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As filed with the Securities and Exchange Commission on December 29, 2000
Registration Statement No. 333-52470
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALLSCRIPTS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-3444974
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2401 Commerce Drive
Libertyville, Illinois 60048
(847) 680-3515
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Glen E. Tullman
Chairman and Chief Executive Officer
2401 Commerce Drive
Libertyville, Illinois 60048
(847) 680-3515
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
------------------------------------
Copies to:
Jeffrey Schumacher
Sachnoff & Weaver, Ltd.
30 S. Wacker Drive, 29th Floor
Chicago, Illinois 60606
(312) 207-6414
------------------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this registration statement as
determined by the selling stockholders.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, 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. [_]
The registrant amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the 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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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated December 29, 2000.
1,398,303 Shares
Allscripts, Inc.
Common Stock, $0.01 par value
Allscripts, Inc.: The Offering:
. We are a Delaware corporation engaged . The selling stockholders listed
in the business of providing Internet under the caption "Selling
and client/server medication Stockholders" on pages 23-27, or
management solutions to physicians their successors, distributees
and selling prepackaged or permitted assigns, are
pharmaceuticals to physicians for offering 1,398,303 shares of our
distribution directly to patients. common stock. We will not
receive any of the proceeds from
the sale of the shares.
. Allscripts, Inc. . The selling stockholders may
sell the shares from time to
2401 Commerce Drive time, using a broker, dealer or
agent, or directly, in open
Libertyville, Illinois 60048 market transactions, block
trades, ordinary brokers trades
(847) 680-3515 or in privately negotiated
transactions. The selling
stockholders or any broker or
dealer may use the prospectus.
The price at which the selling
stockholders will sell the
shares and commissions, if any,
to be paid, may vary based on
prevailing market prices or may
be privately negotiated and as
a result are not known at this
time. We will pay the expenses
incident to the registration of
such shares, except for selling
commissions.
. Nasdaq National Market symbol: MDRX . There is an existing trading
market for these shares. The
last reported sale price on
December 27, 2000 was $9.91.
INVESTING IN OUR COMMON STOCK INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 7 OF THIS PROSPECTUS FOR INFORMATION THAT YOU SHOULD CONSIDER BEFORE
PURCHASING SECURITIES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY BODY HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is _____________, 2001.
<PAGE>
Table of Contents
<TABLE>
<S> <C>
FORWARD-LOOKING INFORMATION................................................. 2
OUR COMPANY................................................................. 4
RECENT DEVELOPMENTS......................................................... 4
BUSINESS OF CHANNELHEALTH................................................... 6
RISK FACTORS................................................................ 7
USE OF PROCEEDS............................................................. 23
SELLING STOCKHOLDERS........................................................ 23
PLAN OF DISTRIBUTION AND OFFERING PRICE..................................... 28
VALIDITY OF STOCK........................................................... 30
EXPERTS..................................................................... 30
AVAILABLE INFORMATION....................................................... 30
INFORMATION INCORPORATED BY REFERENCE....................................... 31
</TABLE>
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. The selling stockholders are offering to
sell, and seeking offers to buy, shares of our common stock only in
jurisdictions where offers and sales are permitted. You should not assume that
the information in this prospectus or any supplement is accurate as of any date
other than the date on the cover page of such documents. Our business, financial
condition, results of operations and prospects may have changed since that date.
In this prospectus, "we," "us" and "our" refer to Allscripts, Inc., and the
"selling stockholders" refers to those persons described in the section titled
"Selling Stockholders" beginning on page 23.
FORWARD-LOOKING INFORMATION
This prospectus, including the information incorporated by reference herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
Some of this information is based on the beliefs of management as well as
assumptions made by and information currently available to management. When used
in this prospectus or in the documents incorporated by reference in this
prospectus, the words "anticipate," "believe," "estimate," "expect," "intend,"
"plan," or any similar expressions, as they relate to us or our management, or
the management of our business, may identify forward-looking statements. Our
actual results could differ materially from those projected in the
forward-looking
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statements as a result of the risk factors set forth in the section titled
"Business - Risks Related to Our Company" of our annual report on From 10-K for
the year ended December 31, 1999 and in the section titled "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of our
annual report on Form 10-K for the year ended December 31, 1999 and our
quarterly reports on Form 10-Q for the quarters ended March 31, 2000, June 30,
2000, as amended on October 27, 2000, and September 30, 2000, and in the section
titled "Risk Factors" of our Registration Statement on Form S-4, dated November
8, 2000, as amended on December 7, 2000, all of which are incorporated by
reference in this prospectus, and any subsequently filed reports under the
Securities Exchange Act of 1934.
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OUR COMPANY
We provide physicians with Internet and client/server medication management
solutions designed to improve the quality and cost effectiveness of
pharmaceutical healthcare. Our technology-based approach focuses on the point of
care, where prescriptions and many other healthcare transactions originate, and
creates an electronic dialogue between physicians and other participants in the
healthcare delivery process, including patients, pharmacies, managed care
organizations and pharmaceutical manufacturers.
We currently offer products in four categories: point-of-care medication
management, Internet products and services, including e-detailing, information
products and prepackaged medications. Our TouchScript software enables
electronic prescribing, routing of prescription information and capturing of
prescription data at the point of care. Our other e-commerce products and
services offer physicians and their patients medication-related education and
information services. We also sell prepackaged medications to physicians for
dispensing to their patients.
We were incorporated in Illinois in 1986 and were reincorporated in Delaware
in 1999. Our executive offices are at 2401 Commerce Drive, Libertyville,
Illinois 60048. Our telephone number is (847) 680-3515; our Internet e-mail
address is [email protected]; and our web site is www.allscripts.com.
Information contained on our web site is not part of this prospectus.
TouchScript(R) is a registered trademark of Allscripts, Inc.
RECENT DEVELOPMENTS
Legal Proceedings
Three complaints, styled as shareholder class action complaints, have been
filed in the United States District Court for the Northern District of Illinois
against our company and our President and Chief Financial Officer, David B.
Mullen, alleging that the defendants failed to disclose that revenue relating to
our relationship with IMS Health was not properly recorded in the second quarter
of 2000. The complaints are captioned Bredeson v. Allscripts, Inc. and David B.
Mullen, Civ. No. 00C-6796 (N. D. Ill., filed on October 31, 2000), Karmazin v.
Allscripts, Inc. and David B. Mullen, Civ. No. 00C-6864 (N.D. Ill., filed on
November 2, 2000) and Mohr v. Allscripts, Inc. and David B. Mullen, Civ. No.
00C-6992 (N.D. Ill., filed on November 6, 2000). The complaints in these actions
purport to be brought on behalf of individuals who purchased our common stock
during the period of July 27, 2000 through and including October 26, 2000. The
plaintiffs allege violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and seek unspecified damages. According to reports on the
Internet, at least one additional similar complaint has been filed against us.
At this time, management is unable to determine the likely outcome of this
matter or to reasonably estimate the amount of loss with respect to this matter.
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Proposed Merger with Channelhealth
Channelhealth Incorporated, IDX Systems Corporation and our company have
agreed on a merger transaction involving Channelhealth, a majority-owned
subsidiary of IDX, and us. Before we can complete the merger, we must obtain the
approval of our stockholders and Channelhealth must obtain the approval of its
stockholders. We sent a proxy statement/prospectus to ask our stockholders to
vote in favor of the merger transaction in December 2000. Upon completion of the
transaction:
. Our company and Channelhealth will each become a wholly owned subsidiary
of a new holding company named "Allscripts Healthcare Solutions, Inc.,"
formerly "Allscripts Holding, Inc.," which we refer to in this
prospectus as New Allscripts;
. each outstanding share of our common stock will be converted into one
share of New Allscripts common stock; and
. each outstanding share of Channelhealth common stock and each
outstanding share of Channelhealth preferred stock will be converted
into the right to receive shares of New Allscripts common stock
representing altogether about 21.9% of the New Allscripts common stock
calculated on a fully diluted basis and treating option holders and
warrant holders as stockholders.
The New Allscripts common stock, including the shares issued to stockholders
of Channelhealth as a result of the merger transactions, will be authorized for
quotation on the Nasdaq National Market under the trading symbol "MDRX," which
is our current trading symbol.
Channelhealth and our company will each hold a special meeting of its
stockholders to consider and vote on the merger proposal in early January 2001.
Completion of the merger requires approval of our stockholders and
Channelhealth's common and preferred stockholders, voting separately by class.
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BUSINESS OF CHANNELHEALTH
Channelhealth sells physician-focused, Internet-based software applications
and services that automate many of the clinical and administrative functions
involved in the healthcare delivery process. Channelhealth's solution is
designed to help healthcare providers lower healthcare costs and improve
decision making by managing information flows in an efficient and timely manner.
Channelhealth's suite of applications, which are known collectively as the
"Physician Channel," consists of:
Application Key Applications and Services
- --------------------------------------------------------------------------------
Physician Homebase Access to practice management and
clinical functions (schedules, tasks, patient
lists, e-mail), personally configured links to
clinically relevant content and continuing medical
education and non-clinical content
WebWorks Office automation and work-flow integration tools
that create task lists for the physicians and
their support teams
ChargeWorks Automated encounter form that includes regulatory
compliance decision support
DocWorks Electronic dictation and transcription services
with on-line tracking, viewing and printing
capabilities
MedWorks Medication management and prescription
communication for ambulatory patients with drug
utilization review and plan-specific formulary
checking
ResultWorks Display of clinical results and text documents
OrderWorks Ordering of diagnostic tests, supplies and other
items for ambulatory patients
NoteWorks Structured clinical note creation and editing
Channelhealth delivers its Physician Channel services through an
application services provider model and integrates them with a provider
organization's existing practice management system and databases. Channelhealth
has designed its services to be implemented on a modular basis. Thus, the
Physician Channel services can be implemented incrementally with minimal
disruption and up-front investment.
Channelhealth has entered into strategic agreements with various providers
of on-line medical resources to better service the healthcare providers using
the Physician Channel. These agreements provide users of the Physician Channel
with access to continuing medical information courses, clinical reference and
health awareness information, as well as access to prescription benefit
management rules and eligibility, pertinent patient medication history and
network pharmacy listings. Channelhealth has also entered into an administrative
services agreement, a marketing, development and service agreement and a cross
license and software maintenance agreement with IDX. Upon the closing of the
mergers, the marketing, development and service agreement and the cross license
and software maintenance agreement will terminate and be replaced with the
strategic alliance agreement and the amended and restated cross license and
software maintenance agreement. The administrative services agreement will
terminate as of December 31, 2000.
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Channelhealth's target customers are large healthcare provider
organizations, primarily consisting of large physician group practices,
hospitals and integrated delivery networks. Channelhealth competes for customers
with other providers of Internet-based healthcare solutions and clinical systems
for the key service offerings of connectivity, content, applications and the
browser-based desktop and personal digital assistant user interface. While it
enjoys the advantage of access to a large installed base of provider
organizations in the United States and strong relationships with executive
management at prestigious healthcare organizations nationwide, Channelhealth
expects competitors to aggressively target that customer base. Channelhealth
distributes its services to clients under license agreements that typically
grant customers nonexclusive, nontransferable licenses to use the software and
services. To provide complete services for its clients, Channelhealth provides
technical service and support to its customers 24 hours a day and seven days a
week.
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DECRIBED BELOW BEFORE MAKING A
DECISION TO INVEST IN OUR COMMON STOCK. THE RISKS AND UNCERTAINTIES DESCRIBED
BELOW ARE NOT THE ONLY ONES THAT WE FACE. ADDITIONAL RISKS AND UNCERTAINTIES NOT
PRESENTLY KNOWN TO US OR THAT WE DO NOT CURRENTLY BELIEVE ARE IMPORTANT TO AN
INVESTOR MAY ALSO HARM OUR BUSINESS OPERATIONS. IF ANY OF THE EVENTS,
CONTINGENCIES, CIRCUMSTANCES OR CONDITIONS DESCRIBED IN THE FOLLOWING RISKS
ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD
BE SERIOUSLY HARMED. IF THAT OCCURS, THE TRADING PRICE OF OUR COMMON STOCK COULD
DECLINE, AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT.
Risks Related to Our Company
If physicians do not accept our products and services, our growth will be
impaired.
Our business model depends on our ability to sell our TouchScript system to
physicians and other healthcare providers and to generate usage by a large
number of physicians. We have not achieved this goal with previous or currently
available versions of our software. Physician acceptance of our products and
services will require physicians to adopt different behavior patterns and new
methods of conducting business and exchanging information. We cannot assure you
that physicians will integrate our products and services into their office work
flow or that participants in the pharmaceutical healthcare market will accept
our products and services as a replacement for traditional methods of conducting
pharmaceutical healthcare transactions. Achieving market acceptance for our
products and services will require substantial marketing efforts and the
expenditure of significant financial and other resources to create awareness and
demand by participants in the pharmaceutical healthcare industry. If we fail to
achieve broad acceptance of our products and services by physicians and other
healthcare participants or to position our services as a preferred method for
pharmaceutical healthcare delivery, our prospects for growth will be diminished.
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We are currently experiencing losses and we may not become profitable in the
future.
We are currently experiencing losses and cannot assure you that we will
become profitable in the foreseeable future, if ever. For the nine months ended
September 30, 2000 and the year ended December 31, 1999, we had net losses of
$42.1 million and $11.2 million, respectively. Even if we do achieve
profitability, we may be unable to sustain or increase our profitability in the
future.
Because our business model is new and unproven, our operating history is not
indicative of our future performance and our business is difficult to evaluate.
Because we have not yet successfully implemented our business model, we do
not have an operating history upon which you can evaluate our prospects, and you
should not rely upon our past performance to predict our future performance. We
sold our pharmacy benefit management business in March 1999. Revenue from this
discontinued operation was $44,719,000 in 1997, $52,866,000 in 1998 and
$14,292,000 in 1999. In each of 1997 and 1998, revenue from this discontinued
operation exceeded revenue from continuing operations. For the year ended
December 31, 1998, we generated 93.4% of our revenue from the sale of
prepackaged medications to doctors for dispensing at the point of care, without
the use of our TouchScript system. For the year ended December 31, 1999 and the
nine months ended September 30, 2000, we generated 76.2% and 54.4% of our
revenue, respectively, from these non-TouchScript medication sales. Accordingly,
our operating history is not indicative of our future performance under our new
business model. In attempting to implement our business model, we are
significantly changing our business operations, sales and implementation
practices, customer service and support operations and management focus. We are
also facing new risks and challenges, including a lack of meaningful historical
financial data upon which to plan future budgets, the need to develop strategic
relationships and other risks described below.
If we are unable to maintain existing relationships and create new relationships
with managed care payers, our prospects for growth will suffer.
We rely on managed care organizations to reimburse our physician customers
for prescription medications dispensed in their offices. While many of the
leading managed care payers and pharmacy benefit managers currently reimburse
our physicians for in-office dispensing, none of these payers is under a
long-term obligation to do so. If we are unable to increase the number of
managed care payers that reimburse for in-office dispensing, or if some or all
of the payers who currently reimburse physicians decline to do so in the future,
utilization of our products and, therefore, our growth will be impaired.
If we are unable to successfully introduce new products, our business prospects
will be impaired.
The successful implementation of our business model depends on our ability
to introduce new products and to introduce these new products on schedule. We
cannot assure you that we will be able to introduce new products or our products
currently under development on schedule, or at all. In addition, early releases
of software often contain errors or defects. We cannot assure you that, despite
our extensive testing, errors will not be found in our new product releases and
services before or after commercial release, which would result in product
redevelopment costs and loss of, or delay in, market acceptance. A failure by us
to introduce planned products or other new products or to introduce these
products on schedule could have a material adverse effect on our business
prospects.
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Our business will not be successful unless we establish and maintain strategic
relationships.
To be successful, we must establish and maintain strategic relationships
with leaders in a number of healthcare and Internet industry segments. This is
critical to our success because we believe that these relationships will enable
us to:
. extend the reach of our products and services to a larger number of
physicians and to other participants in the healthcare industry;
. develop and deploy new products;
. further enhance the Allscripts brand; and
. generate additional revenue.
Entering into strategic relationships is complicated because some of our
current and future strategic partners may decide to compete with us in some or
all of our markets. In addition, we may not be able to establish relationships
with key participants in the healthcare industry if we have relationships with
their competitors. Moreover, many potential strategic partners have resisted,
and may continue to resist, working with us until our products and services have
achieved widespread market acceptance.
Once we have established strategic relationships, we will depend on our
partners' ability to generate increased acceptance and use of our products and
services. To date, we have established only a limited number of strategic
relationships, and these relationships, including our recently formed alliance
with IMS Health Incorporated, are in the early stages of development and may not
achieve the objectives that we seek. We have limited experience in establishing
and maintaining strategic relationships with healthcare and Internet industry
participants. If we lose any of these strategic relationships or fail to
establish additional relationships, or if our strategic relationships fail to
benefit us as expected, we may not be able to execute our business plan, and our
business will suffer.
If potential customers take a long time to evaluate the purchase of our products
and services, we could incur additional selling expenses and require additional
working capital.
The length of the sales cycle for our current TouchScript product depends on
a number of factors, including the nature and size of the potential customer and
the extent of the commitment being made by the potential customer, and is
difficult to predict. Our marketing efforts with respect to large healthcare
organizations generally involve a lengthy sales cycle due to these
organizations' complex decision-making processes. If potential customers take
longer than we expect to decide whether to purchase our solutions, our selling
expenses could increase, and we may need to raise additional capital sooner than
we would otherwise need to.
If we cannot keep pace with advances in technology, our business could be
harmed.
If we cannot adapt to changing technologies, our products and services may
become obsolete, and our business could suffer. Because the Internet and
healthcare information markets are characterized by rapid technological change,
we may be unable to anticipate changes in our current and potential customers'
requirements that could make our existing technology obsolete. Our success will
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depend, in part, on our ability to continue to enhance our existing products and
services, develop new technology that addresses the increasingly sophisticated
and varied needs of our prospective customers, license leading technologies and
respond to technological advances and emerging industry standards and practices
on a timely and cost-effective basis. The development of our proprietary
technology entails significant technical and business risks. We may not be
successful in using new technologies effectively or adapting our proprietary
technology to evolving customer requirements or emerging industry standards.
Our future success depends upon our ability to grow, and if we are unable to
manage our growth effectively, we may incur unexpected expenses and be unable to
meet our customers' requirements.
We will need to expand our operations if we successfully achieve market
acceptance for our products and services. We cannot be certain that our systems,
procedures, controls and existing space will be adequate to support expansion of
our operations. Our future operating results will depend on the ability of our
officers and key employees to manage changing business conditions and to
implement and improve our technical, administrative, financial control and
reporting systems. An unexpectedly large increase in the volume or pace of
traffic on our web site or the number of orders placed by customers may require
us to expand and further upgrade our technology. We may not be able to project
the rate or timing of increases in the use of our web site accurately or to
expand and upgrade our systems and infrastructure to accommodate such increases.
Difficulties in managing any future growth could have a significant negative
impact on our business because we may incur unexpected expenses and be unable to
meet our customers' requirements.
If we lose the services of our key personnel, we may be unable to replace them,
and our business could be negatively affected.
Our success depends in large part on the continued service of our management
and other key personnel and our ability to continue to attract, motivate and
retain highly qualified employees. In particular, the services of Glen E.
Tullman, our Chairman and Chief Executive Officer, and David B. Mullen, our
President and Chief Financial Officer, are integral to the execution of our
business strategy. If one or more of our key employees leaves our company, we
will have to find a replacement with the combination of skills and attributes
necessary to execute our strategy. Because competition for skilled employees is
intense, and the process of finding qualified individuals can be lengthy and
expensive, we believe that the loss of the services of key personnel could
negatively affect our business, financial condition and results of operations.
If we are unable to implement our acquisition strategy successfully, our ability
to expand our product and service offerings and our customer base maybe limited.
We regularly evaluate acquisition opportunities. Acquisitions involve
numerous risks, including difficulties in the assimilation of the operations,
services, products and personnel of the acquired company, the diversion of
management's attention from other business concerns, entry into markets in which
we have little or no direct prior experience, the potential loss of key
employees of the acquired company and our inability to maintain the goodwill of
the acquired businesses. In order to expand our product and service offerings
and grow our business by reaching new customers, we may continue to acquire
businesses that we believe are complementary. The successful implementation of
this strategy depends on our ability to identify suitable acquisition
candidates, acquire companies on
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acceptable terms, integrate their operations and technology successfully with
our own and maintain the goodwill of the acquired business. We are unable to
predict whether or when any prospective acquisition candidate will become
available or the likelihood that any acquisition will be completed. Moreover, in
pursuing acquisition opportunities, we may compete for acquisition targets with
other companies with similar growth strategies. Some of these competitors may be
larger and have greater financial and other resources than we have. Competition
for these acquisition targets could also result in increased prices of
acquisition targets.
Future acquisitions may result in potentially dilutive issuances of equity
securities, the incurrence of additional debt, the assumption of known and
unknown liabilities, the write off of software development costs and the
amortization of expenses related to goodwill and other intangible assets, all of
which could have a material adverse effect on our business, financial condition,
operating results and prospects. We have taken, and in the future may take,
charges against earnings in connection with acquisitions. The costs and expenses
incurred may exceed the estimates upon which we based these charges.
Our business depends on our intellectual property rights, and if we are unable
to protect them, our competitive position will suffer.
Our business plan is predicated on our proprietary systems and technology,
including TouchScript. We protect our proprietary rights through a combination
of trademark, trade secret and copyright law, confidentiality agreements and
technical measures. We generally enter into non-disclosure agreements with our
employees and consultants and limit access to our trade secrets and technology.
We cannot assure you that the steps we have taken will prevent misappropriation
of technology. Misappropriation of our intellectual property would have a
material adverse effect on our competitive position. In addition, we may have to
engage in litigation in the future to enforce or protect our intellectual
property rights or to defend against claims of invalidity, and we may incur
substantial costs as a result.
If we are deemed to infringe on the proprietary rights of third parties, we
could incur unanticipated expense and be prevented from providing our products
and services.
We could be subject to intellectual property infringement claims as the
number of our competitors grows and the functionality of our applications
overlaps with competitive products. While we do not believe that we have
infringed or are infringing on any valid proprietary rights of third parties, we
cannot assure you that infringement claims will not be asserted against us or
that those claims will be unsuccessful. We could incur substantial costs and
diversion of management resources defending any infringement claims.
Furthermore, a party making a claim against us could secure a judgment awarding
substantial damages, as well as injunctive or other equitable relief that could
effectively block our ability to provide products or services. In addition, we
cannot assure you that licenses for any intellectual property of third parties
that might be required for our products or services will be available on
commercially reasonable terms, or at all.
Factors beyond our control could cause interruptions in our operations, which
would adversely affect our reputation in the marketplace and our results of
operations.
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To succeed, we must be able to operate our systems without interruption.
Certain of our communications and information services are provided through our
service providers. Our operations are vulnerable to interruption by damage from
a variety of sources, many of which are not within our control, including:
. power loss and telecommunications failures;
. software and hardware errors, failures or crashes;
. computer viruses and similar disruptive problems; and
. fire, flood and other natural disasters.
We have no comprehensive plans for these contingencies. Any significant
interruptions in our services would damage our reputation in the marketplace and
have a negative impact on our results of operations.
We may be liable for use of data we provide.
We provide data for use by healthcare providers in treating patients.
Third-party contractors provide us with most of this data. Although no claims
have been brought against us alleging injuries related to the use of our data,
claims may be made in the future. While we maintain product liability insurance
coverage in an amount that we believe is sufficient for our business, we cannot
assure you that this coverage will prove to be adequate or will continue to be
available on acceptable terms, if at all. A claim brought against us that is
uninsured or under-insured could materially harm our financial condition.
If our security is breached, we could be subject to liability, and people could
be deterred from using our services.
The difficulty of securely transmitting confidential information over the
Internet has been a significant barrier to conducting e-commerce and engaging in
sensitive communications over the Internet. Our strategy relies on the use of
the Internet to transmit confidential information. We believe that any
well-publicized compromise of Internet security may deter people from using the
Internet for these purposes, and from using our system to conduct transactions
that involve transmitting confidential healthcare information.
It is also possible that third parties could penetrate our network security
or otherwise misappropriate patient information and other data. If this happens,
our operations could be interrupted, and we could be subject to liability. We
may have to devote significant financial and other resources to protect against
security breaches or to alleviate problems caused by breaches. We could face
financial loss, litigation and other liabilities to the extent that our
activities or the activities of third-party contractors involve the storage and
transmission of confidential information like patient records or credit
information. In addition, we could incur additional expenses if new regulations
regarding the use of personal information are introduced.
If we are unable to obtain additional financing for our future needs, our growth
prospects and our ability to respond to competitive pressures will be impaired.
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We cannot be certain that additional financing will be available on
favorable terms, or at all. If adequate financing is not available or is not
available on acceptable terms, our ability to fund our expansion, take advantage
of potential acquisition opportunities, develop or enhance services or products,
or respond to competitive pressures would be significantly limited.
If our content and service providers fail to perform adequately, our reputation
in the marketplace and results of operations could be adversely affected.
We depend on independent content and service providers for many of the
benefits we provide through our TouchScript system, including the maintenance of
managed care pharmacy guidelines, drug interaction reviews and the routing of
transaction data to third-party payers. Any problems with our providers that
result in interruptions of our services or a failure of our services to function
as desired could damage our reputation in the marketplace and have a material
adverse effect on our results of operations. We may have no means of replacing
content or services on a timely basis or at all if they are inadequate or in the
event of a service interruption or failure.
We also expect to rely on independent content providers for the majority of
the clinical, educational and other healthcare information that we plan to
provide on our Web site. In addition, we will depend on our content providers to
deliver high quality content from reliable sources and to continually upgrade
their content in response to demand and evolving healthcare industry trends. Any
failure by these parties to develop and maintain high quality, attractive
content could impair the value of the Allscripts brand and our results of
operations.
If third-party payers force us to reduce our prices, our results of operations
could suffer.
We expect to derive a majority of our revenue from the sale, including over
the Internet, of prepackaged medications to physicians. We may be subject to
pricing pressures with respect to our future sales of prepackaged medications
arising from various sources, including practices of managed care organizations
and any governmental action requiring or allowing pharmaceutical reimbursement
under Medicare. If our pricing of prepackaged medications experiences
significant downward pressure, our business will be less profitable.
If we incur costs exceeding our insurance coverage in lawsuits pending against
us or that are brought against us in the future, it could materially adversely
affect our financial condition.
We are a defendant in numerous multi-defendant lawsuits involving the
manufacture and sale of dexfenfluramine, fenfluramine and phentermine. The
plaintiffs in these cases claim injury as a result of ingesting a combination of
these weight-loss drugs. While we do not believe we have any significant
liability in these lawsuits, in the event we were found liable in these lawsuits
or in any other lawsuits filed against us in the future in connection with these
weight-loss drugs or otherwise, and if our insurance coverage were inadequate to
satisfy these liabilities, it could have a material adverse effect on our
financial condition.
If our principal supplier fails or is unable to perform its contract with us, we
may be unable to meet our commitments to our customers.
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We currently purchase a majority of the medications that we repackage from
McKesson HBOC, Inc. We have an agreement with this supplier that expires in
September 2001. If we do not meet certain minimum purchasing requirements,
McKesson may increase the prices that we pay under this agreement, in which case
we would have the option to terminate the agreement. Although we believe that
there are a number of other sources of supply of medications, if McKesson fails
or is unable to perform under our agreement, particularly at certain critical
times during the year, we may be unable to meet our commitments to our
customers, and our relationships with our customers could suffer.
Because of anti-takeover provisions under Delaware law and in our certificate of
incorporation and by-laws, takeovers may be more difficult, possibly preventing
you from obtaining optimal share price.
Certain provisions of Delaware law and our certificate of incorporation and
by-laws could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of
our company. For example, our certificate of incorporation and by-laws provide
for a classified Board of Directors and allow us to issue preferred stock with
rights senior to those of the common stock without any further vote or action by
the stockholders. In addition, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law, which could have the effect
of delaying or preventing a change in control of our company.
Risks Related to Our Merger with Channelhealth
New Allscripts may face difficulties in integrating the operations and products
of Channelhealth and Allscripts.
Channelhealth and our company have previously operated separately. The
proposed management team of New Allscripts does not have experience with the
combined business. Integration of product lines will involve consolidation of
products with duplicative functionality, coordination of research and
development activities and convergence of the technologies supporting the
various products. New Allscripts may not be able to integrate the products,
product development, information systems and operations of Channelhealth and our
company without a loss of key officers, employees, customers or suppliers, a
loss of revenues or an increase in net loss, an increase in operating or other
costs or other difficulties. In addition, New Allscripts may not be able to
realize the operating efficiencies, the material expansion of its customer base
to IDX customers or the other benefits expected from the Channelhealth merger
and related transactions such as the strategic alliance with IDX. Any unexpected
costs or delays incurred in connection with such integration could have an
adverse effect on New Allscripts' business, results of operations or financial
condition.
The business separation of Channelhealth from IDX may impair assets.
The separation of Channelhealth from the rest of IDX's businesses, assets
and liabilities pursuant to the asset purchase agreement between IDX and
Channelhealth requires the transfer of assets, including intellectual property
rights, between Channelhealth and IDX. Some of these transfers may trigger
Channelhealth liabilities that will not become payable by Channelhealth until
after the mergers are completed. Generally, IDX will be responsible for these
liabilities but IDX would not be required to indemnify Channelhealth for any
losses that are consequential, in the nature of lost profits,
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diminution in value, damage to reputation or the like, special or punitive
damages or otherwise not actual losses.
Channelhealth expects to continue to incur losses and may never achieve
profitability, which may cause New Allscripts' stock price to fall.
Historically, Channelhealth has incurred significant net losses, and since
Channelhealth has only recently implemented its business strategy, Allscripts
and Channelhealth expect Channelhealth to continue to incur losses at least
through 2001. Additionally, Channelhealth has spent significant amounts on
research and development and sales and marketing efforts, and Channelhealth
expects these costs to continue. Channelhealth and our company cannot be certain
that Channelhealth will achieve profitability and if it is unable to do so, New
Allscripts' business prospects may be harmed and New Allscripts' stock price may
fall.
Channelhealth recently began independent operations and its limited operating
history makes an evaluation of its business and prospects difficult.
Since its inception as an independent company in September 1999,
Channelhealth's operating activities have consisted largely of developing the
software applications necessary to provide its services and Channelhealth has
only recently begun to sell its services to provider organizations. In addition,
Channelhealth's long-term success will depend largely on the success of its
strategic relationships and the strategic alliance between New Allscripts and
IDX. Channelhealth is still in the early stages of its current strategic
relationships and it is unable to predict whether the goals of those
relationships will be achieved. Channelhealth's limited operating history and
limited experience with its strategic business partners make it difficult to
evaluate its business following the Channelhealth merger and prospects.
Channelhealth's historical financial information may not be representative of
its results as a company separate from IDX.
Channelhealth's financial statements, which reflect the operations and net
assets of the "Physician Channel" business of Channelhealth and exclude the
operations and net assets of the "Patient Channel" business and the "eCommerce
Channel" business to be retained by IDX, have been derived from the consolidated
financial statements of IDX using the historical results of operations and
historical bases of the assets and liabilities of IDX. Accordingly, the
historical financial information included in this prospectus does not
necessarily reflect what Channelhealth's financial position, results of
operations and cash flows would have been as a separate, stand-alone entity
during the periods presented. In addition, such information may not necessarily
be indicative of what Channelhealth's financial position, results of operations
and cash flows will be in the future as a wholly-owned subsidiary of New
Allscripts. Its historical costs and expenses include allocations from IDX for
centralized administrative services and infrastructure costs, including
accounting, cash management, information management, property management, human
resources, legal services and purchasing of materials, equipment and supplies.
Channelhealth and IDX have determined these allocations on bases that they
consider to be reasonable reflections of Channelhealth's utilization of services
provided or the benefit Channelhealth received from such services. Channelhealth
has not made adjustments to its historical financial
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information to reflect many significant changes that will occur in its cost
structure, funding and operations as a result of its separation from IDX.
Channelhealth's and New Allscripts' growth and revenues could suffer if they are
unable to enter into and maintain relationships with IDX customers.
Channelhealth seeks to increase its subscriber base through targeting
provider organizations that use IDX practice management systems or other IDX
services, and affiliates of these organizations. Channelhealth's services use
the Web FrameWork technology, which it licenses from IDX, and which enables its
software applications and services to be tightly integrated with IDX practice
management systems and provide real-time synchronization of data. If
Channelhealth's relationship with IDX terminates, its services might not be as
attractive to IDX customers and Channelhealth may not have access to this
potential customer base, IDX might enter into arrangements that would allow
Channelhealth's competitors to utilize IDX technology and IDX could compete
against Channelhealth. If any of these situations were to occur, Channelhealth's
and New Allscripts' expected revenues may be lower, their business may be harmed
and New Allscripts' stock price may fall.
Channelhealth's and New Allscripts' business will be harmed if they cannot
maintain Channelhealth's strategic alliance agreement with Healtheon/WebMD.
On June 8, 2000, Channelhealth and IDX entered into agreements with
Healtheon/WebMD Corp. pursuant to which Healtheon/WebMD agreed to provide
electronic transaction and content services to Channelhealth and IDX. Pursuant
to the agreement, Healtheon/WebMD's content is to be integrated into
Channelhealth's Physician Channel and Patient Channel internet services.
Healtheon/WebMD further committed to a multi-million dollar campaign promoting
IDX and Channelhealth products and services that incorporate Healtheon/WebMD
content and transactions. Healtheon/WebMD has recently informed IDX that it
believes Channelhealth and IDX will be unable to perform their obligations to
Healtheon/WebMD if the proposed strategic alliance between IDX and us is
consummated. Healtheon/WebMD also stated that it would seek to terminate the
Channelhealth agreement and would propose a "restructured" relationship with
IDX. Such proposal has not been received by IDX. We and Channelhealth believe
that Channelhealth's and IDX's performance will not be impaired by the strategic
alliance with us and that Healtheon/WebMD does not have a basis for unilaterally
terminating the Channelhealth or restructuring the IDX agreement. In addition,
pursuant to the strategic alliance agreement between IDX and as we and IDX each
agree not to take any action which would cause a default under or termination of
the agreement between Channelhealth and Healtheon/WebMD. In the event the
Healtheon/WebMD agreement is terminated, Channelhealth's and New Allscripts'
expected revenues for 2001 may be significantly lower than currently
anticipated, their business' may be harmed and New Allscripts' stock price may
fall.
Channelhealth's and New Allscripts' business will be harmed if they cannot
maintain the strategic alliance agreement and the cross license agreement with
IDX.
Upon completion of the mergers, New Allscripts will enter into a 10-year
strategic alliance agreement with IDX pursuant to which New Allscripts and IDX
will agree to coordinate product development and align their respective
marketing processes. Under this agreement IDX will grant New Allscripts the
exclusive right to market, sell, license and distribute ambulatory point-of-care
and clinical application products to IDX customers. This agreement does not,
however, limit IDX's
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continued development and distribution of its own "LastWord" or radiology
products and services. Channelhealth's and New Allscripts' business strategy
includes targeting current and prospective IDX customers and their affiliates.
If Channelhealth and New Allscripts fail to successfully implement that business
strategy, Channelhealth and New Allscripts may not be able to achieve projected
results or support the price paid for Channelhealth. If IDX does not renew the
strategic alliance agreement, or if such agreement is terminated, Channelhealth
and New Allscripts would lose access to an important customer base. After the
expiration or termination of the strategic alliance agreement, New Allscripts
may not be able to align with another company to market and distribute its
products on as favorable a basis as that represented by the IDX strategic
alliance. This would harm New Allscripts' growth and revenue. In addition, prior
to the termination of this agreement, New Allscripts cannot allow certain
specified IDX direct competitors to market, distribute or sell its or
Channelhealth's services, even if such an agreement would benefit New
Allscripts' business.
Also upon completion of the mergers, Channelhealth will enter into an
amended and restated cross license and software maintenance agreement with IDX
pursuant to which Channelhealth grants IDX a license to use, market and
sublicense its products combined with IDX products, and IDX grants Channelhealth
a license to use, market and sublicense IDX software for use with Channelhealth
products. If this agreement is terminated, Channelhealth will not have access to
IDX software, which would harm its and New Allscripts' ability to integrate
their services with IDX systems and provide real-time data synchronization. This
would make Channelhealth's systems less desirable to IDX customers and would
harm its business.
Risks Related to Our Industry
If the healthcare environment becomes more restrictive, or we do not comply with
healthcare regulations, our existing and future operations may be curtailed, and
we could be subject to liability.
As a participant in the healthcare industry, our operations and
relationships are regulated by a number of federal, state and local governmental
entities. Because our business relationships with physicians are unique, and the
healthcare electronic commerce industry as a whole is relatively young, the
application of many state and federal regulations to our business operations is
uncertain. It is possible that a review of our business practices or those of
our customers by courts or regulatory authorities could result in a
determination that could adversely affect us. In addition, the healthcare
regulatory environment may change in a way that restricts our existing
operations or our growth.
. Electronic Prescribing. The use of our TouchScript software by
physicians to perform electronic prescribing, electronic routing of
prescriptions to pharmacies and dispensing is governed by state and
federal law. The application of these laws to our business is uncertain
because many existing laws and regulations, when enacted, did not
anticipate methods of e-commerce now being developed. The laws of many
jurisdictions neither specifically permit nor specifically prohibit
electronic transmission of prescription orders. Future regulation of
these areas may adversely affect us.
. Licensure. As a repackager and distributor of drugs, we are subject to
regulation by and licensure with the United States Food and Drug
Administration, the United States Drug
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Enforcement Administration and various state agencies that regulate
wholesalers or distributors. Among the regulations applicable to our
repackaging operation are the FDA's "good manufacturing practice"
regulations. Because the FDA's good manufacturing practice regulations
were designed to govern the manufacture, rather than the repackaging, of
drugs, we face legal uncertainty concerning the application of some
aspects of these regulations and of the standards that the FDA will
enforce. Both the FDA and the DEA have the right, at any time, to
inspect our facilities and operations to determine if we are operating
in compliance with the requirements for licensure and all applicable
laws and regulations. Along with many other drug repackagers, we have
received an FDA warning letter alleging violations of FDA regulations,
including the good manufacturing practice regulations. We have
implemented procedures intended to address many of the concerns raised
by the FDA in that letter and believe that our compliance with FDA
regulations meets or exceeds the standard in the drug repackaging
industry. We also believe that we possess all licenses required to
operate our business. If, however, we do not maintain all necessary
licenses, or the FDA decides to substantially modify the manner in which
it has historically enforced its good manufacturing practice regulations
against drug repackagers or the FDA or DEA finds any violations during
one of their periodic inspections, we could be subject to liability, and
our operations could be shut down.
. Physician Dispensing. Physician dispensing of medications for profit is
allowed in all states except Utah and is prohibited, subject to
extremely limited exceptions, in Massachusetts, Montana and Texas. In
addition, New Jersey and New York allow physician dispensing of
medications for profit, but limit the number of days' supply of all
medications, subject to limited exceptions, that a physician may
dispense; several other states limit the number of days' supply of
controlled substances that a physician may dispense. Other states may
enact legislation or regulations prohibiting or restricting physician
dispensing.
The American Medical Association, through certain of its constituent
bodies, has historically taken inconsistent positions on physician
dispensing, alternately discouraging and supporting it. While the AMA's
Council on Ethical and Judicial Affairs in 1986 discouraged physicians
from regularly dispensing prescription pharmaceuticals, in 1987 the
AMA's House of Delegates adopted the following resolution: "Resolved,
that the American Medical Association support the physician's right to
dispense drugs and devices when it is in the best interest of the
patient and consistent with the AMA's ethical guidelines." This position
was reaffirmed by the AMA House of Delegates in January 1997. The AMA's
ethical guidelines provide in relevant part that "physicians may
dispense drugs within their office practices provided there is no
resulting exploitation of patients." While two recent Reports of the
Council on Ethical and Judicial Affairs oppose the in-office sale of
health-related products by physicians, these reports specifically
exclude the sale of prescription items from their scope, although they
do refer to the Council's 1986 Report.
. Stark II. Congress enacted significant prohibitions against physician
self-referrals in the Omnibus Budget Reconciliation Act of 1993. This
law, commonly referred to as "Stark II," applies to physician dispensing
of outpatient prescription drugs that are reimbursable by
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Medicare or Medicaid. We believe that the physicians who use our
TouchScript system or dispense drugs distributed by us are doing so in
material compliance with Stark II, either pursuant to an in-office
ancillary services exception or another applicable exception. While our
physician customers currently do not, to any significant degree,
dispense drugs that are reimbursable by Medicare or Medicaid, if they
were to and if it were determined that the physicians who use our system
or dispense pharmaceuticals purchased from us were not in compliance
with Stark II, it could have a material adverse effect on our business,
results of operations and prospects.
. Drug Distribution. As a distributor of prescription drugs to physicians,
we and our customers are also subject to the federal anti-kickback
statute, which applies to Medicare, Medicaid and other state and federal
programs. The statute prohibits the solicitation, offer, payment or
receipt of remuneration in return for referrals or the purchase of
goods, including drugs, covered by the programs. The anti-kickback law
provides a number of exceptions or "safe harbors" for particular types
of transactions. We believe that our arrangements with our customers are
in material compliance with the anti-kickback statute and relevant safe
harbors. Many states have similar fraud and abuse laws, and we believe
that we are in material compliance with those laws. If, however, it were
determined that we were not in compliance with those laws, we could be
subject to liability, and our operations could be curtailed.
. Claims Transmission. As part of our services provided to physicians, our
system will electronically transmit claims for prescription medications
dispensed by a physician to many patients' managed care organizations
and payers for immediate approval and reimbursement. Federal law
provides that it is both a civil and a criminal violation for any person
to submit a claim to any payer, including, for example, Medicare,
Medicaid and all private health plans or managed care plans seeking
payment for any services or products that have not been provided to the
patient or overbilling for services or products provided. We have in
place policies and procedures that we believe assure that all claims
that are transmitted by our system are accurate and complete, provided
that the information given to us by our customer is also accurate and
complete. If, however, we do not follow those procedures and policies,
or they are not sufficient to prevent inaccurate claims from being
submitted, we could be subject to liability.
. Patient Information. Existing federal and state laws and regulations
regulate the disclosure of confidential medical information, including
information regarding conditions like AIDS, substance abuse and mental
illness. In addition, the U.S. Department of Health and Human Services
recently published a rule regarding the disclosure of confidential
medical information. As part of the operation of our business, our
customers may provide to us patient-specific information related to the
prescription drugs that our customers prescribe to their patients. We
have policies and procedures that we believe assure compliance with all
federal and state confidentiality requirements for handling of
confidential medical information we receive. If, however, we do not
follow those procedures and policies, or they are not sufficient to
prevent the unauthorized disclosure of confidential medical information,
we could be subject to liability, fines and lawsuits, or our operations
could be shut down.
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In June 1999, President Clinton announced that he intended to propose broad
Medicare reform legislation that would make available to Medicare
recipients a subsidized prescription drug benefit. While no federal price
controls are included in the current version of the proposed legislation,
any legislation that reduces physician incentives to dispense medications
in their offices could adversely affect physician acceptance of our
products. We cannot predict whether or when future health care reform
initiatives at the federal or state level or other initiatives affecting
our business will be proposed, enacted or implemented or what impact such
initiatives may have on our business, financial condition or results of
operations.
If the new and rapidly evolving Internet and electronic healthcare information
markets fail to develop as quickly as expected, our business prospects will be
impaired.
The Internet and electronic healthcare information markets are in the early
stages of development and are rapidly evolving. A number of market entrants have
introduced or developed products and services that are competitive with one or
more components of the solutions we offer. In addition, several companies have
recently introduced or announced their intention to introduce electronic
prescribing products. We expect that additional companies will continue to enter
these markets. In new and rapidly evolving industries, there is significant
uncertainty and risk as to the demand for, and market acceptance of, recently
introduced products and services. Because the markets for our products and
services are new and evolving, we are not able to predict the size and growth
rate of the markets with any certainty. We cannot assure you that markets for
our products and services will develop or that, if they do, they will be strong
and continue to grow at a sufficient pace. If markets fail to develop, develop
more slowly than expected or become saturated with competitors, our business
prospects will be impaired.
Consolidation in the healthcare industry could adversely affect our business.
Many healthcare industry participants are consolidating to create
integrated healthcare delivery systems with greater market power. As provider
networks and managed care organizations consolidate, competition to provide
products and services like ours will become more intense, and the importance of
establishing relationships with key industry participants will become greater.
These industry participants may try to use their market power to negotiate price
reductions for our products and services. If we were forced to reduce our
prices, our business would become less profitable unless we were able to achieve
corresponding reductions in our expenses.
If the Internet infrastructure does not continue to improve, our ability to use
the Internet on a large scale could be compromised.
If the Internet continues to experience significant growth in the number of
users and the level of use, then the Internet infrastructure may not be able to
continue to support the demands placed on it. The Internet may not prove to be a
viable commercial medium because of inadequate development of the necessary
infrastructure, lack of timely development of complementary products like high
speed modems, delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet activity or increased
government regulation. Because our business plan relies heavily on the viability
of the Internet, our business will suffer if growth of the Internet does not
meet our expectations.
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Risks Related to This Offering and Our Stock
The public market for our common stock may be volatile.
The market price of our common stock is highly volatile and could fluctuate
significantly in response to various factors, including:
. actual or anticipated variations in our quarterly operating results;
. announcements of technological innovations or new services or products
by us or our competitors;
. changes in financial estimates by securities analysts;
. conditions and trends in the electronic healthcare information,
Internet, e-commerce and pharmaceutical markets; and
. general market conditions and other factors.
In addition, the stock markets, especially the Nasdaq National Market, have
experienced extreme price and volume fluctuations that have affected the market
prices of equity securities of many technology companies, and Internet-related
companies in particular. These fluctuations have often been unrelated or
disproportionate to operating performance. These broad market factors may
materially affect the trading price of our common stock. General economic,
political and market conditions like recessions and interest rate fluctuations
may also have an adverse effect on the market price of our common stock.
Volatility in the market price for our common stock may result in the filing
of securities class action litigation. On October 26, 2000, we announced that
our previously reported revenues for the second quarter of 2000 were being
revised from $12.6 million to $12.1 million. Three complaints, styled as
shareholder class action complaints, have been filed in the United States
District Court for the Northern District of Illinois against our company and our
President and Chief Financial Officer, David B. Mullen, alleging that the
defendants failed to disclose that revenue relating to our relationship with IMS
Health was not properly recorded in the second quarter of 2000. The complaints
in these actions purport to be brought on behalf of individuals who purchased
our common stock during the period of July 27, 2000 through and including
October 26, 2000. The plaintiffs allege violations of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and seek unspecified damages. At this
time, management is unable to determine the likely outcome of this matter or to
reasonably estimate the amount of loss with respect to this matter. In addition,
these actions could result in substantial costs and the diversion of
management's attention and resources.
Our quarterly operating results may vary.
Our quarterly operating results have varied in the past, and we expect that
they will continue to vary in future periods depending on a number of factors,
including seasonal variances in demand for
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our products and services, the sales, installation and implementation cycles for
our TouchScript system and other factors described in this "Risk Factors"
section of this prospectus. For example, all other factors aside, our sales of
prepackaged medications have historically been highest in the fall and winter
months. We expect to increase activities and spending in substantially all of
our operational areas. We base our expense levels in part upon our expectations
concerning future revenue, and these expense levels are relatively fixed in the
short term. If we have lower revenue, we may not be able to reduce our spending
in the short term in response. Any shortfall in revenue would have a direct
impact on our results of operations. For these and other reasons, we may not
meet the earnings estimates of securities analysts or investors, and our stock
price could suffer.
We may have substantial sales of our common stock after the offering that could
cause our stock price to fall.
Our common stock began trading on the Nasdaq National Market on July
23,1999; however, to date there have been a limited number of shares trading in
the public market. A substantial number of shares will become eligible for
public sale at various times after the date of this prospectus. Sales of a
substantial number of shares of our common stock after the date of this
prospectus could cause our stock price to fall.
Because our executive officers and directors have substantial control of our
voting stock, takeovers not supported by them will be more difficult, possibly
preventing you from obtaining optimal share price.
The control of a significant amount of our stock by insiders could adversely
affect the market price of our common stock. Assuming completion of the
Channelhealth merger, our executive officers and directors will beneficially own
or control 18,184,741 shares or 48.3% of the outstanding common stock. If our
executive officers and directors choose to act or vote together, they will have
the power to influence significantly all matters requiring the approval of our
stockholders, including the election of directors and the approval of
significant corporate transactions. Without the consent of these stockholders,
we could be prevented from entering into transactions that could be beneficial
to us.
This prospectus contains forward-looking statements.
This prospectus contains forward-looking statements that involve risks and
uncertainties, including those discussed above and elsewhere in this prospectus.
We develop forward-looking statements by combining currently available
information with our beliefs and assumptions. These statements often contain
words like believe, expect, anticipate, intend, contemplate, seek, plan,
estimate or similar expressions.
Forward-looking statements do not guarantee future performance. Recognize
these statements for what they are and do not rely upon them as facts. Forward-
looking statements involve risks, uncertainties and assumptions, including, but
not limited to, those discussed above and elsewhere in this prospectus. We make
these statements under the protection afforded them by Section 21E of the
Securities Exchange Act of 1934, as amended. Because we cannot predict all of
the risks and uncertainties that may affect us, or control the ones we do
predict, these risks and uncertainties can cause our results to differ
materially from the results we express in our forward.
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USE OF PROCEEDS
All of the shares of our common stock offered by this prospectus are being
offered by the selling stockholders. We will not receive any of the proceeds
from the sale of any of the shares by the selling stockholders.
SELLING STOCKHOLDERS
In connection with our acquisition of Medifor, we issued an aggregate of
935,858 shares of our common stock, all of which are being registered for sale
under this prospectus by the stockholders identified as Medifor selling
stockholders in the chart below. In connection with our acquisition of
MasterChart, as of the effective date of the registration statement of which
this prospectus is a part, we issued an aggregate of 1,617,873 shares of our
common stock, 462,445 shares of which are being registered for sale under this
prospectus by the stockholders identified as MasterChart selling stockholders in
the chart below, who collectively own an aggregate of 1,260,603 shares. Shares
of our common stock were issued to the Medifor selling stockholders pursuant to
a merger agreement, dated as of April 12, 2000, among WebDoc Acquisition Corp.,
our wholly owned subsidiary, Medifor, Inc., a Washington corporation, and
certain shareholders of Medifor, Inc., under which we acquired the assets and
business operations of Medifor, Inc. Shares of our common stock were issued to
the MasterChart selling stockholders pursuant to a merger agreement, dated as of
March 13, 2000, among MC Acquisition Corp., our wholly owned subsidiary,
MasterChart, Inc., an Illinois corporation, and the shareholders of MasterChart,
Inc., under which we acquired the assets and business operations of MasterChart,
Inc. None of the selling stockholders has held any office or maintained any
material relationship with us or any of our predecessors for the three years
prior to acquisition.
The following table sets forth for each selling stockholder the number of
shares beneficially owned by such selling stockholder as of December 19, 2000,
the maximum number of shares to be offered by such selling stockholder and the
number of shares beneficially owned by the selling stockholder after this
offering, assuming that all of the shares being offered for sale are actually
sold by the selling stockholder. Since the selling stockholders may choose not
to sell their shares, we are unable to state the exact number of shares that
actually will be sold. Messrs. Hahn, Hammack and Lyerly each beneficially own
1.14 percent of the shares of common stock outstanding prior to this offering
and less than one percent after the offering. No other selling stockholders
beneficially owns one percent or more of the shares of common stock outstanding
as of December 19, 2000.
<TABLE>
<CAPTION>
- --------------------------------------- --------------------- --------------- ------------- -----------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- --------- ------- --------
- --------------------------------------- --------------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Kevin A. Hahn 327,319 130,928 196,391
- --------------------------------------- --------------------- --------------- ------------- -----------
Scott J. Hammack 327,319 130,928 196,391
- --------------------------------------- --------------------- --------------- ------------- -----------
Marc Lyerly 327,319 130,928 196,391
- --------------------------------------- --------------------- --------------- ------------- -----------
Paul Lazarre 68,217 17,054 51,163
- --------------------------------------- --------------------- --------------- ------------- -----------
Stuart Scholly 22,739 5,685 17,054
- --------------------------------------- --------------------- --------------- ------------- -----------
Gregory R. Hammack 56,848 14,212 42,636
- --------------------------------------- --------------------- --------------- ------------- -----------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------- --------------------- --------------- ------------- -----------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- --------- ------- --------
- --------------------------------------- --------------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Stephen Benjamin 7,733 1,933 5,800
- --------------------------------------- --------------------- --------------- ------------- -----------
Charles Carlin 12,373 3,093 9,280
- --------------------------------------- --------------------- --------------- ------------- -----------
John J. Jacksack 10,827 2,707 8,120
- --------------------------------------- --------------------- --------------- ------------- -----------
Erik A. Kins 3,093 773 2,320
- --------------------------------------- --------------------- --------------- ------------- -----------
John E. Lauraitis 7,733 1,933 5,800
- --------------------------------------- --------------------- --------------- ------------- -----------
Bhavik M. Modi 3,093 773 2,320
- --------------------------------------- --------------------- --------------- ------------- -----------
Alejandro Oviedo 12,373 3,093 9,280
- --------------------------------------- --------------------- --------------- ------------- -----------
David W. Zang 12,373 3,093 9,280
- --------------------------------------- --------------------- --------------- ------------- -----------
Zhixiong Zhao 7,733 1,933 5,800
- --------------------------------------- --------------------- --------------- ------------- -----------
Patrick J. Clawson 30,933 7,733 23,200
- --------------------------------------- --------------------- --------------- ------------- -----------
Duan Kui 1,546 387 1,159
- --------------------------------------- --------------------- --------------- ------------- -----------
Mark A. Matson 2,629 657 1,972
- --------------------------------------- --------------------- --------------- ------------- -----------
Kevin C. Mincemeyer 2,784 696 2,088
- --------------------------------------- --------------------- --------------- ------------- -----------
Soo Chin Ng 1,546 387 1,159
- --------------------------------------- --------------------- --------------- ------------- -----------
Timothy C. Nicholson 3,248 812 2,436
- --------------------------------------- --------------------- --------------- ------------- -----------
Bimal Shukla 1,546 387 1,159
- --------------------------------------- --------------------- --------------- ------------- -----------
Michael P. Stein 3,093 773 2,320
- --------------------------------------- --------------------- --------------- ------------- -----------
Zwei Tong 1,546 387 1,159
- --------------------------------------- --------------------- --------------- ------------- -----------
John Weir 4,640 1,160 3,480
- --------------------------------------- --------------------- --------------- ------------- -----------
American National Trust & Investment 1,469 1,469 0
Management Co., Trustee DCA, P.C.,
MPP fbo Garth A. Morgan, M.D.
- --------------------------------------- --------------------- --------------- ------------- -----------
Charles L. & Barbara M. Anderson 8,612 8,612 0
- --------------------------------------- --------------------- --------------- ------------- -----------
John D. Barrett, D.D.S. 4,477 4,477 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Thomas W. Barwick 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
James Fraser & Deidre D. Black 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Curt Blake 7,838 7,838 0
- --------------------------------------- --------------------- --------------- ------------- -----------
William K. and Karen S. Bloemker 2,153 2,153 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Geoffrey A. & Erin Boguch 11,764 11,764 0
- --------------------------------------- --------------------- --------------- ------------- -----------
David E. Boyle 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
John M. Brazier 1,722 1,722 0
- --------------------------------------- --------------------- --------------- ------------- -----------
John P. & Evelyn E. Bredeson 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Britannia Holdings Limited 94,537 94,537 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Thomas F. & Joyce S. Broderick 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
John A. Calhoun 6,196 6,196 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Capital Growth Fund, Inc. Pension & 3,151 3,151 0
Profit Sharing Trust
- --------------------------------------- --------------------- --------------- ------------- -----------
H. Kennith & Tillie M. Carter 4,477 4,477 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Sharon Carter, M.D. 4,296 4,296 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Gary D. Coard 7,477 7,477 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Leon & Linda Crawford 548 548 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Cypress Partners Limited Partnership 18,907 18,907 0
- --------------------------------------- --------------------- --------------- ------------- -----------
James J. & Patricia F. David 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------- --------------------- --------------- ------------- -----------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- --------- ------- --------
- --------------------------------------- --------------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Karen and James S. Dempster 1,469 1,469 0
- --------------------------------------- --------------------- --------------- ------------- -----------
George C. Denniston, Jr., as Trustee 1,371 1,371 0
of the George C. Denniston, Jr.
Living Trust dated 5/22/96
- --------------------------------------- --------------------- --------------- ------------- -----------
Martha K. Denniston, as Trustee of 1,371 1,371 0
the Martha K. Denniston Living Trust
dated 5/22/96
- --------------------------------------- --------------------- --------------- ------------- -----------
Karl Dillon 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
James J. & Geri Dykeman 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Eagle Investments, Inc. 3,875 3,875 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 143 143 0
Anne L. Burns
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 2,939 2,939 0
Bobby E. Dubois
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 143 143 0
John D. Barret
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 8,955 8,955 0
Karen R. Erickson
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 2,939 2,939 0
Michael L. Yawman
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 1,469 1,469 0
Patricia C. Sussman
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 1,469 1,469 0
Peter Y. Sussman
- --------------------------------------- --------------------- --------------- ------------- -----------
Edward D. Jones & Co., Custodian FBO 6,000 6,000 0
William K. Bloemker, M.D.
- --------------------------------------- --------------------- --------------- ------------- -----------
Peter W. Eising 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Thomas H. Elzey 3,573 3,573 0
- --------------------------------------- --------------------- --------------- ------------- -----------
David J. Fitterer 3,573 3,573 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Leland W. & Judith A. Foote 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
George P. Futas 3,730 3,730 0
- --------------------------------------- --------------------- --------------- ------------- -----------
J. Peter Geerlofs, M.D. and Glenda 308,049 308,049 0
Hultman
- --------------------------------------- --------------------- --------------- ------------- -----------
Peter J. Geerlofs 3,445 3,445 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Robert J. & Penelope W. Genise 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Donald L. and Anne George 2,939 2,939 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Glenn W. Ison, as Trustee for the 2,153 2,153 0
Glenn W. Ison Revocable Living Trust
dated April 16, 1992
- --------------------------------------- --------------------- --------------- ------------- -----------
Goodman Family, LLC 4,306 4,306 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Larry M. and Karen L. Gorman 3,919 3,919 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Lynn K. Greenberg, as Trustee of the 2,743 2,743 0
Lynn K. Greenburg Trust dated 5/30/90
- --------------------------------------- --------------------- --------------- ------------- -----------
Keith and Kathleen Hallman 3,919 3,919 0
- --------------------------------------- --------------------- --------------- ------------- -----------
David Hanzlik 4,306 4,306 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Daniel L. Hardman 945 945 0
- --------------------------------------- --------------------- --------------- ------------- -----------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------- --------------------- --------------- ------------- -----------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- --------- ------- --------
- --------------------------------------- --------------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Scott L. & Patricia P. Hardman 1,890 1,890 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Helios Capital Management Corporation 720 720 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Edith N. Hilliard 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Jack Holthaus 7,838 7,838 0
- --------------------------------------- --------------------- --------------- ------------- -----------
C. Russell, Jr. & Jessica L. Hoover 6,834 6,834 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Charles R. Hoover, as Trustee UAD 4,477 4,477 0
2/12/93 for the Charles R. Hoover
Living Trust
- --------------------------------------- --------------------- --------------- ------------- -----------
Glenn W. Ison, as Trustee of the 6,716 6,716 0
Glenn W. Ison Revocable Living Trust
dated 4/16/92
- --------------------------------------- --------------------- --------------- ------------- -----------
Kent L. Johnson 14,167 14,167 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Bradley S. & Michelle Keller 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Jerry Keppler 10,696 10,696 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Jerry E. & Ann Keppler 775 775 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Charles and Judith Landau 1,175 1,175 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Janice L. & William H. Lindeman 4,477 4,477 0
- --------------------------------------- --------------------- --------------- ------------- -----------
E.G. and Rosalie R. Lindquist 5,261 5,261 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Chauncey F. & Elizabeth H. Lufkin 4,306 4,306 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Ian B. MacCallum, Jr. 1,371 1,371 0
- --------------------------------------- --------------------- --------------- ------------- -----------
John McDonald 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Michael E. Menashe 2,881 2,881 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Mickel Development, LLC 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Stephen J. Mirande 1,088 1,088 0
- --------------------------------------- --------------------- --------------- ------------- -----------
James R. Moburg 6,976 6,976 0
- --------------------------------------- --------------------- --------------- ------------- -----------
David R. & Susan C. Moffett 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
N2 Partners 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Daryl D. & Joan C. Nagel 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Renee J. Naness 1,890 1,890 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Northwest Angel Investors-Medifor 6,302 6,302 0
L.L.C.
- --------------------------------------- --------------------- --------------- ------------- -----------
Frank J. & Brenda Owens 2,521 2,521 0
- --------------------------------------- --------------------- --------------- ------------- -----------
PAINEWEBBER as IRA Custodian for 4,477 4,477 0
James F. Grabicki
- --------------------------------------- --------------------- --------------- ------------- -----------
Jean Patterson 8,612 8,612 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Profit Sharing Retirement Plan for 2,521 2,521 0
Partners, Non-Lawyer Employees of
Short Cressman Burgess, P.S.
- --------------------------------------- --------------------- --------------- ------------- -----------
Pruzan Building Company 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
John H. Pryor and Thalia Gould 5,878 5,878 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Wesley O. Reed and Mary Griffith 8,955 8,955 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Resources Trust Co., Custodian FBO 1,371 1,371 0
Anne Richardson IRA
- --------------------------------------- --------------------- --------------- ------------- -----------
Resources Trust Co., Custodian FBO 881 881 0
Charles Landau IRA
- --------------------------------------- --------------------- --------------- ------------- -----------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------- --------------------- --------------- ------------- -----------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- --------- ------- --------
- --------------------------------------- --------------------- --------------- ------------- -----------
<S> <C> <C> <C> <C>
Resources Trust Co., Custodian FBO 3,919 3,919 0
Elizabeth Berman IRA
- --------------------------------------- --------------------- --------------- ------------- -----------
Resources Trust Co., Custodian FBO 489 489 0
Judith Landau IRA
- --------------------------------------- --------------------- --------------- ------------- -----------
Resources Trust Co., Custodian FBO 1,371 1,371 0
Rosemary Shirley IRA
- --------------------------------------- --------------------- --------------- ------------- -----------
Robert Bruce Robinson 2,449 2,449 0
- --------------------------------------- --------------------- --------------- ------------- -----------
RxRemedy, Inc. 78,205 78,205 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Alan J. Searle, M.D. 4,296 4,296 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Pankaj Sharma, M.D. 1,469 1,469 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Michael A. Sherry 3,573 3,573 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Terry R. Smith 2,521 2,521 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Solomon Smith Barney, Custodian FBO 1,469 1,469 0
David C. Dover IRA
- --------------------------------------- --------------------- --------------- ------------- -----------
Richard T. Sorensen and Rita 2,939 2,939 0
Hollingsworth
- --------------------------------------- --------------------- --------------- ------------- -----------
Southwest Securities, Inc., FBO 2,645 2,645 0
Gareth A. Morgan, M.D., IRA
- --------------------------------------- --------------------- --------------- ------------- -----------
Parker Sroufe 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
John Staenberg 1,294 1,294 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Paul & Linda Suzman 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
The Erickson Family Trust, dated 2,743 2,743 0
February 15, 1994
- --------------------------------------- --------------------- --------------- ------------- -----------
The Heidorn Trust, dated May 20, 1994 8,612 8,612 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Kathleen and H. Wayne Tittle 2,939 2,939 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Paul & Jeanne Tomlinson 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Hugh E. & Mary M. Toomey 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
William W. Treverton 739 739 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Richard W. & Karen J. Tschetter 3,151 3,151 0
- --------------------------------------- --------------------- --------------- ------------- -----------
William M. & Nancy L. Vieser 8,612 8,612 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Katherine Voyles 315 315 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Lauretta & Vaughn Webb 5,094 5,094 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Nick N. & Carol R. Westlund 6,302 6,302 0
- --------------------------------------- --------------------- --------------- ------------- -----------
Michel R. Zelnick 4,306 4,306 0
- --------------------------------------- --------------------- --------------- ------------- -----------
</TABLE>
___________________
(1) Approximately 20% of the total number of shares set forth in this column as
owned prior to this offering by Medifor selling stockholders are being held
in escrow pending the occurrence of certain events specified in a merger
agreement, dated as of April 12, 2000, among WebDoc Acquisition Corp., our
wholly owned subsidiary, Medifor, Inc., a Washington corporation, and
certain shareholders of Medifor, Inc.
27
<PAGE>
PLAN OF DISTRIBUTION AND OFFERING PRICE
The selling stockholders, or their pledgees, assignees and successors-in-
interest may sell, from time to time, any or all of the shares of common stock
covered by this prospectus on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
. Sales in the over-the-counter market or otherwise at prices and at
terms then prevailing or at prices related to the then current market
price;
. Underwritten offerings;
. Ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers;
. Block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
. Purchases by a broker-dealer as principal and resale by the broker-
dealer for its account;
. An exchange distribution in accordance with the rules of the
applicable exchange;
. Privately negotiated transactions;
. Short sales;
. Broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
. A combination of any such methods of sale; or
. Any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
A selling stockholder may, together with any agent of the selling
stockholder, accept or reject in whole or in part any proposed purchase of the
shares of common stock offered by this prospectus. We will not receive any
proceeds from the offering of shares by the selling stockholders.
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in a distribution of the shares of common stock covered
by this prospectus may be limited in its ability to engage in market activities
with respect to such shares. The selling stockholders, for example, will be
subject to applicable provisions of the Securities Exchange Act of 1934 and the
rules and regulations under it, including, without limitation, Regulation M,
which provisions may restrict
28
<PAGE>
certain activities of the selling stockholders and limit the timing of purchases
and sales of any shares of common stock by the selling stockholders.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to specified exceptions or
exemptions. The foregoing may affect the marketability of the shares offered by
this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling stockholder defaults on a margin
loan, the broker may offer and sell, from time to time, the pledged shares.
The selling stockholders may sell shares directly to market makers acting
as principals and/or broker-dealers acting as agents for themselves or their
customers. Broker-dealers engaged by the selling stockholders may arrange for
other broker-dealers to participate in sales. Broker-dealers may receive
commissions, concessions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved. Market makers and block purchasers that purchase the
shares will do so for their own account and at their own risk. It is possible
that the selling stockholders will attempt to sell shares in block transactions
to market makers or other purchasers at a price per share that may be below the
then-current market price. We cannot make assurances that all or any of the
shares of common stock will be sold by the selling stockholders.
The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be underwriters within the meaning of the
Securities Act of 1933 in connection with such sales. In such event, any
commissions received by such broker-dealers or agents 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 of 1933.
We have not registered or qualified the shares of common stock offered by
this prospectus under the laws of any country, state or jurisdiction, other than
the United States.
We are required to pay all fees and expenses incident to the registration
of the shares. The selling stockholders will pay any sales commissions or other
seller's compensation applicable to these transactions. We have agreed to
indemnify the selling stockholders against certain losses, claims, damages and
liabilities under the Securities Act of 1933.
Our common stock is currently traded on the Nasdaq National Market. The
public offering price for any shares that are sold will be determined by the
price indicated on such system at the time such sale occurs, or at such price as
shall be determined through private negotiations between the buyers and the
selling stockholders, or their agents.
29
<PAGE>
VALIDITY OF STOCK
The validity of the common stock offered by this prospectus will be passed
upon for us by Sachnoff & Weaver, Ltd., Chicago, Illinois.
EXPERTS
The consolidated financial statements of Allscripts, Inc. as of December
31, 1999 and 1998 and for each of the three years in the period ended December
31, 1999, incorporated in this registration statement by reference to the Annual
Report on Form 10-K of Allscripts, Inc. for the year ended December 31, 1999,
have been so incorporated in reliance upon the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
Ernst & Young LLP, independent auditors, have audited the financial
statements of the Physician Channel business of Channelhealth Incorporated,
included in Amendment No. 1 to the Form S-4 (333-49568) of Allscripts Healthcare
Solutions, Inc., as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. The
financial statements of the Physician Channel business of Channelhealth
Incorporated are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Those reports, proxy statements and other information
may be obtained:
. At the Public Reference Room of the Securities and Exchange Commission,
Room 1024 - Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549;
. At the public reference facilities at the Securities and Exchange
Commission's regional offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048 or Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661;
. By writing to the Securities and Exchange Commission, Public Reference
Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549;
. At the offices of the National Association of Securities Dealers, Inc.,
Reports Section, 1735 K Street, N.W., Washington, DC 20006; or
. From the Internet site maintained by the Securities and Exchange Commission
at http://www.sec.gov, which contains reports, proxy and information
statements and other information regarding issuers that file electronically
with the Securities and Exchange Commission.
30
<PAGE>
Some locations may charge prescribed or modest fees for copies.
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 under the Securities Act covering the shares of common
stock offered by this prospectus. As permitted by the Securities and Exchange
Commission, this prospectus, which constitutes a part of the registration
statement, does not contain all the information included in the registration
statement. You may obtain such additional information from the locations
described above. Statements contained in this prospectus as to the contents of
any contract or other document are not necessarily complete. You should refer to
the contract or other document for all the details.
INFORMATION INCORPORATED BY REFERENCE
We have previously filed the following documents with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, and
they are incorporated into this prospectus by reference:
(a) Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999, filed on March 30, 2000;
(b) Our Proxy Statement for our Annual Meeting of Stockholders held on May
10, 2000, filed on April 21, 2000;
(c) Our Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 2000, filed on May 15, 2000;
(d) Our Quarterly Report on Form 10-Q for the quarterly period ended June
30, 2000, filed on August 14, 2000, as amended on October 27, 2000;
(e) Our Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2000, filed on November 14, 2000
(f) The description of our common stock contained in our Registration of
Certain Classes of Securities on Form 8-A, dated June 29, 1999;
(g) Current Reports on Form 8-K dated February 8, 2000, February 22, 2000,
May 24, 2000 (as amended on July 24, 2000 and July 25, 2000), May 31, 2000 (as
amended on July 25, 2000) and July 27, 2000; and
(h) The Form S-4 Registration Statement of Allscripts Healthcare
Solutions, Inc., filed on November 9, 2000, as amended on December 7, 2000.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, after the date of this
prospectus and before the termination of this offering are incorporated by
reference and become a part of this prospectus from their date of filing. Any
statements contained in this prospectus or in a document incorporated by
reference are modified
31
<PAGE>
or superseded for purposes of this prospectus to the extent that a statement
contained in any such document 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.
On request, we will provide anyone who receives a copy of this prospectus
with a copy of any or all of the documents incorporated in this prospectus by
reference. Written or telephone requests for such copies should be directed to
our principal office: Allscripts, Inc., Investor Relations Department, 2401
Commerce Drive, Libertyville, Illinois 60048, (847) 680-3515.
32
<PAGE>
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 us in
connection with the sale of our common stock being registered hereby. All the
amounts shown are estimated, except the Securities Exchange Commission
registration fee.
SEC registration fee...................... $ 2,538
Printing expenses......................... 15,000
Legal fees and expenses................... 25,000
Accounting fees and expenses.............. 3,000
Miscellaneous expenses.................... 5,000
Total..................... $50,538
-------
Item 15. Indemnification of Directors and Officers.
We are a Delaware corporation, subject to the applicable indemnification
provisions of the General Corporation Law of the State of Delaware (the "DGCL").
Section 145 of the DGCL empowers a Delaware corporation to indemnify, subject to
certain prescribed standards, any person in connection with any action, suit or
proceeding brought or threatened because such person is or was a director,
officer, employee or agent of the corporation or was serving as such with
respect to another corporation or other entity at the request of such
corporation.
Our Certificate of Incorporation and By-laws provide that we shall, subject
to certain limitations, indemnify our directors and officers against expenses,
including attorneys' fees, judgments, fines and certain settlements, actually
and reasonably incurred by them in connection with any suit or proceeding to
which they are a party so long as they acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to a criminal action or proceeding, so long as
they had no reasonable cause to believe their conduct to have been unlawful.
Section 102 of the DGCL permits a Delaware corporation to include in its
certificate of incorporation a provision eliminating or limiting a director's
liability to a corporation or its stockholders for monetary damages for breaches
of fiduciary duty. The enabling statute provides, however, that liability for
breaches of the duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct, or knowing violations of the law, and the
unlawful purchase or redemption of stock or payment of unlawful dividends or the
receipt of improper personal benefits cannot be eliminated or limited in this
manner. Our Certificate of Incorporation includes a provision that eliminates,
to the fullest extent permitted, director liability for monetary damages for
breach of fiduciary duty.
II-1
<PAGE>
We have purchased directors and officers liability insurance, which
provides coverage against certain liabilities. In addition, some of our officers
are indemnified against liabilities that they may incur in their capacities as
directors by third parties with which they are affiliated.
Item 16. Exhibits.
(a) Exhibits:
2.1 Agreement and Plan of Merger, dated as of March 13, 2000, among MC
Acquisition Corp., MasterChart, Inc. and the shareholders of
MasterChart, Inc. (1)
2.2 Agreement and Plan of Merger, dated as of April 12, 2000, among
WebDoc Acquisition Corp., Medifor, Inc. and certain shareholders of
Medifor, Inc. (2)
2.3 Merger Agreement with IDX Systems Incorporated (3)
4 Specimen common stock Certificate (4)
5 Opinion of Sachnoff & Weaver, Ltd. regarding the legality of the
securities being registered*
23.1 Consent of PricewaterhouseCoopers LLP, independent auditors*
23.2 Consent of Ernst & Young LLP, independent auditors*
23.3 Consent of Arthur Andersen LLP, independent auditors*
23.4 Consent of Sachnoff & Weaver, Ltd. (included in Exhibit 5)*
24 Powers of Attorney (included on the signature page)*
* Previously filed
(1) Incorporated by reference from the Registrant's Current Report on Form 8-K
as filed with the Securities and Exchange Commission on May 24, 2000 (File No.
000-26537), as amended on July 24, 2000 and July 25, 2000.
(2) Incorporated by reference from the Registrant's Current Report on Form 8-K
as filed with the Securities and Exchange Commission on May 31, 2000 (File No.
000-26537) ), as amended on July 25, 2000.
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<PAGE>
(3) Incorporated by reference from the Form S-4 Registration Statement of
Allscripts Healthcare Solutions, Inc. as filed with the Securities and Exchange
Commission on November 9, 2000 (File No. 333-49568), as amended on December 7,
2000.
(4) Incorporated by reference from the Registrant's Form S-1 Registration
Statement as filed with the Securities and Exchange Commission on January 27,
2000 (File No. 333-95521).
Item 17. Undertakings.
(a) 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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act of 1933, as amended, if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the registration statement;
(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 paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) 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.
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<PAGE>
(b) 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, as amended, 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, 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 Securities Act of 1933, as amended, and is, therefore, unenforceable. In
the event that a claim for the 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
Securities Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Libertyville, State of
Illinois, on December 29, 2000.
ALLSCRIPTS, INC.
By: /s/ David B. Mullen
-------------------------------------------
David B. Mullen, Chief Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C> <C>
* Chairman and Chief Executive Officer December 29, 2000
- ----------------------------------------- (Principal Executive Officer)
Glen E. Tullman
/s/ David B. Mullen President, Chief Financial Officer and December 29, 2000
- ----------------------------------------- Director
David B. Mullen
* Senior Vice President, Finance, and December 29, 2000
- ----------------------------------------- Secretary (Principal Accounting Officer)
John G. Cull
* Director December 29, 2000
- -----------------------------------------
Philip D. Green
* Director December 29, 2000
- -----------------------------------------
Fazle Husain
* Director December 29, 2000
Michael J. Kluger
- -----------------------------------------
* Director December 29, 2000
Ben Lytle
* Director December 29, 2000
- -----------------------------------------
Edward M. Philip
* Director December 29, 2000
- -----------------------------------------
Gary Stein
* /s/ David B. Mullen
- -----------------------------------------
David B. Mullen, attorney in fact
</TABLE>
