Item 2.05 Costs Associated with Exit or Disposal Activities.
On June 24, 2016, Accretive Health, Inc. (the “Company”), in order to align the size and composition of its workforce to its
current client base, better position itself for already committed future growth, and enable the Company to more efficiently serve contracted demand, committed to a plan to reduce its workforce in certain operational, corporate, administrative and
management functions (the “Plan”). The Plan will affect 41 employees. The majority of the reductions will occur in June 2016, and the Company expects the Plan to be completed by the end of the third quarter of 2016.
Pursuant to the Plan, and subject to the execution of separation and general release agreements, the Company will enter into severance
arrangements with each terminated employee based on the terms of the Company’s severance plan, or as applicable, the terms of the employee’s offer letter. The Company expects the arrangements to consist of severance payments, medical and
dental benefits and outplacement job training.
In connection with the Plan, during 2016, the Company expects to record approximately $4.1
million to $4.3 million in severance, stock compensation an d employee benefits related expenses. The Company expects cash expenditures of $2.4 million to $2.6 million related to the Plan and believes most of the cash will be expended in 2016.
The Company expects annualized cost savings of approximately $16 million from a combination of savings driven by the Plan and other cost
reduction initiatives.
A copy of the press release announcing the Plan is attached hereto as Exhibit 99.1, and is incorporated herein by
reference.
Safe Harbor Statement
This Form 8-K contains forward-looking statements,, including statements regarding the Company’s entry into separation and general release
agreements, the Company’s anticipated future charges and expenditures relating to the Plan and the Company’s already committed future growth, cost savings and operational results. All forward-looking statements contained in this Form 8-K
involve risks and uncertainties. The Company’s actual results and outcomes could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the factors set forth in the Company’s
annual report on Form 10-K for the year ended December 31, 2015. The words “strive,” “objective,” “anticipates,” “believes,” “estimates,” “expects,” “intends,”
“may,” “plans,” “projects,” “vision,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying
words. The Company has based these forward-looking statements on its current expectations and projections about future events. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these
expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections, or expectations prove
incorrect, actual results, performance, financial condition, or events may vary materially and adversely from those anticipated, estimated, or expected.
All forward-looking statements included in this Form 8-K are expressly qualified in their entirety by these cautionary statements. The Company
cautions readers not to place undue reliance on any forward-looking statement that speaks only as of the date made and to recognize that forward-looking statements are predictions of future results, which may not occur as anticipated. Actual results
could differ materially
from those anticipated in the forward-looking statements and from historical results, due to the uncertainties and factors described above, as well as others that the Company may consider
immaterial or does not anticipate at this time. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, the Company does not know whether its expectations may prove correct. The Company’s
expectations reflected in its forward-looking statements can be affected by inaccurate assumptions it might make or by known or unknown uncertainties and factors, including those described above. The risks and uncertainties described above are not
exclusive, and further information concerning the Company and its business, including factors that potentially could materially affect its financial results or condition or relationships with customers and potential customers, may emerge from time
to time. The Company assumes no, and it specifically disclaims any, obligation to update, amend, or clarify forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. The
Company advises investors, however, to consult any further disclosures it makes on related subjects in its periodic reports that it files with or furnishes to the SEC.
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