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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION OCTOBER 14, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________________
HOME HEALTH CORPORATION OF AMERICA, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2224800
- ------------------------------- ------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
BRUCE J. FELDMAN
2200 RENAISSANCE BOULEVARD PRESIDENT AND
SUITE 300 CHIEF EXECUTIVE OFFICER
KING OF PRUSSIA, PA 19406 2200 RENAISSANCE BOULEVARD
(610) 272-1717 SUITE 300
- --------------------------------- KING OF PRUSSIA, PA 19406
(ADDRESS, INCLUDING ZIP CODE, AND (610) 272-1717
TELEPHONE NUMBER, INCLUDING -----------------------------------
AREA CODE, OF REGISTRANT'S (NAME, ADDRESS, INCLUDING ZIP CODE,
PRINCIPAL EXECUTIVE OFFICES) AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
SOL GENAUER, ESQUIRE
MICHAEL MEDVECKUS, ESQUIRE
BLANK ROME COMISKY & MCCAULEY LLP
ONE LOGAN SQUARE
PHILADELPHIA, PA 19103-6998
_______________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
Title of each class of Amount to be offering price per aggregate offering Amount of
securities to be registered registered(1) share(2) price(2) registration fee
- ----------------------------- --------------- -------------------- -------------------- ------------------
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Common Stock, no par
value.......... 579,901 shares $ 1.22 per share $707,479.22 $171.07
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(1) This Registration Statement covers shares owned by certain selling
stockholders which shares may be offered from time to time by the selling
stockholders until the date on which all of the Shares included in the
Registration Statement have been sold or are permitted to be sold under Rule
144.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended,
based upon the last sale price of the Common Stock as reported by Nasdaq on
October 13, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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PROSPECTUS
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HOME HEALTH CORPORATION OF AMERICA, INC.
579,901 SHARES OF COMMON STOCK
The shareholders of Home Health Corporation of America, Inc., a
Pennsylvania corporation, identified in this prospectus under the heading
"Selling Stockholders" are offering and selling 579,901 shares of the
Company's common stock. Such shares may be offered from time to time by
the selling stockholders until all the shares have been sold or are
permitted to be sold under the Securities and Exchange Commission's Rule
144.
Each selling stockholder is responsible for paying all expenses
relating to the sale of his or her shares including any commissions,
discounts or other fees payable to broker-dealers and any attorney fees or
other expenses incurred by such selling stockholder. The selling
stockholders have also agreed to pay the fees and expenses of registering
their common stock. The Company will not receive any of the proceeds from
the sale of the shares by the selling stockholders.
The selling stockholders anticipate selling the share from time to
time primarily in transactions (which may include block transactions) on
the Nasdaq National Market System at the then current market price. They
may also sell shares in negotiated transactions or otherwise at varying
prices that will be determined at the time of sale.
The common stock is quoted on Nasdaq National Market System under the
symbol "HHCA." On October 13, 1998, the last reported closing price of the
common stock was $1.00 per share.
The Company's principal executive offices are located at 2200
Renaissance Boulevard, Suite 300, King of Prussia, Pennsylvania, 19406,
and its telephone number is (610) 272-1717.
Investing in the common stock involves certain risks. See "Risk
Factors" beginning at page 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
The date of this Prospectus is October 14, 1998.
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TABLE OF CONTENTS
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RISK FACTORS............................................. 3
USE OF PROCEEDS.......................................... 13
SELLING STOCKHOLDERS..................................... 14
PLAN OF DISTRIBUTION..................................... 15
WHERE YOU CAN FIND MORE INFORMATION...................... 16
INCORPORATION OF INFORMATION FILED WITH THE COMMISSION... 16
LEGAL MATTERS............................................ 17
EXPERTS.................................................. 17
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As used in this prospectus the term "Company" means Home Health
Corporation of America, Inc. References in this prospectus to a
particular fiscal year of the Company are to the year which ends on June
30.
___________
Some of the statements contained in or incorporated by reference into
this prospectus are forward-looking. They include statements concerning
(a) strategy, (b) liquidity and capital resources, (c) restructuring
initiatives, (d) relationships with managed care companies, (e) regulatory
matters and (f) legal proceedings. Actual results may differ materially
from those suggested by the forward-looking statements for various
reasons, including those discussed under "Risk Factors."
___________
The data contained or incorporated by reference in this prospectus
relating to the home health care industry have been derived from industry
and other sources available to the Company. The Company has not
independently verified this data. Therefore, the Company makes no
representation as to the accuracy of such data.
___________
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RISK FACTORS
You should carefully consider the following factors as well as other
information contained or incorporated by reference in this prospectus before
deciding to invest in shares of the common stock.
Recent Regulatory Developments. The Company's business is subject to
extensive federal, state and local regulation. Political, economic and
regulatory influences are subjecting the health care industry in the United
States to fundamental change. The Company anticipates that Congress and state
legislatures will continue to review and assess alternative health care delivery
and payment systems and will continue to propose and adopt legislation effecting
fundamental changes in the health care delivery system. Changes in the
applicable laws or new interpretations of existing laws may have a dramatic
effect on the definition of permissible or impermissible activities, the
relative cost of doing business, and the methods and amounts of payments for
medical care by both governmental and other payors. Legislative changes to
"balance the budget" and slow the annual rate of growth of Medicare and Medicaid
expenditures are expected to continue in the future. The Balanced Budget Act of
1997 was enacted during fiscal 1998. This new law caused significant changes to
the Medicare system of reimbursement. While the Balanced Budget Act of 1997 has
significantly impacted the home health care industry, additional changes may
also occur in the future. There can be no assurance that future legislation or
regulatory changes will not have a material adverse effect on the future
operations of the Company. The level of net revenues and profitability of the
Company, like those of other health care providers, will also be affected by the
continuing efforts of other payors to contain or reduce the costs of health care
by lowering reimbursement rates, slowing payment for services provided,
increasing case management review of services and negotiating reduced contract
pricing and capitation arrangements. See "Business -- Payor Mix" and
"--Government Regulation" in the Company's Annual Report on Form 10-K for the
year ended June 30, 1998.
Medicare Reimbursement. The Balanced Budget Act of 1997 caused significant
changes to the Medicare system of reimbursement, including the implementation of
an interim payment system, a reduction in reimbursement rates for oxygen
services and a requirement that a prospective payment system be implemented by
October 1, 1999 with up to a four-year phase-in period.
The implementation of the interim payment system has had a significant
impact on reimbursements received by the Company's Texas Medicare cost-
reimbursed nursing agency during fiscal 1998 and is expected to have a
significant impact on reimbursements in fiscal 1999 to be received by the
Company's remaining Medicare cost-reimbursed nursing agencies. In an effort to
reduce operating costs and respond to the reductions in Medicare reimbursement,
the Company implemented a restructuring plan during fiscal 1998. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Restructuring Initiatives" in the Company's Annual Report on Form
10-K for the year ended June 30, 1998.
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Effective January 1, 1998 reimbursement from Medicare for oxygen services
was reduced by 25%. An additional 5% reduction becomes effective on January 1,
1999. These reductions have had and are expected to continue to have a
materially adverse impact to the Company's internal growth in net revenues.
The impact of the implementation of the prospective payment system on the
Company's results of operations cannot be predicted with any certainty at this
time and would depend, to a large extent, on the reimbursement rates for home
health services established under the prospective payment system and the
Company's ability to deliver its services at a cost below the prospective
payment system rates. There can be no assurances that such reimbursement rates
would cover the costs incurred by the Company to provide home health services.
The Balanced Budget Act of 1997 has caused many other changes in the system
of Medicare reimbursement. For example, all home health agencies will be
required to obtain surety bonds in the amount of at least $50,000.
Additionally, payments will be frozen for durable medical equipment, excluding
orthotic and prosthetic equipment, and payments for certain reimbursable drugs
and biologicals will be reduced. The impact of these reimbursement changes
could have a material adverse effect on the Company's financial condition or
results of operations.
For additional information regarding changes to the Medicare system of
reimbursement and the impact of these changes on the Company see "Business --
Payor Mix" and "--Government Regulation" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Internal Growth,"
"--Net Revenues" and "--Results of Operations -- Fiscal 1998 Compared with
Fiscal 1997" in the Company's Annual Report on Form 10-K for the year ended
June 30, 1998.
Reimbursement Payments. Eight of the Company's cost-reimbursed nursing
agencies receive periodic interim payments for services provided. These
payments, which are received bi-weekly and are adjusted quarterly to reflect the
volume of home health services actually provided, are scheduled to be
discontinued upon implementation of the prospective payment system. The
discontinuance of periodic interim payments could result in a material adverse
effect on the Company's cash flow. See "Business -- Payor Mix" and
"--Reimbursement Payments" in the Company's Annual Report on Form 10-K for the
year ended June 30, 1998.
Reimbursement from Medicare and Medicaid for certain services is subject to
audit and retroactive adjustment. Retroactive adjustments made to prior-year
cost reports could have a material adverse effect on the Company's financial
condition or results of operations.
Risks Associated with Collection of Accounts Receivable. The home health
care industry is generally characterized by long collection cycles for accounts
receivable due to the complex and time consuming requirements for obtaining
reimbursement from private and governmental third party payors. The Company
experienced an increase in its days net revenues outstanding from 104 at June
30, 1997 to 132 for June 30, 1998, using a three-month rolling average
calculation. The
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increase in days net revenues outstanding resulted from a decrease in net
revenues of $8.7 million from the three months ended June 30, 1997 to the three
months ended June 30, 1998, as well as an increase of $2.5 million in net
accounts receivable from June 30, 1997 to June 30, 1998. The decrease in net
revenues resulted from various factors. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Net Revenues" and
"--Internal Growth" in the Company's Annual Report on Form 10-K for the year
ended June 30, 1998. The increase in accounts receivable was principally due to
internal growth and certain managed care payors continuing to subject the
Company to increasingly protracted payment terms and increasing attempts by
these and other non-governmental payors to deny payments for products and
services furnished to their subscribers.
At June 30, 1998, approximately 39.2% of the Company's net revenues were
derived from managed care and other non-governmental payors. The increase in the
length of time required to collect receivables owed by managed care and other
payors is an industry-wide issue. A continuation of the lengthening of the
amount of time required to collect accounts receivables from managed care
organizations or other payors or the Company's inability to decrease days net
revenues outstanding could have a material adverse effect on the Company's
financial condition or results of operations. During fiscal 1998 the Company
terminated relationships with certain managed care organizations and is in the
process of reviewing its managed care contracts. See "--Dependence on
Relationships with Referral Sources." There can be no assurance that the
Company's days net revenues outstanding will not continue to increase if these
payors continue to delay reimbursing the Company for its services. See
"Business -- Payor Mix" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" in the
Company's Annual Report on Form 10-K for the year ended June 30, 1998.
Pricing Pressures. Medicare, Medicaid and other payors, including managed
care organizations and traditional indemnity insurers, are attempting to control
and limit increases in health care costs and, in some cases, are decreasing
reimbursement rates. While the Company's net revenues from managed care and
other non-governmental payors have increased and are expected to continue to
increase, payments per visit from managed care organizations typically have been
lower than cost-based reimbursement from Medicare and reimbursement from other
payors for nursing and related patient services, resulting in reduced
profitability on such services. Other payor and employer groups, including
Medicare, are exerting pricing pressure on home health care providers, resulting
in reduced profitability. Such pricing pressures could have a material adverse
effect on the Company's financial condition or results of operations. During
fiscal 1998 the Company terminated relationships with certain managed care
organizations and is in the process of reviewing its managed care contracts.
See "--Dependence on Relationships with Referral Sources."
Restructuring Initiatives. In an effort to reduce operating costs and
respond to the reductions in Medicare reimbursement, the Company implemented a
restructuring plan during fiscal 1998. This plan included cost reduction and
office consolidation initiatives and resulted in $5.2 million in restructuring
costs being recorded during fiscal 1998. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Restructuring
Initiatives" in the Company's
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Annual Report on Form 10-K for the year ended June 30, 1998. There can be no
assurance that the Company will be able to achieve the expected cost savings or
synergies from the closing or consolidation of offices and its other
restructuring efforts or will be able to reduce costs without negatively
impacting operations.
Need for Additional Financing. The Company believes cash on hand, cash
flows generated from operations and the Company's ability to finance certain
capital expenditures through leasing arrangements should be adequate to enable
the Company to fund its operations. The Company's future capital requirements
will depend upon many factors, including the performance of the Company's
business, as well as other factors that are not within the Company's control,
including competitive conditions and regulatory or other government actions.
However, there can be no assurance that the Company's cash on hand, internally
generated funds and funds from any financings will prove to be sufficient to
fund the Company's operations. In the event that the Company's cash on hand,
internally generated funds and funds from any financings prove to be
insufficient to fund the Company's operations, the Company may be required to
adjust its cost structure, delay or abandon its development and expansion plans,
and/or seek additional funds.
Risks Related to Goodwill. During fiscal 1998, the Company wrote-off $23.5
million of goodwill recorded in connection with certain acquisitions. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Results of Operations - Fiscal 1998 Compared with Fiscal 1997 -
Writedown of Goodwill" in the Company's Annual Report on Form 10-K for the year
ended June 30, 1998. At June 30, 1998, after recording this writedown, goodwill
resulting from acquisitions was approximately $46.8 million, or approximately
34.2% of total assets. Goodwill is the excess of cost over the fair value of
the net assets of businesses acquired. There can be no assurance that the
Company will ever realize the value of such goodwill. This goodwill is being
amortized on a straight-line basis over 20 to 25 years. The Company will
continue to evaluate on a regular basis whether events or circumstances have
occurred that indicate all or a portion of the carrying amount of goodwill may
no longer be recoverable, in which case an additional charge to earnings would
become necessary.
Although at June 30, 1998 the net unamortized balance of goodwill is not
considered to be impaired under generally accepted accounting principles, any
such future determination requiring the write-off of a significant portion of
unamortized goodwill could have a material adverse effect on the Company's
financial condition or results of operations. Additionally, reimbursement
regulations have been issued related to reimbursement for certain mobile
diagnostic services. These regulations could eliminate payment for mobile
diagnostic services to the Company. Goodwill associated with mobile diagnostic
services acquisitions aggregates approximately $1.0 million at June 30, 1998.
Mobile diagnostic services represent less than 3% of the Company's current net
revenues.
Internal Growth Rates. The Company is a leading provider of comprehensive
home health care services, delivering nursing and related patient services,
respiratory therapy, infusion therapy and durable medical equipment from 44
branch locations in nine states. Since fiscal 1995, the
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Company generated a compound annual growth rate in net revenues of 39.6% through
a combination of acquisitions and internal growth. The Company experienced
internal growth rates in net revenues of 19%, 16% and 4% for fiscal years 1996,
1997 and 1998, respectively. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Internal Growth" in the
Company's Annual Report on Form 10-K for the year ended June 30, 1998. Because
of matters discussed in this prospectus that may be beyond the control of the
Company, there can be no assurance that the Company can increase or maintain the
internal growth rates at levels experienced in previous years.
Dependence on Relationships with Referral Sources. The growth and
profitability of the Company depends on its ability to establish and maintain
close working relationships with referral sources, including payors, hospitals,
physicians and other health care professionals. Managed care organizations,
which are exerting an increasing amount of influence over the health care
industry, have been consolidating to enhance their ability to impact the
delivery of health care services. As managed care organizations have increased
and continue to increase their market share in regions in which the Company
operates, these organizations have become and will continue to become
increasingly important to the Company as referral sources. From fiscal 1996 to
fiscal 1998, the Company's net revenues derived from managed care and other non-
governmental payors increased from 37.8% to 39.2%. While the Company's net
revenues from managed care and other non-governmental payors have increased and
are expected to continue to increase, payments per visit from managed care
organizations typically have been lower than cost-based reimbursement from
Medicare and reimbursement from other payors for the Company's services,
resulting in reduced profitability on such services.
During fiscal 1998 the Company terminated its relationship with certain
managed care organizations as a result of these organizations continuing to
subject the Company to increasingly protracted payment terms and increasing
attempts to deny payments for products and services furnished to their
subscribers. Additionally, the Company is in the process of reviewing all of
its managed care contracts and determining if the contracts meet the Company's
profitability guidelines. As a result of these terminations and other factors,
the Company's internal growth rates declined during fiscal 1998. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Internal Growth" in the Company's Annual Report on Form 10-K for
the year ended June 30, 1998.
There can be no assurance the Company will be able to successfully maintain
existing referral sources or develop and maintain new referral sources. The loss
of any significant referral sources or the failure to develop any new referral
sources could have a material adverse effect on the Company's financial
condition or results of operations.
Year 2000 Computer Concerns. The impact of Year 2000 computer problems on
the Medicare and Medicaid programs, other federal or state health care programs
and other third party payors could affect prompt reimbursement to the Company in
the future unless and until such potential problems are corrected. The
Company's major management information system software
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programs are vendor-supplied and are scheduled by the vendors to be Year 2000
compliant by December 31, 1999. The Company expects to be Year 2000 compliant by
December 31, 1999 and does not expect to incur significant costs in attaining
compliance. However, there can be no assurance the Company has adequately
assessed or identified all aspects of its business which may be impacted by Year
2000 issues which may arise after December 31, 1999. Additionally, there can be
no assurance that vendors who supply the Company's major management information
system software will adequately address and correct any and all Year 2000 issues
prior to January 1, 2000. As a result of the foregoing, there can be no
assurance that Year 2000 computer problems which may impact the Company or its
payors will not have a material adverse effect on the Company's financial
condition or results of operations.
Potential Risks Associated with Acquisitions and Expansion. While the
Company completed fourteen acquisitions between fiscal 1996 and 1997, it
completed no acquisitions during fiscal 1998. As a result of the uncertainty of
the outcome of additional legislative and regulatory changes in the system of
Medicare reimbursement, the Company has slowed its growth through acquisitions.
In addition, the Company is restricted by its senior credit facility from
engaging in acquisitions. Management believes that as a result of Medicare
legislative and regulatory changes and managed care and other competitive
pressures, the home health care industry will continue to consolidate. See
"Business -- Industry Overview," "--Payor Mix" and "--Government Regulation"
in the Company's Annual Report on Form 10-K for the year ended June 30, 1998.
The Company believes it will be positioned to execute its acquisition strategy
once Medicare reimbursement regulation uncertainties and the Company's capital
constraint issues are resolved.
When evaluating acquisitions, the Company seeks potential acquisition
candidates that would complement or expand its current services. In attempting
to make acquisitions, the Company competes with other providers, some of which
have greater financial resources than the Company. In addition, since the
consideration for acquired businesses may involve cash, notes or the issuance of
shares of common stock, options or warrants, existing stockholders may
experience dilution in the value of their shares of common stock in connection
with such acquisitions. Moreover, many states have Certificate of Need,
licensure, or similar laws which generally require that the appropriate state
agency approve certain acquisitions and/or determine that a need exists for new
services and capital expenditures or other changes prior to such new services
being added. Additionally, the Health Care Financing Administration ("HCFA"),
the department of the U.S. Department of Health and Human Service responsible
for the rules governing Medicare and Medicaid, may also require the
redesignation of branch offices as separate providers. To the extent that
Certificates of Need or other approvals are required for expansion of Company
operations, either through acquisitions or provision of new services, such
expansion could be adversely affected by the failure or inability to obtain the
necessary approvals, changes in the standards applicable to such approvals, and
possible delays and expenses associated with such approvals.
There can be no assurance that the Company will be able to successfully
negotiate, finance or integrate acquisitions. Acquisitions involve numerous
short- and long-term risks, including loss of referral sources, diversion of
management's attention, failure to retain key personnel, loss of net
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revenues of the acquired companies, inability to integrate acquisitions
(particularly management information systems) without material disruptions and
unexpected expenses, the possibility of the acquired businesses becoming subject
to regulatory sanctions, potential undisclosed liabilities and the continuing
value of acquired intangible assets. There can be no assurance that any given
acquisition will be consummated, or if consummated, will not materially
adversely affect the Company's financial condition or results of operations.
Additionally, because of matters discussed herein that may be beyond the control
of the Company and the emerging trend of other health care providers, such as
long-term care providers, seeking to acquire home health care businesses, there
can be no assurance that suitable acquisitions will continue to be identified or
that acquisitions can be consummated on acceptable terms.
Potential Risks Associated with Geographic Expansion. In pursuing its
growth strategy, the Company has expanded its operations into new geographic
markets. When entering new geographic markets, the Company generally seeks to
increase its net revenues by establishing relationships with new referral
sources or increasing business with existing referral sources and will be
reliant to a large extent on local management, who have important relationships
with local referral sources. In addition, the Company will be required to
comply with laws and regulations of states that differ from those in which the
Company currently operates, and may face competitors with greater knowledge of
such local markets. There can be no assurance that if acquisitions are
consummated, the Company will be able to increase its net revenues through new
or existing referral sources or otherwise effectively compete in new geographic
markets in which these companies operate.
Risks Associated with Managed Care Contracts. As an increasing percentage
of patients become members of managed care organizations, the Company believes
that it will be required to deliver its products and services to health
maintenance organizations, employer groups and other private third party payors
on a capitated or other risk sharing basis. Under some of these arrangements, a
health care provider accepts a predetermined amount per member per month in
exchange for providing all covered services to beneficiaries of the payor during
the month. Such arrangements pass much of the economic risk of providing care
from the payor to the provider. To the extent that patients or enrollees
covered by such contracts require more frequent or extensive care than is
anticipated, additional costs would be incurred, resulting in a reduction in
margins. In the worst case, net revenues associated with risk-sharing contracts
or capitated provider networks would be insufficient to cover the costs of the
services provided. Any such reduction of net revenues could have a material
adverse effect on the Company.
Management of Rapid Growth. The Company has experienced rapid growth in
its business and number of employees through acquisition and internal growth.
Continued rapid growth may impair the Company's ability to efficiently provide
its home health care services and products and to adequately manage its
employees. While the Company is taking steps to manage its rapid growth, future
results of operations could be materially adversely affected if it is unable to
do so effectively. The Company implemented a restructuring plan during fiscal
1998. See "--Restructuring Initiatives." Also see "Management's Discussion
and Analysis of Financial Condition and Results
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of Operations -- Restructuring Initiatives" in the Company's Annual Report on
Form 10-K for the year ended June 30, 1998.
Competition. The home health care industry is highly competitive and
includes national, regional and local providers. The Company competes with a
large number of companies in all areas in which its operations are located. The
Company's competitors include major national and regional companies, hospital-
based programs, numerous local providers and nursing agencies. Some current and
potential competitors have or may obtain significantly greater financial and
marketing resources than the Company. Accordingly, other companies, including
managed care organizations, hospitals, long-term care providers and health care
providers that currently are not serving the home health care market, may become
competitors. As a result, the Company could encounter increased competition in
the future that may limit its ability to maintain or increase its market share
or otherwise materially adversely affect the Company's financial condition or
results of operations.
Regulatory Environment. The Company is subject to extensive regulation
which govern financial and other arrangements between healthcare providers at
both the federal and state level. At the federal level, such laws include (i)
the Anti-Kickback Statute, which generally prohibits the offer, payment,
solicitation or receipt of any remuneration in return for the referral of
Medicare and Medicaid patients or the purchasing, leasing, ordering or arranging
for any good, facility services or items for which payment can be made under
Medicare and Medicaid, federal and state health care programs, (ii) the Federal
False Claims Act, which prohibits the submission for payment to the federal
government of fraudulent claims, and (iii) "Stark legislation," which generally
prohibits, with limited exceptions, the referrals of patients by a physician to
providers of "designated health services" under the Medicare and Medicaid
programs, including home health services, physical therapy and occupational
therapy, where the physician has a financial relationship with the provider.
Violations of these provisions may result in civil and criminal penalties, loss
of licensure and exclusion from participation in the Medicare and Medicaid
programs. Many states have also adopted statutes and regulations which prohibit
provider referrals to an entity in which the provider has a financial interest,
remuneration or fee-splitting arrangements between health care providers for
patient referrals and other types of financial arrangements with health care
providers. Sanctions for violations of these state regulations include loss of
licensure and civil and criminal penalties. See "Business -- Government
Regulation" in the Company's Annual Report on Form 10-K for the year ended June
30, 1998.
The federal government, private insurers and various state enforcement
agencies have increased their scrutiny of provider business practices and
claims, particularly in the areas of home health care services and products in
an effort to identify and prosecute parties engaged in fraudulent and abusive
practices. In May 1995, the Clinton Administration instituted Operation Restore
Trust ("ORT"), a health care fraud and abuse initiative focusing on nursing
homes, home health care agencies and durable medical equipment companies. ORT,
which initially focused on companies located in California, Florida, Illinois,
New York and Texas, the states with the largest Medicare populations, has been
expanded to all fifty states. See "Business - Government Regulation" in the
Company's Annual Report on Form 10-K for the year ended June 30, 1998. While the
Company believes that it is in material compliance with such laws, there can be
no assurance that
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the practices of the Company, if reviewed, would be found to be in full
compliance with such laws or interpretations of such laws.
Additionally, HCFA has implemented "Wedge Surveys" in at least 13 states,
including Connecticut, Florida, Tennessee, Illinois, Indiana, Massachusetts,
Minnesota, Ohio, Oklahoma, Texas, Utah, Virginia and Wyoming, whereby HCFA
completes ORT-type surveys on a much smaller scale. Assuming the reviewer
uncovered nothing significant during its survey, the home health agency then has
the option to repay the amount determined by HCFA or undergo a broader review of
its claims. If the survey uncovers significant problems, the matter may undergo
further review. See "Business -- Government Regulation" in the Company's Annual
Report on Form 10-K for the year ended June 30, 1998.
While the Company believes that it is in material compliance with the fraud
and abuse and self-referral laws, there can be no assurance that the practices
of the Company, if reviewed, would be found to be in full compliance with such
requirements, as such requirements ultimately may be interpreted. Although the
Company does not believe it has violated any fraud and abuse laws, there can be
no assurance that future related legislation, either health care or budgetary,
related regulatory changes or interpretations of such regulations, will not have
a material adverse effect on the future operations of the Company.
Certificate of Need, Permits and Licensure. The federal government and all
states regulate various aspects of the home health care industry. Such laws
include certificates of need, certification under Medicare and Medicaid and
other third party programs, as well as state laws which may impose licensure
requirements on home health care agencies. The failure to obtain, renew or
maintain any of the required regulatory approvals or licenses could adversely
affect the Company's financial condition or results of operations. There can be
no assurance that either the states or the federal government will not change
current interpretations of existing regulations or impose additional regulations
upon the Company's activities which might adversely affect its financial
condition or results of operations.
Geographic Concentration. Approximately $58.6 million, or 33.6%, of the
Company's net revenues in fiscal 1998 were derived from the Company's operations
in Florida and approximately $106.9 million, or 61.4 %, of the Company's net
revenues in fiscal 1998 were derived from the Company's operations in Florida
and the Mid-Atlantic operating areas. Unless and until the Company's operations
become more diversified geographically (as a result of acquisitions or internal
expansion), adverse economic, regulatory, or other developments in Florida or
the Mid-Atlantic states could have a material adverse effect on the Company's
financial condition or results of operations.
Potential Volatility in Stock Price. Over the past year, the Company's
stock price has been subject to significant volatility. If net revenues or
earnings fail to meet expectations of the investment community, or if the
Company announces other information that may be deemed to be negative by the
investment community, such as the issuance of additional common stock, or other
11
<PAGE>
changes in the Company's capital structure, there could be an immediate and
significant adverse impact on the trading price for the Company's common stock.
Regardless of the Company's performance, broad market fluctuations and general
economic or political conditions as well as health care-related market
announcements from time to time may also adversely affect the price of the
Company's stock. As a result, changes in the Company's stock price can be
sudden and unpredictable.
Quarterly Fluctuations in Operating Results. Results of operations for any
quarter are not necessarily indicative of results of operations for any future
period or for a full fiscal year. The Company has experienced and expects to
continue to experience lower same-branch net revenues during the first fiscal
quarter which ends on September 30 as compared to the immediately preceding
quarter due to fewer referrals during the summer months. The Company anticipates
that the effects of seasonality will continue for the foreseeable future. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Quarterly Results" in the Company's Annual Report on Form 10-K for
the year ended June 30, 1998.
Dependence on Key Personnel. The Company's success is highly dependent on
its President, Chief Executive Officer and Chairman of the Board, Bruce J.
Feldman and a number of its other key management and professional personnel.
The loss of one or more of these personnel could have a material adverse effect
on the Company's financial condition or results of operations. The Company's
success will also depend in part on its ability to retain and attract additional
qualified management and professional personnel. Competition for such personnel
in the home health care industry is strong. There can be no assurance that the
Company will be successful in attracting or retaining the personnel it requires.
Pending and Threatened Litigation. The Company is a party to certain
pending and threatened legal actions. See "Business - Legal Proceedings" in the
Company's Annual Report on Form 10-K for the year ended June 30, 1998 and
"Selling Stockholders." While the Company believes it has adequate legal
defenses and/or insurance coverage for these actions, there can be no assurance
of favorable outcomes regarding these legal actions or that recovery of any
insurance proceeds will be sufficient to cover any judgments, settlements or
costs relating to any pending or future legal proceedings. Additionally, any
judgments, settlements or costs relating to pending or future legal proceedings
which are not covered by insurance could have a material adverse effect on the
Company's results of operations or financial condition.
Potential Liability. The Company maintains a commercial general liability
policy which includes product liability coverage on the medical equipment that
it sells or rents with both per-occurrence and annual aggregate coverage limits
of $1.0 million and $3.0 million, respectively. In addition, the Company has an
umbrella liability or "excess" policy with a single limit of $10.0 million for
any one occurrence in excess of certain minimum amounts. The umbrella policy
excludes professional liability. The Company maintains a health care agency
professional liability insurance policy with limits of $4.0 million per claim
and an annual aggregate limit of $6.0 million. Health care professionals with
whom the Company has contracted must provide evidence that they
12
<PAGE>
carry at least $1.0 million of insurance coverage, although there is no
assurance that such providers will continue to do so, or that such insurance is,
or will continue to be, adequate or available to protect the Company, or that
the Company will not have liability independent of that of such providers and/or
their insurance coverage. While the Company believes that it has adequate
insurance coverage, there can be no assurance that any such insurance will be
sufficient to cover any judgments, settlements or costs relating to any pending
or future legal proceedings (including any related judgments, settlements or
costs) or that any such insurance will be available to the Company in the future
on satisfactory terms, if at all. Any judgments, settlements or costs relating
to pending or future legal proceedings which are not covered by insurance could
have a material adverse effect on the Company's results of operations or
financial condition.
Potential Effect of Anti-Takeover Provisions; Issuance of Preferred Stock.
Certain provisions of the Pennsylvania Business Corporation Law, the Company's
Amended Articles of Incorporation and the Company's Restated Bylaws, such as a
staggered board of directors and limitations on stockholder actions and
proposals, may have the effect of discouraging, delaying or preventing a change
of control of the Company which could adversely affect the market price of the
Company's common stock. In addition, the Company's board of directors has the
authority to issue shares of preferred stock without shareholder approval and
upon such terms as the board of directors may determine. While the Company has
no present plans to issue any shares of preferred stock, the rights of the
holders of the Company's common stock will be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future.
Compliance Program. In August, 1998, the Department of Health and Human
Services ("HHS") issued compliance program guidance for home health agencies.
The guidance encourages home health agencies to develop effective internal
controls that promote adherence to applicable federal and state law and program
requirements of federal, state and private health plans. The absence of a
compliance program or an incomplete or ineffective compliance program may not be
regarded favorably by HHS and could negatively affect government audits,
investigations, and/or inspections. During fiscal 1998, the Company implemented
an internal Compliance Program. Although management believes the Compliance
Program will be effective and will assist the Company in monitoring and
enhancing the effectiveness of its internal controls, there can be no assurance
that the Compliance Program will identify all potential compliance issues or
that as drafted it will be viewed as complete or effective under audit or
inspection by third party payors.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares of
common stock offered under this prospectus by the selling stockholders.
13
<PAGE>
SELLING STOCKHOLDERS
The shares covered by this prospectus are being registered to permit public
secondary trading in the shares and the selling stockholders may offer the
shares for resale from time to time.
The following table sets forth certain information as of the date of this
prospectus regarding the ownership of shares of the Company's common stock by
each selling stockholder and as adjusted to give effect to the sale of the
shares offered hereby. The selling stockholders may from time to time offer and
sell pursuant to this prospectus any or all of the shares. There can be no
assurance that all or any of the shares offered hereby will be sold.
<TABLE>
<CAPTION>
NAME # OF SHARES # OF SHARES # OF SHARES % OF SHARES
OF OWNED BEFORE BEING OFFERED OWNED AFTER OWNED AFTER
SELLING STOCKHOLDER THE OFFERING FOR SALE THE OFFERING THE OFFERING
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph Falkson 278,353(1) 278,353 --- ---
Susan Falkson 69,588(1) 69,588 --- ---
Michael Falkson 115,980(1) 115,980 --- ---
Peter Falkson 115,980(1) 115,980 --- ---
</TABLE>
- ----------------------
(1) Of these shares 68,408, 17,102, 28,503 and 28,503 shares are being held for
the account of Joseph Falkson, Susan Falkson, Michael Falkson and Peter
Falkson, respectively, in escrow pursuant to the terms of an escrow
agreement among the selling stockholders, the Company, and an escrow agent
(the "Escrow Agreement") and may be sold only upon release of the shares
from the escrow. Without the prior approval of the Company, the shares
held in escrow may not be released until January 2, 1999.
The selling stockholders acquired their shares of the Company's common
stock in connection with the acquisition by the Company of a business formerly
owned by the selling stockholders. On June 8, 1998, the selling stockholders
commenced litigation against the Company and certain named officers of the
Company. This lawsuit was filed in federal court in Boston, Massachusetts. Among
other claims, the plaintiffs allege that delays in the issuance and registration
of shares pursuant to a formula in a Subscription Agreement between the Company
and the plaintiffs has resulted in damages, including a loss in excess of $1
million. The claims are for breach of contract, breach of good faith and fair
dealing, misrepresentation, fraudulent inducement and violation of the
Massachusetts Unfair and Deceptive Trade Practices Act. As relief, the
plaintiffs seek specific performance of the Subscription Agreement,
consequential damages resulting from the alleged breaches, a declaratory
judgment, punitive damages for the fraud based claims and an award of costs and
attorneys fees. The Company intends to vigorously defend against these claims.
The Company filed a motion to dismiss or alternatively to transfer the action.
This motion was recently denied by the court.
14
<PAGE>
PLAN OF DISTRIBUTION
The shares of the Company's common stock offered by the selling
stockholders pursuant to this prospectus may be sold from time to time by the
selling stockholders, or by pledgees, donees, transferees or other successors in
interest. Such sales may be made from time to time, pursuant to this prospectus
or Rule 144 under the Securities Act (or any other applicable exemption from
registration under the Securities Act), in the over-the-counter market, on any
exchange or quotation system on which the Company's common stock may be admitted
for trading otherwise at prices and at terms then prevailing or at prices
related to the then-current market price, or in negotiated transactions. The
shares may be sold by one or more of the following methods, without limitation:
(a) a block trade in which the broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
prospectus; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (d) face-to-face transactions between the
selling stockholders and purchasers without a broker or dealer. In effecting
sales, brokers or dealers engaged by the selling stockholders may arrange for
other brokers or dealers to participate. Such brokers or dealers may receive
commissions or discounts from the selling stockholders in amounts to be
negotiated immediately prior to the sale. The selling stockholders and any
brokers, dealers or other agents that participate in the distribution of the
shares offered hereby may be deemed to be "underwriters" within the meaning of
the Securities Act, in connection with such sales. In addition, any securities
covered by this prospectus that qualify for sale pursuant to Rule 144 might be
sold under Rule 144 rather than pursuant to this prospectus.
Upon the Company being notified by a selling stockholder that any material
arrangement has been entered into with a broker or dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a prospectus supplement will
be filed, if required, pursuant to Rule 424(c) under the Securities Act,
disclosing (a) the name of each such broker or dealer, (b) the number of shares
involved, (c) the price at which such shares were sold, (d) the commissions paid
or discounts or concessions allowed to such broker(s) or dealer(s), where
applicable, (e) that such broker(s) or dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, as supplemented, and (f) other facts material to the
transaction.
The Registration Statement shall remain effective until the date on which
all of the shares included in the Registration Statement have been sold or are
permitted to be sold under Rule 144.
Each selling stockholder is required to pay all expenses relating to the
sale of the shares including any commissions, discounts or other fees payable to
brokers, dealers or agents and any attorney fees or other expenses incurred by
such selling stockholder. In addition, the selling stockholders are required to
pay all expenses incident to the registration of the common stock, including,
without limitation, the filing of this Registration Statement, including all
registration and filing fees, fees and expenses of compliance with state
securities or "blue sky" laws, printing expenses, messenger and delivery
expenses, fees and disbursements of counsel for the Company and all independent
certified public accountants retained by the Company.
15
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act (the
"Registration Statement") with respect to the registration of the shares offered
under this prospectus. This prospectus constitutes a part of the Registration
Statement and, in accordance with the rules of the Commission, omits certain of
the information contained in the Registration Statement. For such information,
reference is made to the Registration Statement and the exhibits thereto.
The Company files annual, quarterly and current reports, proxy statements
and other information with the Commission. You may read and copy any reports,
statements or other information that the Company files at the Commission's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. You may obtain
information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Company's filings with the Commission are also
available to the public on the Commission's internet site at http://www.sec.gov.
You may also inspect the Company's Commission reports and other information at
the office of NASDAQ Operations, 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF INFORMATION FILED WITH THE COMMISSION
The following documents and portions of documents filed by the Company with
the Commission are hereby incorporated by reference into this prospectus and
made a part hereof: (i) the Annual Report on Form 10-K for the year ended June
30, 1998, and (ii) the description of the Common Stock contained under the
heading "Description of Securities" in the Registration Statement on Form 8-A,
dated October 5, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date of this prospectus
shall be deemed to be incorporated by reference herein and to be a part hereof
from the date of filing thereof. Any statement contained herein or in any
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained herein or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed to constitute a part of this prospectus, except
as so modified or superseded.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner to whom a copy of this prospectus has been
delivered, upon written or oral request
16
<PAGE>
of such person, a copy of any or all of the information that has been
incorporated by reference in this prospectus (not including exhibits to such
information unless such exhibits are specifically incorporated by reference into
the information that this prospectus incorporates). Written or oral requests for
such copies should be directed to Home Health Corporation of America, Inc., 2200
Renaissance Boulevard, Suite 300, King of Prussia, Pennsylvania 19406-2755,
Attention: Corporate Secretary, telephone (610) 272-1717.
LEGAL MATTERS
An opinion has been rendered by the law firm of Blank Rome Comisky &
McCauley, LLP, One Logan Square, Philadelphia, Pennsylvania, to the effect that
the shares of the Company's common stock offered by the selling stockholders
under this prospectus are legally issued, fully paid and non-assessable.
EXPERTS
The consolidated balance sheets as of June 30, 1998 and 1997 and the
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended June 30, 1998, incorporated by
reference in this prospectus, have been incorporated herein in reliance upon the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of such firm as experts in accounting and auditing.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table shows the estimated expenses of the issuance and
distribution of the securities offered hereby.
Registration expenses...................................... $ 240
Legal fees and expenses.................................... 7,000
Accounting fees and expenses............................... 3,000
Printing fees and expenses................................. 2,500
Miscellaneous.............................................. 500
------------
Total...................................................... $ 13,240
============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Sections 1741 through 1750 of Subchapter D, Chapter 17, of the
Pennsylvania Business Corporation Law of 1988 (the "BCL") contain
provisions for mandatory and discretionary indemnification of a
corporation's directors, officers and other personnel, and related
matters.
Under Section 1741, subject to certain limitations, a corporation has
the power to indemnify directors and officers under certain prescribed
circumstances against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with an action or proceeding, whether civil, criminal,
administrative or investigative, to which any of them is a party by reason
of his being a representative, director or officer of the corporation or
serving at the request of the corporation as a representative of another
corporation, partnership, joint venture, trust or other enterprise, if he
acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to
any criminal proceeding, had no reasonable cause to believe his conduct
was unlawful. Under Section 1743, indemnification is mandatory to the
extent that the officer or director has been successful on the merits or
otherwise in defense of any action or proceeding if the appropriate
standards of conduct are met.
Section 1742 provides for indemnification in derivative actions
except in respect of any claim, issue or matter as to which the person has
been adjudged to be liable to the corporation unless and only to the
extent that the proper court determines upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, the person is fairly and reasonably entitled to indemnity for the
expenses that the court deems proper.
II-1
<PAGE>
Section 1744 provides that, unless ordered by a court, any indemnification
under Section 1741 or 1742 shall be made by the corporation only as authorized
in the specific case upon a determination that the representative met the
applicable standard of conduct, and such determination will be made by the board
of directors (i) by a majority vote of a quorum of directors not parties to the
action or proceeding; (ii) if a quorum is not obtainable, or if obtainable and a
majority of disinterested directors so directs, by independent legal counsel; or
(iii) by the shareholders. Section 1745 provides that expenses incurred by an
officer, director, employee or agent in defending a civil or criminal action or
proceeding may be paid by the corporation in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by or on behalf of such
person to repay such amount if it shall ultimately be determined that he or she
is not entitled to be indemnified by the corporation.
Section 1746 provides generally that, except in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness, the
indemnification and advancement of expenses provided by Subchapter 17D of the
BCL shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders of disinterested directors or otherwise, both as
to action in his or her official capacity and as to action in another capacity
while holding that office.
Section 1747 also grants to a corporation the power to purchase and
maintain insurance on behalf of any director or officer against any liability
incurred by him or her in his or her capacity as officer or director, whether or
not the corporation would have the power to indemnify him or her against the
liability under Subchapter 17D of the BCL.
Section 1748 and 1749 extend the indemnification and advancement of
expenses provisions contained in Subchapter 17D of the BCL to successor
corporations in fundamental changes and to representatives serving as
fiduciaries of employee benefit plans.
Section 1750 provides that the indemnification and advancement of expense
provided by, or granted pursuant to, Subchapter 17D of the BCL, shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of the heirs and personal representative of such person.
The Company's Bylaws provide in general that the Company shall indemnify
its officers and directors to the fullest extent authorized by law.
The Company currently has directors' and officers' liability insurance
which covers certain liabilities, including liabilities to the Company and its
shareholders, in the amount of $5 million.
II-2
<PAGE>
ITEM 16. EXHIBITS.
NUMBER DOCUMENT
- ------ --------
5.1 Opinion of Blank Rome Comisky & McCauley LLP as to the validity of the
issuance of the shares of Common Stock to be registered.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Blank Rome Comisky & McCauley LLP (included in Exhibit 5.1).
24.1 Power of attorney of certain signatories (included on the Signature
Page).
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(4) It will remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(5) It will include any material information with respect to the plan of
distribution by means of a post-effective amendment not previously disclosed in
this registration statement or any material change to such information in this
registration statement.
II-3
<PAGE>
(6) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in King of Prussia, Pennsylvania, on the date indicated.
HOME HEALTH CORPORATION OF AMERICA, INC.
Date: October 14, 1998 By: /s/ Bruce J. Feldman
--------------------
Bruce J. Feldman
President and Chief Executive Officer
Each person whose signature appears below hereby authorizes Bruce J.
Feldman to sign on his behalf individually and in each capacity stated below,
and to file with the Securities and Exchange Commission any amendments,
including post-effective amendments, to this Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, in the
capacities indicated, on October 14, 1998.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY
- --------- --------
<S> <C>
/s/ Bruce J. Feldman Chairman of the Board, President
- --------------------------------- and Chief Executive Officer
Bruce J. Feldman (Principal Executive Officer)
/s/ David S. Geller Chief Financial Officer
- --------------------------------- (Principal Accounting Officer)
David S. Geller
/s/ G. Michael Bellenghi Director
- ---------------------------------
G. Michael Bellenghi
/s/ Harvey Machaver Director
- ---------------------------------
Harvey Machaver
/s/ Donald M. Gleklen Director
- ---------------------------------
Donald M. Gleklen
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
NUMBER DOCUMENT
------ --------
5.1 Opinion of Blank Rome Comisky & McCauley LLP.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Blank Rome Comisky & McCauley LLP (included in Exhibit
5.1).
24.1 Power of attorney of certain signatories (included on the
Signature Page).
S-1
<PAGE>
EXHIBIT 5.1
BLANK ROME COMISKY & MCCAULEY LLP
COUNSELORS AT LAW
One Logan Square
Philadelphia, Pennsylvania 19103-6998
(215) 569-5500
Fax: (215) 569-5555
October 14, 1998
Home Health Corporation of America, Inc.
2200 Renaissance Boulevard
Suite 300
King of Prussia, PA 19406-2755
Ladies and Gentlemen:
We have acted as counsel to Home Health Corporation of America, Inc.
(the "Company") in connection with the preparation of the Registration
Statement on Form S-3 ("Registration Statement") to be filed by the
Company with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, relating to the registration of 579,901 shares of
common stock, no par value ("Common Stock"), which have been included in
the Registration Statement for the respective accounts of the persons
identified in the Registration Statement as selling stockholders.
Although as counsel to the Company we have advised the Company in
connection with a variety of matters referred to us by it, our services
are limited to specific matters so referred. Consequently, we may not have
knowledge of many transactions in which the Company has engaged or its
day-to-day operations.
In rendering this opinion, we have examined the following documents: (i)
the Company's Articles of Incorporation and Bylaws, as amended and restated,
(ii) the Company's Minute Books; and (iii) the Registration Statement. We have
assumed and relied, as to questions of fact and mixed questions of law and fact,
on the truth, completeness,
S-2
<PAGE>
authenticity and due authorization of all documents and records examined and the
genuineness of all signatures.
We have not made any independent investigation in rendering this opinion
other than the document examination described. Our opinion is therefore
qualified in all respects by the scope of that document examination. We make no
representation as to the sufficiency of our investigation for your purposes.
This opinion is limited to the laws of the Commonwealth of Pennsylvania. In
rendering this opinion we have assumed (i) compliance with all other laws,
including federal laws and (ii) compliance with all Pennsylvania securities and
antitrust laws.
Based upon and subject to the foregoing, we are of the opinion that the
shares of Common Stock are legally issued, fully paid and non-assessable.
This opinion is given as of the date hereof. We assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur.
This opinion is strictly limited to the matters stated herein and no other
or more extensive opinion is intended, implied or to be inferred beyond the
matters expressly stated herein.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to us under "Item 5. Interests of Named Experts
and Counsel" in the Registration Statement.
Sincerely,
BLANK ROME COMISKY & McCAULEY LLP
/s/ Blank Rome Comisky & McCauley LLP
----------------------------------------------
S-3
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated September 2, 1998, except for
paragraph 1 of note 5, for which the date is September 23, 1998, on our audits
of the consolidated financial statements and financial statement schedule of
Home Health Corporation of America, Inc. included in the Home Health Corporation
of America, Inc. Annual Report on Form 10-K for the fiscal year ended June 30,
1998 filed with the Securities and Exchange Commission. We also consent to the
reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
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2400 Eleven Penn Center
Philadelphia, Pennsylvania
October 14, 1998
S-4
