<PAGE> 1
As filed with the Securities and Exchange Commission on August 25, 1999
Registration No. 333-80617
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
QUADRAMED CORPORATION
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C>
DELAWARE 7371
(State or other jurisdiction (Primary Standard Industrial
of incorporation or organization) Classification Code Number)
</TABLE>
1003 WEST 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)
-----------------------------
E. PAYSON SMITH
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
QUADRAMED CORPORATION
1003 WEST 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)
-----------------------------
Copies to:
SCOTT D. LESTER, ESQ.
BROBECK, PHLEGER & HARRISON LLP
ONE MARKET STREET
SPEAR STREET TOWER
SAN FRANCISCO, CALIFORNIA 94105
(415) 442-0900
-----------------------------
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. [ ]
-----------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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)(2) PRICE(1)(2) REGISTRATION FEE(2)
<S> <C> <C> <C> <C>
Common Stock, par value $.01
(previously included)...................... 507,193 Shares $ 10.00 $ 5,071,930 $ 1,410
Common Stock, par value $.01
(previously included)...................... 2,640,867 Shares $ 9.93 $ 26,223,809 $ 7,343
Common Stock, par value $.01
(additional amount)........................ 533,070 Shares $ 8.16 $ 4,347,852 $ 1,217
Total................................... 3,681,130 Shares $ 35,643,591 $ 9,970
</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 August 18, 1999.
(2) A filing fee of $1,410 and $7,343 was previously paid with the initial
filing of the Registration Statement on June 14, 1999 and Amendment No. 1
thereto on August 4, 1999, respectively.
-----------------------------
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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<PAGE> 2
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.
3,681,130 SHARES
QUADRAMED CORPORATION
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of 3,681,130 shares of our common stock which is held by some of
our current stockholders. All of the 3,681,130 Shares which may be offered
hereby were received by the stockholders in connection with certain acquisitions
including our acquisition of all of the outstanding capital stock and options of
Premier Healthcare Corporation and The CompuCare Company ("CompuCare").
The prices at which such stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares. We have agreed to bear certain expenses in connection with the
registration of the shares being offered and sold by the stockholders hereby.
Our Common Stock is quoted on the Nasdaq National Market under the symbol
"QMDC." On August 24, 1999 the closing price on Nasdaq for the common stock was
$8.8125.
____________________
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
____________________
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.
____________________
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 August 25, 1999
<PAGE> 3
PROSPECTUS SUMMARY
This summary highlights certain information contained elsewhere in
this Prospectus. This summary is not complete and does not contain all of the
information that you should consider before investing in the Common Stock. You
should read the entire Prospectus carefully, especially the risks of investing
in the Common Stock discussed under "Risk Factors."
THE COMPANY
QuadraMed Corporation uses technology to transform disparate healthcare
data into valuable, enterprise-wide information. Providing and distributing
meaningful information through its software, services and Internet solutions,
QuadraMed has enabled its 3,850 customers in the U.S. and Canada to generate
operational efficiencies, improve cash flow and measure the cost and quality of
care. QuadraMed has implemented its product and service solutions in
approximately 60% of the nation's hospitals. The Company has three business
units, which include business office, health information management and
enterprise.
The Business Office group targets a provider's chief financial officer
as the primary buyer. The divisions' solutions address the complex
administrative and financial management demands placed on healthcare
organizations today, providing the technology and expertise to increase cash
flow and reduce administrative costs. The group is comprised of the following
product and service categories: decision support, patient-focused solutions,
electronic business office, managed care and executive information systems. The
group also includes business office outsourcing. The following services are
included: full business office outsourcing, A/R reduction and billing services
and interim management consulting.
QuadraMed's Health Information Management (HIM) business lines
primarily target medical records directors, as well as chief financial officers
throughout the provider system. The division is comprised of the following
products and services: coding and abstracting, document imaging and workflow,
and HIM outsourcing and consulting. The Company also offers a compliance
program, including compliance assessment, auditing and education expertise
through a team of over 100 credentialed healthcare attorneys, medical record
professionals, registered nurses and physicians. These services are designed to
improve the ability of healthcare providers to prevent Medicare and Medicaid
fraud and abuse by identifying potentially fraudulent coding in a medical bill.
In the outsourcing area, QuadraMed offers charge description master (CDM)
review, master patient index clean up, interim HIM management service, general
outsourcing and HIM on-site staff services.
The Company's newest operating group, the Enterprise Division,
established in 1999 provides web-based solutions that are designed to flow
across an extended enterprise of inpatient and outpatient locations and across
business entity lines. The Company's enterprise business lines target a
provider's chief financial officer and chief executive officer. The Company
provides access via LAN, WAN or Web, to patient information from disparate
locations in the enterprise. The Affinity suite of products is the group's most
comprehensive offering. Affinity is an integrated hospital information system
that provides clinical and financial information. The product is packaged in a
suite of hospital applications that are designed to provide compliance with
federal and state regulations while automating decision making and increasing
productivity. Affinity provides a patient-centered database that enables a
provider to track patients throughout the continuum of care, without duplication
of effort. Applications are accessible via a web browser, allowing physicians
and other authorized users to have access to real-time patient information, from
remote locations. Affinity integrates financial information such as patient
accounting and DRG/case mix with clinical data such as medication charting and
plan of care to automate state and federal reporting, billing, and other
administrative activities.
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We are incorporated under the laws of the State of Delaware. Our
executive offices are located at 1003 West Cutting Blvd., Suite 200, Richmond,
California 94804 and our telephone number is (510) 620-2340. Unless the context
otherwise requires, "QuadraMed", the "Company", "we", "our" and "us" refer to
QuadraMed Corporation and, where the context requires, its subsidiaries.
THE OFFERING
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<S> <C>
Common Stock offered by Selling
Stockholders............................. 3,681,130
Use of Proceeds.......................... QuadraMed will not receive any
proceeds from the sale of common
stock in the offering
Nasdaq National Market Symbol............ QMDC
</TABLE>
RISK FACTORS
Prior to making an investment in the shares of Common Stock, you
should carefully read this entire prospectus and consider the following risk
and speculative factors in evaluating our Company and our business.
WE HAVE A HISTORY OF OPERATING LOSSES AND OUR FUTURE PROFITABILITY IS UNCERTAIN
We incurred net losses of $37.4 million and $20.7 million for the years
ended December 31, 1997 and 1998, respectively and a net loss of $19.1 million
for the six months ended June 30, 1999. As of June 30, 1999, our accumulated
deficit was $212.3 million. These results include write-offs for acquired
in-process research and development of $21.9 million and $14.5 million in fiscal
years 1997 and 1998, respectively. In connection with our acquisitions, we have
and will incur significant non-recurring charges and we will be required to
amortize significant expenses related to goodwill and other intangible assets in
future periods. It is uncertain whether we will be able to achieve or sustain
revenue growth or profitability on a quarterly or annual basis.
OUR OPERATING RESULTS MAY FLUCTUATE FROM QUARTER TO QUARTER
Our quarterly operating results have varied significantly in the past.
Our quarterly revenues and operating results may fluctuate significantly in the
future as a result of a variety of factors, many of which are outside our
control. These factors include:
. integration of acquired businesses with our business;
. variability in demand for our products and services;
. the introduction of product enhancements and new products by us and our
competitors;
. the timing and significance of announcements concerning our present or
prospective strategic alliances;
. the termination of, or a reduction in, the products and services we offer,
. the loss of customers due to consolidation in the health care industry;
. delays in product delivery requested by our customers;
. the length of the sales cycle for our products or the timing of our sales;
. the amount of new potential contracts at the beginning of any particular
quarter;
. budgeting cycles of our customers and changes in our customer's budgets;
. our investment in marketing, sales, research and development, and
administrative personnel necessary to support our anticipated operations;
. costs incurred in connection with our marketing and sale promotional
activities;
. software defects and other quality factors in our products; and
. general economic conditions and resulting effects on the health care
industry.
We cannot accurately forecast the timing of our customer purchases due
to the complex procurement decision process associated with most health care
providers and payors. As a result, we typically experience sales cycles that
extend over several quarters. In addition, certain products we acquired as a
result of our acquisition of Integrated Medical Networks in September
2.
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1998 and The Compucare Company in March 1999 have higher average selling prices
and longer sales cycles than many of our other products. This may increase the
volatility of our quarterly operating results. Moreover, our operating expense
levels, which will increase with the addition of acquired businesses, are
relatively fixed. Accordingly, if future revenues are below our expectations, we
would experience a disproportionate adverse affect on our net income and
financial results. Further, it is likely that, in some future quarter, our
revenues or operating results may fall below the expectations of securities
analysts and investors. In such an event, the trading price of our Common Stock
would likely be materially and adversely affected.
WE FACE RISKS RELATING TO THE INTEGRATION OF ACQUIRED COMPANIES INTO OUR COMPANY
Realizing benefits from acquisitions depends in significant part upon
several factors and is accompanied by a number of risks, including:
. successful integration of the operations, products and personnel of the
acquired company;
. possible costs, delays or other problems we may incur to successfully
complete such integration;
. the potential interruption or disruption of our ongoing business and the
distraction of management from other matters; and
. significant operational and administrative expense relating to such
integration.
Any difficulties encountered in the integration process could have a
material adverse effect on our business, operating results and financial
condition. Even if we are able to successfully integrate these businesses with
our business, the acquired operations may not achieve sales, productivity and
profitability commensurate with our historical or projected operating results.
Failure to achieve such projected results would have a material adverse effect
on our financial performance, and in turn, on the market value of the our
Common Stock. There can be no assurance that we will realize any of the
anticipated benefits of our acquisitions or that such acquisitions will enhance
our business or financial performance.
WE ARE DEPENDENT ON AN ACQUISITION STRATEGY FOR OUR GROWTH
We intend to continue to expand in part through acquisitions of products,
technologies and businesses. Our ability to expand successfully through
acquisition depends on many factors, including:
. the successful identification and acquisition of products, technologies or
businesses;
. management's ability to effectively negotiate and consummate acquisitions and
integrate and operate the new products, technologies or businesses;
. significant competition for acquisition opportunities in our industry, which
may intensify due to increasing consolidation in the health care industry,
thereby increasing the costs of capitalizing on acquisition opportunities; and
. competition for acquisition opportunities with other companies that have
significantly greater financial and management resources than us.
3.
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WE FACE SEVERAL RISKS ASSOCIATED WITH ACQUISITIONS AND MAY NOT BE SUCCESSFUL IN
MANAGING CHANGING OPERATIONS
Acquisitions involve a number of special risks including:
. 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; and
. exposure to the risks of entering markets in which we have no direct prior
experience or to risks associated with the market acceptance of acquired
products and technologies.
Management evaluated and purchased a new management and accounting system
and will implement the system in 1999. Information systems expansion or
replacement can be a complex, costly and time-consuming process, and there can
be no assurance that our system transition and further implementation can be
accomplished without disruption of our business. Any business disruption or
other system transition difficulties could have a material adverse effect on
our business, financial condition and results of operations.
We may not be successful in addressing these risks and our failure to do
so could have a material adverse effect on our business, results of operations
and financial condition.
Additionally, customer dissatisfaction or performance problems at a single
acquired company could have an adverse effect on its sales and marketing
initiatives and on our reputation. With the addition of the acquired
businesses, our anticipated future operations may place a strain on our
management systems and resources. We expect that we will be required to continue
to improve our financial and management controls, reporting systems and
procedures, and will need to expand, train and manage our workforce. There can
be no assurance that we will be able to effectively manage these tasks, and the
failure to do so could have a material adverse effect on our business, financial
condition and results of operations.
Moreover, future acquisitions by us 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. Our inability to successfully deal with these factors could have a
material adverse effect on our business, financial condition and results of
operations.
WE ARE DEPENDENT ON KEY MANAGEMENT PERSONNEL FOR OUR FUTURE SUCCESS
We are substantially dependent upon the continued service of our executive
officers, product managers and other key sales, marketing and development
personnel. If we fail to retain the services of any of our executive officers
or fail to hire, retain and motivate other key employees, our business will be
adversely affected. Furthermore, additions of new, and departures of existing,
personnel could have a disruptive effect on our business and operations.
4.
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WE FACE RISKS RELATED TO HOSPITAL AND MANAGED CARE MARKETS AND UNCERTAINTY IN
THE HEALTHCARE INDUSTRY
A substantial portion of our 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 our products and services, which could adversely affect
our business. In addition, the decision to purchase our products often involves
the approval of several members of management of a hospital or health care
provider. Consequently, it is difficult for us to predict the timing or outcome
of the buying decisions of our 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. We believe that the
commercial value and appeal of our 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 our 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 our
business, financial condition and operating results. 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 of our clients in ways that cannot be
predicted. Health care organizations may react to these proposals by curtailing
or deferring investments, including those for our 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 our products by hospital associations or other customers. Any of these
occurrences could have a material adverse effect on our business. 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
our products. If we fail to maintain adequate price levels, our business,
financial condition and results of operations would be adversely affected. Other
market-driven reforms could also have adverse effects on our business, financial
condition and results of operations.
WE OPERATE IN HIGHLY COMPETITIVE MARKETS
Competition in the market for our 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 our business, financial condition and results of operations. We
compete with other providers of health care information software and services,
as well as health care consulting firms. Our principal competitors include,
among others:
5.
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. CIS Technologies, Inc., a division of National Data Corporation, Inc., and
Sophisticated Software, Inc. in the market for our EDI products;
. MedE AMERICA in the market for our claims processing service;
. Healthcare Cost Consultants, Inc., a division of CIS Technologies, Inc., and
Trego Systems, Inc. in the market for our contract management products;
. McKesson HBOC, Inc., Optika Imaging Systems, Inc. and LanVision Systems, Inc.
in the market for our electronic document management products;
. 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 our decision support
products;
. McKesson HBOC, Inc., Shared Medical Systems, Inc., MediTech Corporation and
Eclipses Corporation in the market for our enterprise products;
. HMS and ARTRAC, a division of Medaphis in the market for our business office
outsourcing services;
. a subsidiary of Minnesota Mining and Manufacturing, in the market for our
medical records products; and
. Transcend Services, Inc. and SMART Corporation in the market for our health
information management services.
In addition, current and prospective customers evaluate our 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 products that
compete with those offered by us, may enter our markets. In addition, many of
our competitors and potential competitors have significantly greater financial,
technical, product development, marketing and other resources and market
recognition than us. Many of our competitors also currently have, or may
develop or acquire, substantial installed customer bases in the health care
industry. As a result of these factors, our 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 and
may devote greater resources to the development, promotion and sale of their
products than us. There can be no assurance that we will be able to compete
successfully against current and future competitors or that such competitive
pressures will not materially adversely affect our business, financial
condition and operating results.
THERE MAY BE AN ADVERSE EFFECT ON THE MARKET PRICE OF OUR STOCK AS A RESULT OF
SHARES BEING AVAILABLE 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 lower
the market price of our Common Stock. As of June 30, 1999, approximately
1,500,000 shares are available for sale in the public market subject to
compliance with Rule 144. Certain of our existing stockholders holding an
aggregate of 725,934 shares of Common Stock as of June 30, 1999 have rights
under certain circumstances to require us to register their shares for future
sale (which amount does not include shares being registered hereunder).
In March 1999, we closed the acquisition of the Compucare Company
("Compucare"). In connection with the acquisition of Compucare, we issued an
aggregate of 2,957,000 shares of Common Stock. All of these shares are being
registered hereunder for resale under the Securities Act and will be freely
tradeable following such registration. In September 1998, we closed the
acquisition of Integrated Medical Networks. In connection with the acquisition
of Integrated Medical Networks, we issued an aggregate of
6.
<PAGE> 9
1,550,000 shares of Common Stock and agreed to file a registration statement
under the Securities Act prior to January 1, 1999 to register all such shares.
In June 1998, we closed the acquisition of Pyramid Health Group, Inc.
("Pyramid"). In connection with the acquisition of Pyramid, we issued an
aggregate of 2,784,508 shares of Common Stock and warrants to purchase 62,710
shares of Common Stock. All of the shares of Common Stock issued in connection
with the acquisitions of IMN and Pyramid have been registered under the
Securities Act and are freely tradeable.
Sales of a substantial number of the aforementioned shares in the public
markets or the prospect of such sales could adversely affect or cause
substantial fluctuations in the market price of the Common Stock and impair our
ability to raise additional capital through the sale of our securities.
WE MAY ENCOUNTER RISKS ASSOCIATED WITH NEW PRODUCT DEVELOPMENT
Our performance depends in large part upon our ability to provide the
increasing functionality required by our customers through the timely
development and successful introduction of new products and enhancements to our
existing suite of products. We have historically devoted significant resources
to product enhancements and research and development and believe that
significant continuing development efforts will be required to sustain our
operations and integrate the products and technologies of acquired businesses
with our products. There can be no assurance that we 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 us will meet the requirements of hospitals or other health care
providers and payors and achieve or sustain market acceptance.
WE MAY NOT BE ABLE TO PROTECT AND ENFORCE OUR INTELLECTUAL PROPERTY RIGHTS AND
MAY FACE A CLAIM OF INFRINGEMENT BY A THIRD PARTY
We rely on a combination of trade secrets, copyright and trademark laws,
nondisclosure and other contractual provisions to protect our proprietary
rights. We have not filed any patent applications covering our technology.
There can be no assurance that measures taken by us to protect our intellectual
property will be adequate or that our competitors will not independently
develop products and services that are substantially equivalent or superior to
the products and services we offer.
There is substantial litigation regarding intellectual property rights in
the software industry. We expect that software products may be increasingly
subject to third-party infringement claims as the number of competitors in our
industry segment grows and the functionality of products overlaps. We believe
that our products do not infringe upon the proprietary rights of third parties.
However, there can be no assurance that third parties will not assert
infringement claims against us in the future. The Company may incur substantial
litigation expenses in defending any such claim regardless of the merit of the
claim. In the event of an unfavorable ruling on any such claim, we cannot
guarantee that a license or similar agreement will be available to us on
reasonable terms, if at all. Infringement may result in significant monetary
liabilities which would have a material adverse effect on our business,
7.
<PAGE> 10
financial condition and results of operations. We cannot guarantee that we will
be successful in the defense of these or similar claims.
UNDETECTED SOFTWARE ERRORS, FAILURES FOUND IN NEW PRODUCTS AND FAILURE OF OUR
PRODUCTS TO MEET PERFORMANCE CRITERIA COULD MATERIALLY ADVERSELY AFFECT OUR
OPERATING RESULTS
Products such as our products frequently contain errors or failures,
especially when initially introduced or when new versions are released.
Although we conduct extensive testing on our products, software errors have
been discovered in certain enhancements and products after their introduction.
We cannot guarantee that despite such testing by us, and by our current and
potential customers, products under development, enhancements or shipped
products will be free of errors or performance failures, resulting in, among
other things;
. loss of revenues and customers;
. delay in market acceptance;
. diversion of resources;
. damage to our reputation; or
. increased service and warranty costs.
The occurrence of any of these consequences could have a material adverse
effect upon our business, financial condition and results of operations.
THERE ARE RISKS ASSOCIATED WITH YEAR 2000 COMPLIANCE
As is true for most companies, the Year 2000 computer issue creates a
risk for us. If systems do not correctly recognize date information when the
year changes to 2000, there could be an adverse impact on our operations. We
face risks in four areas: systems used by us to run our business, systems used
by our suppliers, potential warranty or other claims from our customers, and the
potential reduction in spending by other companies on our products and solutions
as a result of significant information systems spending on Year 2000
remediation.
We have conducted a thorough inventory and evaluation of our systems,
equipment and facilities. We have a number of projects underway to replace or
upgrade systems, equipment and facilities that we know to be Year 2000
non-compliant. We have not identified alternative remediation plans if upgrade
or replacement is not feasible. We will consider the need for such remediation
plans as we continue to assess the year 2000 risk. For the Year 2000
non-compliance issues identified to date, the cost of upgrade or remediation is
not expected to be material to our operating results. If implementation of
replacement systems is delayed, or if significant new non-compliance issues are
identified, our results of operations or financial condition could be materially
adversely affected.
We are also in the process of contacting our critical suppliers to
determine that such suppliers' operations and the products and services they
provide are Year 2000 compliant. To date, we are unaware of any current
suppliers that are not Year 2000 ready. In the event that our suppliers are not
Year 2000 compliant, we will seek alternative sources of supplies. However, such
failures remain a possibility and could have an adverse impact on our results of
operations or financial condition.
We believe our current products are Year 2000 compliant. However,
since all customer situations cannot be anticipated, particularly those
involving third party products, we may see an increase in warranty and other
claims as a result of the Year 2000 transition. In addition, litigation
regarding Year 2000 compliance issues is expected to escalate. For these
reasons, the impact of customer claims could have a material adverse impact on
our results of operations or financial condition.
Year 2000 compliance is an issue for virtually all businesses whose
computer systems and applications may require significant hardware and software
upgrades or modifications. Companies owning and operating such systems may plan
to devote a substantial portion of their information systems' spending to fund
such upgrades and modifications and divert spending away from our products and
solutions. Such changes in our customers' spending patterns could have a
material adverse impact on our sales, operating results or financial condition.
8.
<PAGE> 11
WE MAY SUFFER AN INTERRUPTION IN OUR BUSINESS, INCLUDING, DATA PROCESSING
We currently process substantially all our customer data at our facilities
in Richmond, California and Neptune, New Jersey. Although we back up our data
nightly and have safeguards for emergencies such as power interruption or
breakdown in temperature controls, we have no mirror processing site to which
processing could be transferred in the case of a catastrophic event at either
of these facilities. In the event that a major catastrophic event occurs at
either the Richmond or the Neptune facility, possibly leading to an
interruption of data processing, our business, financial condition and results
of operations could be adversely affected.
WE FACE RISKS RELATED TO OUR OUTSOURCING BUSINESS
We provide compliance, consulting and business office outsourcing and cash
flow management services, including the billing and collection of receivables.
We acquired the infrastructure for our outsourcing business through an
acquisition. In addition, we often use our software products to provide
outsourcing services. As a result, we have not been required to make significant
capital expenditures in order to service existing outsourcing contracts.
However, if we experience a period of substantial expansion in our outsourcing
business, we may be required to make substantial investments in capital assets
and personnel. We cannot guarantee that we will be able to assess accurately the
investment required and negotiate and perform in a profitable manner any of the
outsourcing contracts we may be awarded. Our failure to either estimate
accurately the resources and related expenses required for a project, or to
complete our contractual obligations in a manner consistent with the project
plan upon which a contract was based, could have a material adverse effect on
our business, financial condition and results of operations. In addition, our
failure to meet a client's expectations in the performance of our services could
damage our reputation and adversely affect our ability to attract new business.
Finally, we could incur substantial costs and expend significant resources
correcting errors in our work, and could possibly become liable for damages
caused by these errors.
WE FACE RISKS ASSOCIATED WITH POTENTIAL GOVERNMENTAL 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 our products make them
clinical decision tools subject to FDA regulation. Compliance with these
regulations could be burdensome, time consuming and expensive. We could also
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 us in other
respects not presently foreseeable. We cannot predict the effect of possible
future legislation and regulation.
9.
<PAGE> 12
State governments substantially regulate the confidentiality of patient
records and the circumstances under which such records may be released for
inclusion in our databases. 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 us to incur substantial expenditures. We are not sure
that changes to state or federal laws will not materially restrict the ability
of health care providers to submit information from patient records using our
products.
WE FACE RISK OF PRODUCT-RELATED CLAIMS
Some of our products and services are used in the payment, collection,
coding and billing of health care claims and the administration of managed care
contracts. If our employees or our products fail to accurately assess, process
or collect these claims, our customers may file claims against us. We have been
and currently are involved in claims for money damages related to services
provided by our accounts receivable management business. We maintain insurance
to protect against certain claims associated with the use of our products, but
there can be no assurance that our insurance coverage would adequately cover any
claim brought against us. A successful claim brought against us that is in
excess of, or is not covered by, our insurance coverage could adversely affect
our business, financial condition and results of operations. Even a claim
without merit could result in significant legal defense costs and would consume
management time and resources. We do not know whether we will be subject to
material claims in the future which may result in liability in excess of our
insurance coverage, or which our insurance may not cover. We may not be able to
obtain appropriate insurance in the future at commercially reasonable rates. In
addition, if we are found liable, we would have to significantly alter our
products resulting in additional unanticipated research and development
expenses.
WE FACE RISKS ASSOCIATED WITH CERTAIN INVESTMENTS WE HAVE MADE OR MAY MAKE IN
THE FUTURE
We have made equity investments to acquire minority interests in certain
early stage companies. We do not have the ability to control the operations of
any of these companies. Investing in such early stage companies is subject to
certain significant risks. There can be no assurance that any of these
companies will be successful or achieve profitability or that we will ever
realize a return on our investments. In addition, to the extent any of such
companies fail or become bankrupt or insolvent, we may lose some or all of our
investment. We intend to continue to make additional investments in such
companies in the future. Losses resulting from such investment could have a
material adverse effect on our operating results.
POTENTIAL EFFECTS OF ANTI-TAKEOVER PROVISIONS COULD INHIBIT THE ACQUISITION OF
QUADRAMED
Our Board of Directors has the authority to issue up to 5,000,000 shares
of Preferred Stock and to determine the price, rights preferences, privileges
and restrictions, including voting rights, of those shares without any further
vote or action by the stockholders. The rights of the
10.
<PAGE> 13
holders of Common Stock may 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.
The issuance of Preferred Stock may have the effect of delaying, deferring or
preventing a change of control of the Company without further action by the
stockholders and may adversely affect the voting and other rights of the holders
of Common Stock. We have no present plans to issue shares of Preferred Stock.
Further, certain provisions of our Certificate of Incorporation and Bylaws
could discourage potential takeover attempts and make attempts by stockholders
to change management more difficult. For example, our Board of Directors is
classified into three classes of directors serving staggered, three-year terms
and has the authority without action by our stockholders to impose various
procedural and other requirements that could make it more difficult for
stockholders to effect certain corporate actions. In addition, our 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, our 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 our Common Stock.
Finally, certain provisions of Delaware law 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.
OUR STOCK PRICE MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS
The stock market in general, and the Nasdaq National Market, has
historically experienced extreme price and volume fluctuations that have often
been unrelated to the operating performance of companies and which has affected
the market price of securities of many companies. The trading price of our
Common Stock is likely to be highly volatile and could also be subject to
significant fluctuations in price in response to such factors as:
. variations in quarterly results of operations;
. announcements of new products or acquisitions by us or our competitors;
. governmental regulatory action;
. developments or disputes with respect to proprietary rights;
. general trends in our industry and overall market conditions; and
. other event or factors, many of which are beyond our control.
The market price of our Common Stock 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.
11.
<PAGE> 14
SELLING STOCKHOLDERS
The following table sets forth the principal amount of Common Stock
beneficially owned by each of the Selling Stockholders as of June 30, 1999, 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>
Alden, John 13,386 *
Alden, Mary Watson 3,904 *
Alm, Ricky 117 *
Amherst H. Wilder Foundation 1,204 *
Anderson, Greg 13 *
Anderson, Larin 83 *
Aprahamian, Ronald V. and Patricia C. 140,999 *
Audrey Hillman Fisher Trust, dated 8/28/68 9,340 *
Baum, Linda 134 *
Bernier, Ronald P. 29,706 *
Brink, Richard 5,379 *
Brun, Marcia 43 *
Brynildson, Jeff 167 *
Burgess, Steve 83 *
CEO Venture Fund II 225,082 *
CEO Venture Fund III 120,024 *
Chandler, Judith A. 33 *
Chapman, Christine A. 558 *
Colker, James 6,961 *
Cooke, Kim Daniel 2,152 *
Cooper, Barry 67 *
Countryman, Helen Ann 1,152 *
Dahlby, Karen 62 *
Dean Witter Reynolds, Inc. 4,713 *
Ehrich, Paula 83 *
Eorio, Victoria K. 62 *
Fischer, Mary P. 1,152 *
Fisher, Audrey Hillman 9,340 *
Fosse, Ronald 107 *
Freeman, Robert 62 *
Galen Associates 1,770 *
Galen Partners II, L.P. 300,090 1.3
Galen Partners International II, L.P. 114,867 *
Garrett, John T. 182 *
Gaska, Leslie 167 *
General Mills, Inc. 1,204 *
Gilliland, Vicki 4 *
Golding, Gary P. 195 *
Guthrie, Mary 50 *
Hagen, Keith 25 *
Hale, Ann 83 *
Hays, Jeffrey D. 83 *
HCC Investments, Inc. 190,066 *
Health Partners 3,055 *
Hemley, Donald E. 1,645 *
Hemmerle, John 83 *
Henry L. Hillman, Jr. Trust, dated 8/28/68 9,340 *
Henry L. Hillman Trust, dated 11/18/85 56,041 *
Heyman, Zol 836 *
Hilger, David, Trustee, David 803 *
Hilger and Martha Hilger Trust
Hilger, Jerome A. 12,104 *
Hilger, Jerome, Trustee, Helen 1,854 *
Hilger Trust Unit B
Hilger, Jerome, Trustee, The 755 *
Helen Hilger Revocable Trust
dated 12/28/89
Hilger, Peter A. 1,152 *
Hilger, Timothy 1,152 *
Hillman, Henry L. Jr. 9,340 *
Houlihan Lokey Howard & Zukin 9,427 *
Howell, Richard 1,079 *
Huddelson, William 83 *
IA-II Affiliates Fund, L.L.C. 8,117 *
Information Associates, L.P. 90,253 *
Information Associates-II, C.V. 2,518 *
Information Associates-II, L.P. 139,158 *
Jeffrey M. MacDonald 10,144 *
John H. Ginn 5,072 *
Jones, Mary Pat S. 3,317 *
Jones, V. Brewster 3,317 *
Juliet Lea Hillman Simonds Trust, dated 8/28/68 9,340 *
Lally, Jeanne M. 291 *
Little, Phillip A. 797 *
McLean, Marianne 67 *
Michael D. Halberda 121,726 *
Mikhalko, B. 83 *
Monteiro, M.J. 1,338 *
Morgan Stanley Capital Investors, L.P. 21,628 *
Morgan Stanley Capital Partners III, Inc. 16,497 *
Morgan Stanley Capital Partners III, L.P. 726,504 3.2
Morgan Stanley Venture Capital Fund II, C.V. 58,183 *
Morgan Stanley Venture Capital Fund II, L.P. 170,538 *
Morgan Stanley Venture Investors, L.P. 118,675 *
Morton, Scott 53 *
MSCP III 892 Investors, L.P. 76,911 *
Nelson, Nancy 8 *
Newlin, William R. 7,873 *
Norwest Bank, Trustee John Wedum 3,532 *
Noto, c. Duane 215 *
Parker, Ransom J. 327 *
Peter W. Jarvis 365,179 1.6
Portor, Michael 129 *
Rowny, Paul 134 *
Salim Nice 5,072 *
Schweyen, Connie 107 *
Sellner, Jo Marie 71 *
Simonds, Juliet Lea Hillman 9,340 *
Simpson, Jeffrey 279 *
Sokol, Carol M. 1,152 *
The Regence Group 9,902 *
The Schofield-Locke 1998 Revocable Trust 217,088 *
Thompson, David 323 *
Thompson, Robert 565 *
Trident Capital Partners Fund I, C.V. 16,168 *
Trident Capital Partners Fund I, L.P. 81,725 *
Vaughan, Barbara 12 *
Venhill Limited Partnership 56,041 *
Wedum Foundation 8,152 *
Wedum, John A. 719 *
William Talbott Hillman Trust, dated 8/28/68 18,680 *
Woodwick, Susan 107 *
</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
12.
<PAGE> 15
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 Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P., San
Diego, California.
EXPERTS
The audited consolidated financial statements incorporated by reference
in this prospectus and elsewhere in the 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
13.
<PAGE> 16
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 for the fiscal year ended December 31, 1998
filed March 31, 1999, and amendment thereto filed April 30, 1999.
2. Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1999 filed August 16, 1999.
3. Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1999 filed May 17, 1999.
4. Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1998 and amendment thereto filed March 15, 1999;
5. Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
1998 and amendment thereto filed March 15, 1999;
6. Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
1998 and amendment thereto filed March 15, 1999;
7. Current Report on Form 8-K dated August 11, 1999 and filed August 18,
1999.
8. Current Report on Form 8-K dated March 12, 1999 and filed March 15,
1999.
9. Current Report on Form 8-K dated February 3, 1999 and filed February
18, 1999 and amendment thereto filed March 22, 1999.
10. Current Report on Form 8-K dated September 30, 1998 and filed October
15, 1998;
11. Current Report on Form 8-K dated August 31, 1998 and filed September
11, 1998;
12. Current Report on Form 8-K dated June 1, 1998, and filed June 11,
1998, and amendment thereto filed June 17, 1998;
13. Current Report on Form 8-K dated May 1, 1998 and filed May 11, 1998;
14. Current Report on Form 8-K dated April 13, 1998 and filed April 29,
1998;
15. 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;
16. Current Report on Form 8-K dated September 29, 1997 and filed October
14, 1997, and amendment thereto filed March 10, 1998;
17. Current Report on Form 8-K dated February 4, 1998 and filed February
18, 1998;
18. Current Report on Form 8-K dated December 29, 1997 and filed January
13, 1998; and
19. 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).
14.
<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............................................................ 11
Selling Stockholders....................................................... 12
Plan of Distribution....................................................... 12
Legal Matters.............................................................. 13
Experts.................................................................... 13
Available Information...................................................... 13
Incorporation of Certain Documents
by Reference.......................................................... 14
</TABLE>
QUADRAMED CORPORATION
3,681,130 Shares of Common Stock
PROSPECTUS
August 25, 1999
<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....................... $ 9,470
Nasdaq National Market listing fee........................................ 10,140
Printing and engraving expenses........................................... 1,000
Legal expenses............................................................ 15,000
Accounting fees and expenses.............................................. 20,000
Miscellaneous expenses.................................................... 1,000
-------
Total............................................................. $56,610
=======
</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 December 23, 1998 by
and among the Company and Premier Healthcare Acquisition
Corporation, and Premier Healthcare Corporation and its
Shareholders.(3)
2.2 Acquisition Agreement and Plan of Merger dated February 3, 1999 by
and among the Company and Compucare Acquisition Corporation, and
The Compucare Company and certain of its stockholders.(1)
4.1 Reference is made to Exhibits 3.2 and 3.4 of the Form SB-2 (as
defined herein).(2)
4.2 Form of Common Stock Certificate.(2)
4.3 Registration Rights Agreement dated December 23, 1998 by and
between the Company and the shareholders listed therein.(3)
4.4 Registration Rights Agreement dated March 3, 1999 by and among
the Company and the Stockholders of Compucare listed therein.(3)
5.1 Opinion of Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P.
23.1 Consent of Arthur Andersen LLP.
23.3 Consent of Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P.
(included in Exhibit 5.1).
24.1 Power of Attorney.(3)
(1) Incorporated herein by reference from the Company's Current Report on
Form 8-K filed with the Commission on February 18, 1999.
(2) 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").
(3) Previously filed.
(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 25th day of August, 1999.
QUADRAMED CORPORATION
By /s/ E. PAYSON SMITH
----------------------------------
E. Payson Smith
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
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>
* Chairman of the Board and Chief Executive Officer August 25, 1999
------------------------ (Principal Executive Officer)
James D. Durham
/s/ E. PAYSON SMITH Executive Vice President and Chief Financial Officer August 25, 1999
------------------------ (Principal Financial and Accounting Officer)
E. Payson Smith
* Vice President, Finance August 25, 1999
------------------------- and Chief Accounting Officer
Bernie J. Murphy (Principal Accounting Officer)
* Director August 25, 1999
-------------------------
Michael J. King
* Director August 25, 1999
-------------------------
Albert L. Greene
Director August __, 1999
-------------------------
Kenneth E. Jones
Director August __, 1999
-------------------------
Joan P. Neuscheler
* Director August 25, 1999
-------------------------
E.A. Roskovensky
*By: /s/ E. PAYSON SMITH
-------------------------
E. Payson Smith
Attorney-in-fact
</TABLE>
II-4
<PAGE> 22
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
5.1 Opinion of Zevnik Horton Guibord McGovern Palmer & Fognani, L.L.P.
23.1 Consent of Arthur Andersen LLP.
II-5
<PAGE> 1
EXHIBIT 5.1
August 24, 1999
QuadraMed Corporation
1003 West Cutting Boulevard, 2nd Floor
Richmond, California 94804
Ladies and Gentlemen:
We have acted as counsel to QuadraMed Corporation, a Delaware corporation
(the "Company"), in connection with the issuance of an aggregate of 3,681,130
shares of its common stock (the "Shares") which may be offered for resale by
certain stockholders of the Company pursuant to a registration statement on Form
S-3, filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Registration Statement").
In connection with this opinion, we have examined and relied upon the
Registration Statement and related Prospectus, the Company's Second Amended and
Restated Certificate of Incorporation, the Company's Amended and Restated
Bylaws and the originals or copies certified to our satisfaction of such
records, documents, certificates, memoranda or other instruments as in our
judgment are necessary or appropriate to enable us to render the opinion
express below.
On the basis of the foregoing, and in reliance thereon, we are of the
opinion that the Shares have been duly authorized, validly issued, fully paid
and nonassessable.
We consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Prospectus which is part of the Registration Statement.
It is understood that this opinion is to be used only in connection with
the offer and sale of the Shares while the Registration Statement is in effect.
Very truly yours,
ZEVNIK HORTON GUIBORD McGOVERN
PALMER & FOGNANI, L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated August 11, 1999
included in QuadraMed Corporation's Form 8-K for the year ended December 31,
1998 and to all references to our Firm included in this registration statement.
Our report dated February 17, 1999 included in QuadraMed Corporation's Form 10-K
for the year ended December 31, 1998 is no longer appropriate since restated
financial statements have been presented giving effect to a business
combination accounted for as a pooling-of-interests.
ARTHUR ANDERSEN LLP
San Jose, California
August 23, 1999
