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As filed with the Securities and Exchange Commission on November 4, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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QUADRAMED CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 7371 52-1992861
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
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1003 CUTTING BLVD., SUITE 200
RICHMOND, CALIFORNIA 94804
(510) 620-2340
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
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KEITH M. ROBERTS
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER
AND GENERAL COUNSEL
QUADRAMED CORPORATION
1003 CUTTING BLVD., SUITE 200
RICHMOND, CALIFORNIA 94804
(510) 620-2340
(Name, address, including zip code, and telephone number, including
area code, of agent for service of process)
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Copies to:
SCOTT D. LESTER, ESQ.
BROBECK, PHLEGER & HARRISON LLP
ONE MARKET STREET
SPEAR STREET TOWER
SAN FRANCISCO, CALIFORNIA 94105
(415) 442-0900
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to a 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. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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, 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
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TITLE OF EACH CLASS OF AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE(1) PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $.01................ 2,860,237 Shares $19.72 $56,403,873 $15,680
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933 and based upon the
average of the high and low prices of the Company's Common Stock as
reported on the Nasdaq National Market on October 28, 1998.
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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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 4, 1998
2,860,237 SHARES
QUADRAMED CORPORATION
COMMON STOCK
This Prospectus relates to the public offering (the "Offering") of
2,860,237 shares (the "Shares") of Common Stock, $.01 par value (the "Common
Stock"), of QuadraMed Corporation. ("QuadraMed," the "Company" or the
"Registrant") by certain stockholders of the Company. All of the 2,860,237
Shares which may be offered hereby were received by stockholders of the Company
in connection with the acquisition by the Company of all of the outstanding
capital stock and options of Pyramid Health Group, Inc. ("Pyramid"). The
acquisition of Pyramid, which resulted in Pyramid becoming a wholly owned
subsidiary of the Company, was completed pursuant to an Acquisition Agreement
and Plan of Merger dated as of June 1, 1998. The Shares are being registered in
accordance with a registration rights agreement (the "Rights Agreement") among
the Company and the former Pyramid stockholders which was entered into on June
5, 1998. The Rights Agreement requires the Company to effect the registration of
the Shares received by the former Pyramid stockholders for resale to the public.
All of the Shares were issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
provided by Section 4(2) thereof. All of the Shares may be offered by certain
stockholders of the Company or by pledges, donees, transferees or other
successors in interest that receive such shares as a gift, partnership
distribution or other non-sale related transfer (the "Selling Stockholders").
The Shares may be offered by the Selling Stockholders from time to time
in transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the Shares
for whom such broker-dealers may act as agents or to whom they sell as
principals, or both (which compensation as to a particular broker-dealer might
be in excess of customary commissions). See "Plan of Distribution".
The Company will not receive any of the proceeds from the sale of the
Shares. The Company has agreed to bear certain expenses in connection with the
registration of the Shares being offered and sold by the Selling Stockholders.
The Company's Common Stock is quoted on the Nasdaq National Market
under the symbol "QMDC." On November 3, 1998 the closing price on Nasdaq for
the Common Stock was $23.875.
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SEE "RISK FACTORS" BEGINNING ON PAGE 2 OF THIS
PROSPECTUS FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMIS-
SION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE SELLING STOCKHOLDERS AND ANY BROKER-DEALERS THAT PARTICIPATE IN THE
DISTRIBUTION OF ANY OF THE RESALE SHARES MAY BE DEEMED TO BE
"UNDERWRITERS" WITHIN THE MEANING OF THE SECURITIES ACT,
AND ANY COMMISSION RECEIVED BY THEM AND ANY PROFIT ON
THE SHARES PURCHASED BY THEM MAY BE DEEMED TO BE
UNDERWRITING COMMISSIONS OR DISCOUNTS UNDER THE
SECURITIES ACT. SEE "PLAN OF DISTRIBUTION."
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The date of this Prospectus is November 4, 1998.
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PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus and is not intended to be a complete description of the
matters covered in this Prospectus. This summary is subject to and qualified in
its entirety by reference to the more detailed information contained elsewhere
in this Prospectus and in the documents incorporated by reference in this
Prospectus. Stockholders are urged to read carefully the entire Prospectus. As
used in this Prospectus, unless otherwise indicated or the context otherwise
requires, all references to "QuadraMed" or the "Company" refer to QuadraMed
Corporation and, where the context requires, its subsidiaries. This Prospectus
contains forward-looking statements about future results which are subject to
risks and uncertainties. QuadraMed's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
"Risk Factors."
THE COMPANY
QuadraMed Corporation develops, markets and sells software products and
services designed to enable health care providers and payors to increase
operational efficiency, improve cash flow, measure the cost of care and
effectively administer managed care contracts. The Company's suite of products
is an integrated offering of electronic data interchange ("EDI"), financial
management and decision support and compliance solutions for both providers and
payors. In addition, the Company provides compliance, consulting and business
office outsourcing services.
Electronic Data Interchange. These products enable the editing and
formatting of all claims submitted to payors to help ensure accuracy and
completeness, which results in more efficient reimbursement of third party
claims. The Company collects and utilizes detailed clinical and financial
information from customers who license its EDI products. This data, which is
supplemented with similar, publicly-available information, forms the basis of
the Company's proprietary databases for its decision support products.
Financial Management Products. These products utilize the enhanced data
stream created by the Company's EDI products to allow providers to track payor
contract terms and review medical billing information to ensure that bills are
properly coded and include all services rendered. These capabilities facilitate
a provider's ability to obtain timely and accurate reimbursement and to
administer and measure the profitability of managed care contracts. Further, the
Company offers a product that is designed to improve the ability of health care
providers to prevent Medicare and Medicaid fraud and abuse by identifying
potentially fraudulent coding in their medical bills. In addition, the Company's
electronic document imaging products allow its customers to improve work flow
and move toward a paperless office environment.
Decision Support Products. These products include database analysis
software and national and regional benchmark data that enable customers to
perform clinical, financial and marketing analyses. These products utilize the
enhanced data stream created by the Company's EDI and financial management
products to build proprietary databases that enable providers to measure more
accurately the resources consumed in the provision of care and to compare
clinical outcomes against the associated costs.
Business Office Outsourcing and Cash Flow Management Services. These
services are offered to health care providers, many of which are recognizing the
value of outsourcing their business office operations to reduce costs, increase
cash flow and improve operating efficiencies. The Company believes that it
possesses a significant advantage in the provision of outsourcing services due
to its ability to use its own QuanTIM(R) suite of software products and its
centralized cash flow management operations.
Compliance and Consulting Products. These services are offered (i) to
improve the ability of health care providers to prevent Medicare and Medicaid
fraud and abuse by identifying potentially fraudulent coding in a medical bill,
and (ii) to assist clients in increasing the efficiency of the business office.
QuadraMed offers a comprehensive compliance program, including compliance
assessment, auditing and education expertise through a team of over 100
credentialed health care attorneys, medical records professionals, registered
nurses and physicians. These services are augmented by the implementation of
QuadraMed's integrated compliance software products. In addition, QuadraMed
offers consulting and education services in the areas of managed care contract
performance and negotiation, clinically oriented, patient-focused data analysis
and financial management.
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The Company is incorporated under the laws of the State of Delaware.
The Company's executive offices are located at 1003 Cutting Blvd., Suite 200,
Richmond, California 94804 and its telephone number is (510) 620-2340.
THE OFFERING
An aggregate of 2,860,237 shares of Common Stock are being offered for
resale pursuant to this Prospectus. The Company will not receive any proceeds
from the sale of the Shares which may be sold from time to time hereby.
RISK FACTORS
In addition to the other information contained in this Prospectus
included herewith, prospective investors should carefully consider the following
factors in evaluating the Company and its business before purchasing the shares
of Common Stock offered hereby.
HISTORY OF OPERATING LOSSES; UNCERTAIN PROFITABILITY
The Company incurred net losses of $18.8 million, $958,000 and $25.6
million for the years ended December 31, 1995, 1996 and 1997, respectively, and
net losses of $9.4 million, $19.9 million and $3.9 million for the fiscal
quarters ended March 31, June 30 and September 30, 1998. As of September 30,
1998, the Company had an accumulated deficit of $140.9 million. These results
include write-offs for acquired in-process research and development in the years
ended December 31, 1995 and 1997 and the nine months ended September 30, 1998 of
$14.8 million, $21.9 million and $32.7 million, respectively. In connection with
its acquisitions, the Company has and will incur significant non-recurring
charges and will be required to amortize significant expenses related to
goodwill and other intangible assets in future periods. There can be no
assurance that the Company will be able to achieve or sustain revenue growth or
profitability on a quarterly or annual basis.
POTENTIAL VARIABILITY IN QUARTERLY OPERATING RESULTS
The Company's quarterly operating results have varied significantly in
the past and are likely to vary substantially from quarter to quarter in the
future. Quarterly revenues and operating results may fluctuate significantly as
a result of a variety of factors, including: integration of acquired businesses,
variability in demand for the Company's products and services; the number,
timing and significance of announcements and releases of product enhancements
and new products by the Company and its competitors; the timing and significance
of announcements concerning the Company's present or prospective strategic
alliances; the termination of, or a reduction in, offerings of the Company's
products and services; the loss of customers due to consolidation in the health
care industry; delays in product delivery requested by customers; the length of
the sales cycle or the timing of sales; the amount of new potential contracts at
the beginning of any particular quarter; customer budgeting cycles and changes
in customer budgets; investments by the Company in marketing, sales, research
and development, and administrative personnel necessary to support the Company's
anticipated operations; marketing and sales promotional activities; software
defects and other quality factors; and general economic conditions.
The timing of customer purchases is difficult to predict given the
complex procurement decision process associated with most health care providers
and payors. As a result, the Company typically experiences sales cycles that
extend over several quarters. In addition, certain products acquired by the
Company as a result of the acquisition of Integrated Medical Networks in
September, 1998 have higher average selling prices and longer sales cycles than
many of the Company's other products which may increase the volatility of the
Company's quarterly operating results. Moreover, the Company's operating expense
levels, which will increase with the addition of acquired businesses are
relatively fixed. If revenues are below expectations, net income is likely to be
disproportionately adversely affected. Further, it is likely that in some future
quarter the Company's revenues or operating results will be below the
expectations of securities analysts and investors. In such event, the trading
price of the Company's Common Stock would be materially adversely affected.
INTEGRATION OF ACQUIRED COMPANIES INTO THE COMPANY
The Company expects to realize significant benefits from its recent
acquisitions. Realizing these benefits will depend in significant part upon the
successful integration of the businesses, including their products and
employees, with the Company, and there can be no assurance that such integration
will not entail substantial costs,
2.
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delays or other problems or that such integration will be successfully
completed. The effort to integrate the businesses will divert the attention of
management from other matters and will result in significant operational and
administrative expense. Any difficulties encountered in the integration process
could have a material adverse effect on the revenues and operating results of
the Company. In addition, the process of integrating the businesses could cause
the interruption of, or a disruption in, the business of the Company, which
could have a material adverse effect on the operations and financial performance
of the Company. Even if these businesses are successfully integrated into the
Company, the acquired operations may not achieve sales, productivity and
profitability commensurate with the Company's historical or projected operating
results. Failure to achieve such projected results would have a material adverse
effect on the Company's financial performance, and in turn, on the market value
of the Company's Common Stock. There can be no assurance that the Company will
realize any of the anticipated benefits of its acquisitions or that such
acquisitions will enhance the Company's business or financial performance.
DEPENDENCE ON ACQUISITION STRATEGY
The Company intends to continue to expand in substantial part through
acquisitions of products, technologies and businesses. The Company's ability to
expand successfully through acquisitions depends on many factors, including the
successful identification and acquisition of products, technologies or
businesses and management's ability to effectively negotiate and consummate
acquisitions and integrate and operate the new products, technologies or
businesses. There is significant competition for acquisition opportunities in
the Company's industry, which may intensify due to increasing consolidation in
the health care industry, thereby increasing the costs of capitalizing on
acquisition opportunities. The Company competes for acquisition opportunities
with other companies that have significantly greater financial and management
resources than the Company. The inability to successfully identify appropriate
acquisition opportunities, consummate acquisitions or successfully integrate
acquired products, technologies, operations, personnel or businesses could have
a material adverse effect on the Company's business, financial condition and
results of operations. In addition, acquisitions may divert management's
attention from other business concerns, expose the Company to the risks of
entering markets in which it has no direct prior experience or to risks
associated with the market acceptance of acquired products and technologies, or
result in the loss of key employees of the Company or the acquired company.
Moreover, acquisitions by the Company may result in potentially dilutive
issuances of equity securities, the incurrence of additional debt and the
recognition of amortization expenses related to goodwill and other intangible
assets, which could have a material adverse effect on the Company's business,
financial condition and results of operations.
RISKS ASSOCIATED WITH ACQUISITIONS; NEED TO MANAGE CHANGING OPERATIONS
Acquisitions involve a number of special risks including, without
limitation, managing geographically dispersed operations, failure of the
acquired business to achieve expected results, failure to retain key personnel
of the acquired business, inability to integrate the new business into existing
operations and risks associated with unanticipated events or liabilities,
potential increases in stock compensation expense and increased compensation
expense resulting from newly hired employees, the assumption of unknown
liabilities and potential disputes with the sellers of one or more acquired
entities, all of which could have a material adverse effect on the Company's
business, results of operations and financial condition.
Additionally, customer dissatisfaction or performance problems at a
single acquired company could have an adverse effect on the Company's reputation
and its sales and marketing initiatives. With the addition of the acquired
businesses, the Company's anticipated future operations may place a strain on
its management systems and resources. The Company expects that it will be
required to continue to improve its financial and management controls, reporting
systems and procedures, and will need to expand, train and manage its workforce.
There can be no assurance that the Company will be able to effectively manage
these tasks, and the failure to do so could have a material adverse effect on
the Company's business, financial condition and results of operations.
DEPENDENCE ON KEY PERSONNEL
The Company's performance depends in significant part upon the
continued service of its executive officers, its product managers and other key
sales, marketing and development personnel. The loss of the services of any of
its executive officers or the failure to hire or retain other key employees
could have a material adverse effect on the Company's business, financial
condition and results of operations. Additions of new, and departures of
3.
<PAGE> 7
existing, personnel can be disruptive and could have a material adverse effect
on the Company's business, financial condition and results of operations.
RISKS RELATED TO HOSPITAL AND MANAGED CARE MARKETS; UNCERTAINTY IN THE
HEALTHCARE INDUSTRY
A substantial portion of the Company's revenues have been and are
expected to be derived from the sale of software products and services to
hospitals. Consolidation in the health care industry, particularly in the
hospital and managed care markets, could cause a decrease in the number of
existing or potential purchasers of the Company's products and services, which
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, the decision to purchase the
Company's products often involves the approval of several members of management
of a hospital or health care provider. Consequently, it is difficult for the
Company to predict the timing or outcome of the buying decisions of customers or
potential customers.
The health care industry in the United States is subject to changing
political, economic and regulatory influences that may affect the procurement
practices and operations of health care organizations. The Company believes that
the commercial value and appeal of its products may be adversely affected if the
current health care financing and reimbursement system were to reverse its
current evolution to a managed care model back to a fee-for-service model. In
addition, many of the Company's customers are providing services under capitated
service agreements, and a reduction in the use of capitation arrangements as a
result of regulatory or market changes could have a material adverse effect on
the Company's business, financial condition and results of operations. During
the past several years, the health care industry has been subject to increasing
levels of governmental regulation of, among other things, reimbursement rates
and certain capital expenditures. Certain proposals to reform the health care
system have been and are being considered by Congress. These proposals, if
enacted, could change the operating environment for the Company's clients in
ways that cannot be predicted. Health care organizations may react to these
proposals by curtailing or deferring investments, including those for the
Company's products and services.
Changes in current health care financing and reimbursement systems
could result in the need for unplanned product enhancements, in delays or
cancellations of product orders or shipments or in the revocation of endorsement
of the Company's products by hospital associations or other customers. Any of
these occurrences could have a material adverse effect on the Company's
business, financial condition and results of operations. In addition, many
health care providers are consolidating to create integrated health care
delivery systems with greater regional market power. As a result, these emerging
systems could have greater bargaining power, which may lead to price erosion of
the Company's products. The failure of the Company to maintain adequate price
levels would have a material adverse effect on the Company's business, financial
condition and results of operations. Other market-driven reforms could also have
adverse effects on the Company's business, financial condition and results of
operations.
HIGHLY COMPETITIVE MARKET
Competition in the market for the Company's products and services is
intense and is expected to increase. Increased competition could result in price
reductions, reduced gross margins and loss of market share, any of which could
materially adversely affect the Company's business, financial condition and
results of operations. The Company's competitors include other providers of
health care information software and services, as well as health care consulting
firms. The Company's principal competitors include: (i) CIS Technologies, Inc.,
a division of National Data Corporation, Inc., and Sophisticated Software, Inc.
in the market for its EDI products; (ii) Envoy Corp. and MedE AMERICA in the
market for its claims processing service; (iii) Healthcare Cost Consultants,
Inc., a division of CIS Technologies, Inc., and Trego Systems, Inc. in the
market for its contract management products; (iv) IMNET Systems, Inc., Optika
Imaging Systems, Inc. and LanVision Systems, Inc. in the market for its
electronic document management products; (v) Transition Systems, Inc. and
Healthcare Microsystems, Inc., a division of Health Management Systems Inc.,
HCIA Inc. and MediQual Systems, Inc., a division of Cardinal Health, Inc., in
the market for its decision support products; (vi) HMS and ARTRAC, a division of
Medaphis in the market for its business office outsourcing services; (vii) a
subsidiary of Minnesota Mining and Manufacturing, in the market for its medical
records products; and(viii)Transcend Services, Inc. and SMART Corporation in the
market for its health information management services. In addition, current and
prospective customers evaluate the Company's capabilities against the merits of
their existing information systems and expertise. Furthermore, major software
information systems companies, including those specializing in the health care
industry, not presently offering
4.
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products that compete with those offered by the Company may enter the Company's
markets. In addition, many of the Company's competitors and potential
competitors have significantly greater financial, technical, product
development, marketing and other resources and market recognition than the
Company. Many of the Company's competitors also currently have, or may develop
or acquire, substantial installed customer bases in the health care industry. As
a result of these factors, the Company's competitors may be able to respond more
quickly to new or emerging technologies, changes in customer requirements and
political, economic or regulatory changes in the health care industry or to
devote greater resources to the development, promotion and sale of their
products than the Company. There can be no assurance that the Company will be
able to compete successfully against current and future competitors or that
competitive pressures faced by the Company will not materially adversely affect
its business, financial condition and results of operations.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of Common Stock by existing stockholders under Rule 144
of the Securities Act and through the exercise of registration rights could have
an adverse effect on the price of the Company's Common Stock. As of September
30, 1998, approximately 1.5 million shares are available for sale in the public
market subject to compliance with Rule 144. Certain existing stockholders
holding an aggregate of 144,049 shares of Common Stock as of September 30, 1998
have rights under certain circumstances to require the Company to register their
shares for future sale (which amount does not include shares being registered by
the Company hereunder and shares issued pursuant to the acquisition of
Integrated Medical Networks as discussed below).
In September 1998, the Company closed the acquisition of Integrated
Medical Networks. In connection with the acquisition of Integrated Medical
Networks, the Company issued an aggregate of 1,550,000 shares of Common Stock.
The Company has agreed to file a registration statement under the Securities Act
prior to January 1, 1999 to register all such shares. In June 1998, the Company
closed the acquisition of Pyramid Health Group, Inc. ("Pyramid"). In connection
with the acquisition of Pyramid, the Company issued an aggregate of 2,784,508
shares of Common Stock and warrants to purchase 62,710 shares of Common Stock,
all of which are being registered hereunder for resale under the Securities Act
and will be freely tradeable following such registration. In addition, 13,019
shares of common stock are being registered hereunder for resale under the
Securities Act pursuant to certain exercises of options received by former
Pyramid stockholders and will be freely tradeable following such registration.
In May 1998, the Company closed the acquisition of Medicus Systems Corporation
("Medicus"). In connection with the acquisition of Medicus, the Company issued
an aggregate of 1,201,221 shares of Common Stock, which includes 441,564 shares
of Common Stock issued upon the exercise of warrants issued in November 1997 to
certain former stockholders of Medicus (the "Warrants"). All of the shares of
Common Stock issued in connection with the acquisition of Medicus (including
shares issuable upon exercise of the Warrants) have been registered under the
Securities Act and are freely tradeable. In May 1998, the Company completed an
offering of $115 million principal aggregate amount of Convertible Subordinated
debentures. The Debentures are initially convertible into an aggregate of
3,458,647 shares of the Company's Common Stock at a conversion price of $33.25
per share ( a conversion ratio of 30.075 shares per $1,000 principal amount of
Debentures). The Debentures and the shares of Common Stock issuable upon
conversion of the Debentures have been registered under the Securities Act and
are freely tradable. In December 1997, the Company issued 1,588,701 shares of
Common Stock in connection with the RHP Mergers. The shares of Common Stock
issued in connection with the RHP Mergers have been registered for resale under
the Securities Act and are freely tradeable. An additional 242,590 shares
subject to registration rights were registered for resale concurrently with the
shares issued in connection with the RHP Mergers and are freely tradeable.
Sales of a substantial number of the aforementioned shares of the
Company's Common Stock could adversely affect or cause substantial fluctuations
in the market price of the Company's Common Stock and impair the Company's
ability to raise additional capital through the sale of its securities. Sales of
substantial amounts of Common Stock in the public market under Rule 144 under
the Securities Act, or otherwise, or the perception that such sales could occur,
may adversely affect prevailing market prices of the Common Stock and could
impair the future ability of the Company to raise capital through an offering of
its equity securities.
5.
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NEW PRODUCT DEVELOPEMENT AND SYSTEM ENHANCEMENT
The Company's performance will depend in large part upon the Company's
ability to provide the increasing functionality required by its customers
through the timely development and successful introduction of new products and
enhancements to its existing suite of products. The Company has historically
devoted significant resources to product enhancements and research and
development and believes that significant continuing development efforts will be
required to sustain its operations and integrate the products and technologies
of acquired businesses. There can be no assurance that the Company will
successfully or in a timely manner develop, acquire, integrate, introduce and
market new product enhancements or products, or that product enhancements or new
products developed by the Company will meet the requirements of hospitals or
other health care providers and payors and achieve or sustain market acceptance.
LIMITED PROPRIETARY RIGHTS; RISK OF INFRINGEMENT
The Company relies on a combination of trade secrets, copyright and
trademark laws, nondisclosure and other contractual provisions to protect its
proprietary rights. The Company has not filed any patent applications covering
its technology. There can be no assurance that measures taken by the Company to
protect its intellectual property will be adequate or that the Company's
competitors will not independently develop products and services that are
substantially equivalent or superior to those of the Company.
Substantial litigation regarding intellectual property rights exists in
the software industry, and the Company expects that software products may be
increasingly subject to third-party infringement claims as the number of
competitors in the Company's industry segment grows and the functionality of
products overlaps. Although the Company believes that its products do not
infringe upon the proprietary rights of third parties, there can be no assurance
that third parties will not assert infringement claims against the Company in
the future or that a license or similar agreement will be available on
reasonable terms in the event of an unfavorable ruling on any such claim. In
addition, any claim may require the Company to incur substantial litigation
expenses or subject the Company to significant liabilities and could have a
material adverse effect on the Company's business, financial condition and
results of operations. The Company has received notice of a claim filed with the
United States Trademark Appeal Board for the cancellation of its registered
QuanTIM(R) trademark, and also has received a letter from a separate third party
challenging this trademark. There can be no assurance that the Company will be
successful in its defense of these or similar claims.
RISK OF PRODUCT DEFECTS; FAILURE TO MEET PERFORMANCE CRITERIA
Products such as those offered by the Company frequently contain errors
or failures, especially when initially introduced or when new versions are
released. Although QuadraMed conducts extensive testing, software errors have
been discovered in certain enhancements and products after their introduction.
There can be no assurance that, despite testing by the Company and by current
and potential customers, errors or performance failures will not occur in
products under development or in other enhancements or products after
commencement of commercial shipments, resulting in loss of revenues and
customers, delay in market acceptance, diversion of resources, damage to the
Company's reputation or increased service and warranty costs, any of which could
have a material adverse effect upon its business, financial condition and
results of operations.
YEAR 2000
Many computer systems have experienced or will experience problems
processing dates beyond the year 1999. Therefore, some computer hardware and
software will need to be modified prior to the year 2000 in order to remain
functional. The Company is assessing both the internal readiness of its computer
systems and the compliance of its computer products and software sold to
customers for addressing the year 2000 issues. The Company expects to implement
successfully the systems and programming changes necessary to address the year
2000 issues and does not believe that the cost of such actions will have a
material adverse effect on the Company's business, results of operations or
financial condition. There can be no assurance, however, that there will not be
a delay in, or increased costs associated with, the implementation of such
changes, and the Company's inability to implement such changes could have an
adverse effect on its business, financial condition and results of operations.
The Company has designed and tested the most current versions of its
products to be year 2000 compliant. A significant number of the Company's
customers are running product versions that are not year 2000 compliant.
6.
<PAGE> 10
While the Company has been encouraging such customers to migrate to current
product versions, it is possible that the Company may experience increased
expenses in addressing migration issues and may lose customers. In addition,
there can be no assurances that the Company's current products do not contain
undetected errors or defects associated with year 2000 date functions that may
result in the material costs to the Company. Some commentators have stated that
significant amounts of litigation will arise out of year 2000 compliance issues.
Because of the unprecedented nature of such litigation it is uncertain whether
or to what extent the Company may be affected by it.
RISK OF INTERRUPTION OF DATA PROCESSING
The Company currently processes substantially all its customer data at
its facilities in Richmond, California and Neptune, New Jersey. While the
Company backs up its data nightly and has safeguards for emergencies such as
power interruption or breakdown in temperature controls, it has no mirror
processing site to which processing could be transferred in the case of a
catastrophic event at either of these facilities. The occurrence of a major
catastrophic event at either the Richmond or the Neptune facility could lead to
an interruption of data processing and could have a material adverse effect on
the Company's business, financial condition and results of operations.
RISKS RELATED TO OUTSOURCING BUSINESS
The Company provides compliance, consulting and business office
outsourcing and cash flow management services, including the billing and
collection of receivables. The infrastructure for the Company's outsourcing
business was acquired by the Company. In addition, the Company often uses its
software products to provide outsourcing services. As a result, the Company has
not been required to make significant capital expenditures in order to service
existing outsourcing contracts. However, if the Company experiences a period of
substantial expansion in its outsourcing business, it may be required to make
substantial investments in capital assets and personnel, and there can be no
assurance that it will be able to assess accurately the investment required and
negotiate and perform in a profitable manner any of the outsourcing contracts it
may be awarded. The Company's failure to estimate accurately the resources and
related expenses required for a project or its failure to complete its
contractual obligations in a manner consistent with the project plan upon which
a contract was based could have a material adverse effect on its business,
financial condition and results of operations. In addition, the Company's
failure to meet a client's expectations in the performance of its services could
damage the Company's reputation and adversely affect its ability to attract new
business. Finally, the Company could incur substantial costs and expend
significant resources correcting errors in its work, and could possibly become
liable for damages caused by these errors.
GOVERNMENT REGULATION
The United States Food and Drug Administration (the "FDA") is
responsible for assuring the safety and effectiveness of medical devices under
the Federal Food, Drug and Cosmetic Act. Computer products are subject to
regulation when they are used or are intended to be used in the diagnosis of
disease or other conditions, or in the cure, mitigation, treatment or prevention
of disease, or are intended to affect the structure or function of the body. The
FDA could determine in the future that any predictive aspects of the Company's
products make them clinical decision tools subject to FDA regulation. Compliance
with these regulations could be burdensome, time consuming and expensive. The
Company also could become subject to future legislation and regulations
concerning the development and marketing of health care software systems. Such
legislation could increase the cost and time necessary to market new products
and could affect the Company in other respects not presently foreseeable. The
Company cannot predict the effect of possible future legislation and regulation.
The confidentiality of patient records and the circumstances under
which such records may be released for inclusion in the Company's databases are
subject to substantial regulation by state governments. These state laws and
regulations govern both the disclosure and the use of confidential patient
medical record information. Although compliance with these laws and regulations
is at present principally the responsibility of the hospital, physician or other
health care provider, regulations governing patient confidentiality rights are
evolving rapidly. Additional legislation governing the dissemination of medical
record information has been proposed at both the state and federal levels. This
legislation may require holders of such information to implement security
measures that may require substantial expenditures by the Company. There can be
no assurance that changes to state or federal laws
7.
<PAGE> 11
will not materially restrict the ability of health care providers to submit
information from patient records using the Company's products.
RISK OF PRODUCT-RELATED CLAIMS
Certain of the Company's products and services relate to the payment,
collection, coding and billing of health care claims and the administration of
managed care contracts. Any failure by employees of the Company or by the
Company's products to accurately assess, process or collect such claims could
result in claims against the Company by its customers. The Company has been and
currently is involved in claims for money damages related to services provided
by its accounts receivable management business. The Company maintains insurance
to protect against certain claims associated with the use of its products, but
there can be no assurance that its insurance coverage would adequately cover any
claim asserted against the Company. A successful claim brought against the
Company that is in excess of, or excluded from, its insurance coverage could
have a material adverse effect on its business, financial condition and results
of operations. Even unsuccessful claims could result in the Company's
expenditure of funds in litigation and management time and resources. There can
be no assurance that the Company will not be subject to material claims in the
future, that such claims will not result in liability in excess of the Company's
insurance coverage, that the Company's insurance will cover such claims or that
appropriate insurance will continue to be available to the Company in the future
at commercially reasonable rates. In addition, if liability of the Company were
to be established, substantial revisions to its products could be required that
may cause it to incur additional unanticipated research and development
expenses.
RISKS ASSOCIATED WITH CERTAIN INVESTMENTS
The Company has made, and may continue to make in the future, certain
investments in which it obtains a minority equity interest in certain early
stage companies. The Company does not have the ability to control the operations
of any of these companies. Investing in early stage companies is subject to
certain significant risks, and there can be no assurance that any of these
companies will be successful or achieve profitability or that the Company will
ever realize a return on its investments. In addition, to the extent any of such
companies fail or become bankrupt or insolvent, the Company may be required to
report a loss on some or all of its investment, which could have a material
adverse effect on its results of operations during a particular reporting
period.
POTENTIAL EFFECT OF ANTI-TAKEOVER PROVISIONS
Certain provisions of Delaware law applicable to the Company could have
the effect of delaying, deterring or preventing a change in control of the
Company, including Section 203 of the Delaware General Corporation Law, which
prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years from the date the person
became an interested stockholder unless certain conditions are met. In addition,
the Company's Certificate of Incorporation and Bylaws contain certain provisions
that could discourage potential takeover attempts and make attempts by
stockholders to change management more difficult. The Company's Board of
Directors is classified into three classes of directors serving staggered,
three-year terms and has the authority without action by the Company's
stockholders to fix the rights and preferences and issue shares of preferred
stock, and to impose various procedural and other requirements that could make
it more difficult for stockholders to effect certain corporate actions. The
Company's Certificate of Incorporation provides that directors may be removed
only by the affirmative vote of the holders of two-thirds of the shares of
capital stock of the Company entitled to vote. Any vacancy on the Board of
Directors may be filled only by vote of the majority of directors then in
office. Further, the Company's Certificate of Incorporation provides that any
"Business Combination" (as therein defined) requires the affirmative vote of
two-thirds of the shares entitled to vote, voting together as a single class.
These provisions, and certain other provisions of the Certificate of
Incorporation which may have the effect of delaying proposed stockholder actions
until the next annual meeting of stockholders, could have the effect of delaying
or preventing a tender offer for the Company's Common Stock or other changes of
control or management of the Company, which could adversely affect the market
price of the Company Common Stock.
8.
<PAGE> 12
VOLATILITY OF STOCK PRICE
The stock market historically has experienced volatility which has
affected the market price of securities of many companies and which has
sometimes been unrelated to the operating performance of such companies. The
trading price of the Company's Common Stock could also be subject to significant
fluctuations in response to variations in quarterly results of operations,
announcements of new products or acquisitions by the Company or its competitors,
governmental regulatory action, other developments or disputes with respect to
proprietary rights, general trends in the industry and overall market
conditions, and other factors. The market price may also be affected by
movements in prices of equity securities in general.
USE OF PROCEEDS
The Company will not receive any of the net proceeds from the sale of
the Shares by the Selling Stockholders.
9.
<PAGE> 13
SELLING STOCKHOLDERS
The following table sets forth the principal amount of Common Stock
beneficially owned by each of the Selling Stockholders as of October 30, 1998,
all of which are being offered pursuant hereto. Because the Selling Stockholders
may sell all or a portion of the Shares which they own pursuant to the offering
contemplated by this Prospectus, and because there are currently no agreements,
arrangements or understandings with respect to the sale of any of the Shares, no
estimate can be given as to the amount of Shares that will be held by the
Selling Stockholders after completion of this Offering. The Shares offered for
sale by this Prospectus may be offered from time to time by the Selling
Stockholders named below.
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF SHARES OUTSTANDING
NAME OF SELLING STOCKHOLDER BENEFICIALLY OWNED SHARES
<S> <C> <C>
Bonnie J. Purdy 1,794 *
Compex Investors I, L.P. 82,263 *
Compex Investors II, L.P. 44,294 *
Copley Partners 2 115,689 *
DLJ Venture Capital Fund 41,584 *
David Shanks 11,450 *
Himanshu Sharma 1,185 *
Ivar S. Chhina 5,864 *
Jennifer Vanosdol 1,084 *
Jeffrey C. Bachman 23,840 *
Linda L. Leach 1,218 *
Mehta Family Partners, L.P. 428,438 2.2
Monica Pappas 44,521 *
Nitin T. Mehta 584,075 3.0
Prabhu Goel, Trustee of the Neil N. Mehta - 1996 Trust 43,010 *
Prabhu Goel, Trustee of the Nayan N. Mehta - 1996 Trust 43,011 *
Scottish Investment Trust, PLC 63,299 *
Sharad P. Patel, Trustee of the Sharad P. Trust of April 19, 33,650 *
1985
Sharad P. Patel, Trustee of the Sharad P. Trust of April 19, 3,738 *
1985
Sprout Capital V 795,404 4.1
Sprout Growth, L.P. 267,445 1.4
Sprout Growth, Ltd. 29,183 *
Toronto Dominion Investments, Inc. 63,289 *
Transcorp C/F Nitin T. Mehta A/C IRC-6699-OT 4,965 *
Transcorp C/F Nitin T. Mehta A/C KPS-0227-00 8,903 *
Transcorp C/F Neil N. Mehta A/C IRZ-8055-OC 48,747 *
Transcorp C/F Nayan N. Mehta A/C IRZ-8054-OC 48,747 *
Transcorp C/F Meena N. Mehta A/C TPZ-87332 5,753 *
Victor Rivera 1,874 *
Weber Family Trust 11,920 *
</TABLE>
- --------------------------
* Less than one percent.
PLAN OF DISTRIBUTION
The Shares offered hereby are being offered directly by the Selling
Stockholders. The Company will receive no proceeds from the Offering. The Shares
offered hereby may be sold by the Selling Stockholders from time to time in
transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of
10.
<PAGE> 14
discounts, concessions or commissions from the Selling Stockholders and/or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions). The Shares offered
hereby may be sold either pursuant to this Registration Statement or pursuant to
Rule 144 of the Securities Act.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
The Selling Stockholders and any broker-dealers or agents that
participate with the Selling Stockholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), any person engaged in the
distribution of the Shares may not simultaneously engage in market making
activities with respect to the Common Stock of the Company for a period of one
business day prior to the commencement of such distribution. In addition and
without limiting the foregoing, each Selling Stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, which provisions may limit the timing of purchases and sales of
shares of the Company's Common Stock by the Selling Stockholders.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Brobeck, Phleger & Harrison LLP, San Francisco, California.
EXPERTS
The audited consolidated financial statements and schedules
incorporated by reference in this Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act, and in accordance therewith file reports, proxy statements and
other information with the Securities and Exchange Commission (the
"Commission"). These materials can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Commission's regional offices at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, New York, New York 10048. Information on the operation
of the Public Reference Room can be obtained by calling the Commission at
1-800-SEC-0330. Copies of these materials can also be obtained from the
Commission at prescribed rates by writing to the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
maintains a Web site that contains reports, proxy and information statements and
other materials that are filed through the Commission's Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR"). This Web site can be
accessed at http:\www.sec.gov. In addition, material filed by the Company can be
inspected at the offices of the National Association of Securities Dealers,
Inc., Market Listing Section, 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus does not contain all the information set forth in the
Registration Statement on Form S-3 and exhibits relating thereto, including any
amendments (the "Registration Statement"), of which this Prospectus is a part,
and which the Company has filed with the Commission under the Securities Act.
Reference is made to such Registration Statement for further information with
respect to the Company and the securities of the Company
11.
<PAGE> 15
offered hereby. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission or attached as an annex hereto.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission under
Section 13(a) and 15(d) of the Exchange Act are hereby incorporated by reference
in this Prospectus:
1. Annual Report on Form 10-K/A for the fiscal year ended December 31,
1997;
2. Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1998 and amendment thereto;
3. Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1998;
4. Current Report on Form 8-K dated September 30, 1998 and filed October
15, 1998;
5. Current Report on Form 8-K dated August 31, 1998 and filed September
11, 1998;
6. Current Report on Form 8-K dated June 1, 1998, and filed June 11,
1998, and amendment thereto filed June 17, 1998;
7. Current Report on Form 8-K dated May 1, 1998 and filed May 11, 1998;
8. Current Report on Form 8-K dated April 13, 1998 and filed April 29,
1998;
9. Current Report on Form 8-K dated April 24, 1997 and filed May 9, 1997,
and amendments thereto filed July 8, 1997 and March 10, 1998,
respectively;
10. Current Report on Form 8-K dated September 29, 1997 and filed October
14, 1997, and amendment thereto filed March 10, 1998;
11. Current Report on Form 8-K dated February 4, 1998 and filed February
18, 1998;
12. Current Report on Form 8-K dated December 29, 1997 and filed January
13, 1998; and
13. The description of Company Common Stock set forth in the Company's
Registration Statement on Form 8-A filed pursuant to Section 12 of the
Exchange Act and any amendment or report filed for the purpose of
updating such description.
All reports and definitive proxy or information statements filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus shall be deemed to be incorporated by
reference into this Prospectus from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
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 which 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, except as so modified or superseded,
to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THERE WILL BE PROVIDED WITHOUT CHARGE TO
EACH PERSON, INCLUDING ANY BENEFICIAL OWNER OF COMPANY COMMON STOCK, TO WHOM A
PROSPECTUS IS DELIVERED, UPON ORAL OR WRITTEN REQUEST OF ANY SUCH PERSON, A COPY
OF ANY OR ALL DOCUMENTS INCORPORATED BY REFERENCE HEREIN (EXCLUDING EXHIBITS
UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE HEREIN).
REQUESTS SHOULD BE DIRECTED TO KEITH M. ROBERTS, QUADRAMED CORPORATION, 1003
CUTTING BLVD. SUITE 200, RICHMOND, CALIFORNIA, 94804 (TEL. 510/620-2340).
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN
THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
12.
<PAGE> 16
UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF.
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Except for the historical financial information contained herein, the
matters discussed in this Prospectus may be considered "forward-looking"
statements within the meaning of Section 27A of the Securities Act, and Section
21E of the Exchange Act. Such statements include declarations regarding the
intent, belief or current expectations of the Company and its management.
Prospective investors are cautioned that any such forward-looking statements are
not guarantees of future performance and involve a number of risks and
uncertainties, including those discussed herein under "Risk Factors." Actual
results could differ materially from those indicated by such forward-looking
statements. Among the important factors that could cause actual results to
differ materially from those indicated by such forward-looking statements are:
(i) that the information is of a preliminary nature and may be subject to
further adjustment, (ii) variability in quarterly operating results, (iii)
identification, consummation and assimilation of acquisitions, (iv) dependence
on hospitals and demand for the Company's products and services in the
healthcare information systems and services markets, (v) legislative or
market-driven reforms in the healthcare industry, (vi) the Company's ability to
develop and introduce new products, (vii) management of the Company's changing
operations, (viii) dependence on key personnel, (ix) development by competitors
of new or superior products or entry into the market of new competitors, (x)
risks related to product defects, (xi) risks associated with pending
litigation,(xii) volatility in the Company's stock price, (xiii) the success or
failure of strategic alliances, (xiv) risk of interruption in data processing,
(xv) risks associated with certain investments in early stage companies, and
(xvi) other risks identified from time to time in the Company's reports and
registration statements filed with the Securities and Exchange Commission.
13.
<PAGE> 17
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO
BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH AN OFFERING OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................................................... 1
Risk Factors............................................................... 2
Use of Proceeds............................................................ 9
Selling Stockholders....................................................... 10
Plan of Distribution....................................................... 10
Legal Matters.............................................................. 11
Experts.................................................................... 11
Available Information...................................................... 11
Incorporation of Certain Documents
by Reference.......................................................... 12
</TABLE>
QUADRAMED CORPORATION
2,860,237 Shares of Common Stock
PROSPECTUS
November 4, 1998
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of Common Stock to being registered,
other than underwriting discounts and commissions. All amounts are estimates
except the Securities and Exchange Commission registration fee, the NASD filing
fee and the Nasdaq National Market listing fee.
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee....................... 15,680
Nasdaq National Market listing fee........................................ 17,500
Printing and engraving expenses........................................... 1,000
Legal expenses............................................................ 15,000
Accounting fees and expenses.............................................. 2,000
Miscellaneous expenses.................................................... 0
Total............................................................. 51,180
=======
</TABLE>
The Selling Stockholders will bear their own sales commissions and related sales
expenses in connection with this offering, but will not bear any of the expenses
listed above.
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides in relevant part that "[a] corporation shall have power to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the person's conduct was
unlawful." With respect to derivative actions, Section 145(b) of the DGCL
provides in relevant part that "[a] corporation shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor [by reason of that person's
service in one of the capacities specified in the preceding sentence] against
expenses (including attorneys' fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or suit if
the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper."
Section 102(b)(7) of the DGCL provides that a corporation's certificate
of incorporation may eliminate or limit personal liability of its directors to
the corporation or its stockholders for monetary damages for breach of a
director's fiduciary duty. However, no such provision may eliminate or limit the
liability of a director for breaching such director's duty of loyalty, failing
to act in good faith, engaging in intentional misconduct or knowingly violating
a law, paying a dividend or approving a stock repurchase that was illegal, or
obtaining an improper
II-1
<PAGE> 19
personal benefit. A provision of this type has no effect on the availability of
equitable remedies, such as injunction or rescission, for breach of fiduciary
duty.
The Company's Second Amended and Restated Certificate of Incorporation
eliminates the personal liability of its directors to the fullest extent allowed
under the DGCL. In addition, Article 5 of the Company's Amended and Restated
Bylaws provides that the Company shall indemnify each person who is or was a
director or executive officer of the Company to the full extent permitted by the
DGCL. Such Article also provides that the Company may, but is not required to,
indemnify its employees and agents (other than directors and officers) to the
extent and in the manner permitted by the DGCL.
The Registrant has entered into an indemnification agreement with each
of its directors and officers and intends to maintain insurance for the benefit
of its directors and officers insuring such persons against certain liabilities,
including liabilities under the securities laws.
ITEM 16. EXHIBITS.
(a) Exhibits
2.1 Acquisition Agreement and Plan of Merger dated June 1, 1998 by and
between the Company and Pyramid Health Group, Inc. and its
Stockholders.(2)
4.1 Reference is made to Exhibits 3.2 and 3.4 of the Form SB-2 (as
defined herein).(1)
4.2 Form of Common Stock Certificate.(1)
4.3 Registration Rights Agreement dated June 5, 1998 by and between the
Company and the stockholders listed on Schedule A thereto.(2)
5.1 Opinion of Brobeck, Phleger and Harrison LLP.(3)
23.1 Consent of Arthur Andersen LLP.(3)
23.2 Consent of Deloitte & Touche LLP.(3)
23.3 Consent of Brobeck, Phleger & Harrison LLP(included in
Exhibit 5.1).
24.1 Power of Attorney (see page II-4).
(1) Incorporated herein by reference from the exhibit with the same number to
the Company's Registration Statement on Form SB-2, No. 333-5180-LA, as filed
with the Commission on June 28, 1996, as amended by Amendment No. 1, Amendment
No. 2 and Amendment No. 3 thereto, as filed with the Commission on July 26,
1996, September 9, 1996 and October 2, 1996, respectively (collectively, "Form
SB-2").
(2) Incorporated herein by reference from the Company's Current Report on Form
8-K, as filed with the Commission on June 11, 1998, and amendment thereto filed
June 17, 1998.
(3) To be filed by amendment.
(b) Financial Data Schedule
Not applicable.
II-2
<PAGE> 20
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; provided, however, that (i) and (ii)
do not apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by (i) and
(ii) is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15 of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, 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) To 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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
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 registrant 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 Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that, 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 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.
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 shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-3
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Richmond, State of
California on this 4th day of November, 1998.
QUADRAMED CORPORATION
By /s/ KEITH M. ROBERTS
----------------------------------
Keith M. Roberts
Executive Vice President,
Chief Financial Officer
and General Counsel
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, John V. Cracchiolo
and Keith M. Roberts, and each one of them, his attorneys-in-fact, each with the
power of substitution and resubstitution, for him in any and all capacities, to
sign any and all amendments to this Registration Statement and any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) promulgated under the
Securities Act of 1933, as amended, and all post-effective amendments thereto,
and to file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ JAMES D. DURHAM Chairman of the Board and Chief Executive Officer November 4, 1998
------------------------ (Principal Executive Officer)
James D. Durham
/s/ KEITH M. ROBERTS Executive Vice President, Chief Financial Officer November 4, 1998
------------------------ (Principal Financial and Accounting Officer) and
Keith M. Roberts General Counsel
/s/ BERNIE J. MURPHY Vice President, Finance November 4, 1998
------------------------- and Chief Accounting Officer
Bernie J. Murphy (Principal Accounting Officer)
/s/ JOHN H. AUSTIN, M.D. Director November 4, 1998
-------------------------
John H. Austin, M.D.
/s/ ALBERT L. GREENE Director November 4, 1998
-------------------------
Albert L. Greene
Director November __, 1998
-------------------------
Kenneth E. Jones
</TABLE>
II-4
<PAGE> 22
<TABLE>
<S> <C> <C>
/s/ THOMAS F. MCNULTY Director November 4, 1998
-----------------------
Thomas F. McNulty
/s/ JOAN P. NEUSCHELER Director November 4, 1998
-----------------------
Joan P. Neuscheler
/s/ CORNELIUS T. RYAN Director November 4, 1998
-----------------------
Cornelius T. Ryan
</TABLE>
II-5
