believes that it
has been a valuable and trusted partner to VHA, UHC and Novation
and to their membership over the last five years. By delivering
customized and proven supply chain management solutions, Neoforma
has helped hospitals reduce costs and increase efficiencies,
allowing them to focus on other critical priorities. The current
10-year exclusive outsourcing agreement was originally entered into
in March 2000 and was most recently amended in August 2003 as a
result of negotiations between the parties to the contract. Under
the terms of that amendment, the quarterly maximum payment from
Novation to Neoforma was established at $15.25 million, or $61.0
million per year, beginning in 2004. There can be no assurances
that any particular alternative will be pursued or that any
transaction will occur, or on what terms. In addition, there can be
no assurances that a buyer acceptable to VHA and UHC will be
willing to enter into a transaction on terms acceptable to Neoforma
and VHA and UHC. As previously disclosed, in the event of a change
in control of Neoforma, Novation's consent is required to assign
the outsourcing agreement, because Novation has the right to
terminate the agreement upon such a change in control transaction.
Separately, either party has the right to request that a formal
benchmarking process be undertaken. The detailed terms of the
benchmarking provisions of the agreement have been included in a
Form 8-K to be filed by Neoforma. At this time, none of the parties
to the agreement have requested the formal benchmarking process be
undertaken. About Neoforma Neoforma is a leading supply chain
management solutions provider for the healthcare industry. Through
a unique combination of technology, information and services,
Neoforma provides innovative solutions to over 1,500 hospitals and
suppliers, supporting more than $10 billion in annualized
transaction volume. By bringing together contract information and
order data, Neoforma's integrated solution set delivers a
comprehensive view of an organization's supply chain, driving
significant cost savings and better decision-making for both
hospitals and suppliers. For more information, point your browser
to http://www.neoforma.com/ . This news release contains
forward-looking information within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements include statements related to Neoforma's consideration
of strategic alternatives, the intent of VHA, UHC and Novation to
renegotiate the Outsourcing Agreement with a buyer or merger
partner of Neoforma, the likelihood of a merger or sale of
Neoforma, and in a sale or merger of Neoforma the intent of VHA and
UHC to sell their shares of Neoforma, the intent of Novation, VHA
and UHC to support the sale or merger and the timing for the
completion of the sale or merger. There are a number of risks that
could cause actual results to differ materially from those
anticipated by these forward-looking statements. These risks
include the risk that no strategic alternative will ultimately be
considered, that a buyer or merger partner of Neoforma will not
agree to renegotiated Outsourcing Agreement terms with VHA, UHC and
Novation, and that VHA and UHC may not agree to sell their shares
to a merger partner or buyer of Neoforma or approve a merger or
sale of Neoforma. Other risks are described in Neoforma's periodic
reports filed with the SEC, including its Form 10-K for the year
ended December 31, 2004. These statements are current as of the
date of this release and Neoforma assumes no obligation to update
the forward-looking information contained in this news release.
NOTE: Neoforma is a trademark of Neoforma, Inc. Other Neoforma
logos, product names and service names are also trademarks of
Neoforma, Inc., which may be registered in other countries. Other
product and brand names are trademarks of their respective owners.
http://www.newscom.com/cgi-bin/prnh/20030226/NEOFORMALOGO
http://photoarchive.ap.org/ DATASOURCE: Neoforma, Inc. CONTACT:
media, Rebecca Oles, +1-408-468-4363, or , or investors, Amanda
Mogin, +1-408-468-4251, or , both of Neoforma, Inc. Web site:
http://www.neoforma.com/
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