<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 27, 2000
REGISTRATION NO. 333-47764
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
FORM S-3
------------------------
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE TRIZETTO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 33-0761159
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
567 SAN NICOLAS DRIVE, SUITE 360, NEWPORT BEACH, CA 92660
(949) 719-2200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
JEFFREY H. MARGOLIS, CHIEF EXECUTIVE OFFICER AND PRESIDENT
THE TRIZETTO GROUP, INC.
567 SAN NICOLAS DRIVE, SUITE 360
NEWPORT BEACH, CA 92660
(949) 719-2200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE OF
AGENT FOR SERVICE)
COPY TO:
K.C. SCHAAF, ESQ.
CHRISTOPHER D. IVEY, ESQ.
STRADLING YOCCA CARLSON & RAUTH
660 NEWPORT CENTER DRIVE
SUITE 1600
NEWPORT BEACH, CALIFORNIA 92660
(949) 725-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE REGISTRATION FEE(2)
------------------------------------------------------------------------------------------------------------------------
Common Stock, $0.001 par value...... 1,079,554 shares $15.97 $17,240,477.38 $4,551.49
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The offering price is estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(c) using the average of the
high and low prices reported by the Nasdaq National Market for the
Registrant's common stock on October 6, 2000, which was $15.97 per share.
(2)A filing fee of $2,524.52 was paid on October 11, 2000 based on the
registration of 598,784 shares.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD
NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 27, 2000
PROSPECTUS
THE TRIZETTO GROUP, INC.
1,079,554 SHARES OF COMMON STOCK
($0.001 PAR VALUE)
-------------------------
This prospectus relates to the offer and sale from time to time of up to
1,079,554 shares of our common stock which are held by certain of our current
stockholders named in this prospectus (the "Selling Stockholders") for their own
benefit or by permitted transferees of such stockholders. The shares of our
common stock offered pursuant to this prospectus were originally issued to the
Selling Stockholders in connection with a private offering and with the
acquisitions of Novalis Corporation and Finserv Health Care Systems, Inc. by us.
All or a portion of the common stock offered by this prospectus may be
offered for sale, from time to time on the Nasdaq National Market or on one or
more exchanges, or otherwise at prices and terms then obtainable, or in
negotiated transactions. The distribution of these securities may be effected in
one or more transactions that may take place on the over-the-counter market,
including, among others, ordinary brokerage transactions, privately negotiated
transactions or through sales to one or more dealers for resale of such
securities as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. We will
not receive any of the proceeds from the sale of the shares. We will bear all
expenses of registration incurred in connection with this offering, except that
the Selling Stockholders will pay all any applicable brokerage fees, commissions
and transfer taxes.
Our common stock is quoted on the Nasdaq National Market under the symbol
"TZIX." On , 2000, the closing sales price of our common stock was
$ per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 TO READ ABOUT THE RISKS YOU SHOULD
CONSIDER CAREFULLY BEFORE BUYING SHARES OF OUR COMMON STOCK.
-------------------------
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.
-------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------
The date of this Prospectus is , 2000.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Cautionary Note Regarding Forward-Looking Statements........ i
The Company................................................. 1
Risk Factors................................................ 2
Use of Proceeds............................................. 11
Selling Stockholders........................................ 11
Plan of Distribution........................................ 13
Legal Matters............................................... 13
Experts..................................................... 13
Where You Can Find Additional Information................... 14
</TABLE>
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. These statements relate to future events or
our future financial performance and involve known and unknown risks,
uncertainties and other factors that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by the forward- looking statements. These
risks and other factors include those listed under "Risk Factors" and elsewhere
in this prospectus. In some cases, you can identify forward-looking statements
by terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue" or
the negative of these terms or other comparable terminology. These statements
are only predictions. In evaluating these statements, you should specifically
consider various factors, including the risks outlined under "Risk Factors" and
the other information contained in our publicly-available filings with the
Securities and Exchange Commission.
You should not place undue reliance on any forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these
forward-looking statements. Except as otherwise required by federal securities
laws, we undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events,
changed circumstances or any other reason after the date of this prospectus.
i
<PAGE> 4
THE COMPANY
We enable electronic business for the healthcare industry as a software
application services provider and with our healthcare Internet platforms and
information technology solutions, supported by our transformation services unit,
which provides professional consulting services. By combining hosted software
applications with the Internet, we provide a complete technology solution for
our customers in the healthcare industry. Customers primarily include healthcare
provider groups, physician practice management companies and managed care
organizations such as health maintenance organizations, preferred provider
organizations and third party administrators. By offering our software and
services on a hosted basis, we are able to provide our customers with
comprehensive and cost predictable services with guaranteed service quality,
typically through multi-year contracts. By supplying and managing the customers'
information technology environments, we eliminate their need to manage and
support their own computer systems, networks and software, thus allowing them to
concentrate on their primary business.
We are a leading provider of remotely hosted third party packaged and
proprietary software applications and related services for use in the healthcare
industry. Through our Customer Connectivity Centers, we remotely operate and
maintain applications for our customers on most of the widely used computing,
networking and operating platforms. We provide access to our hosted applications
either across the Internet or across traditional networks. Our proprietary
solutions and methods enable our customers to access our hosted applications
using leading Internet browsers. We have acquired rights to license and/or
deploy numerous commercially available software applications from a variety of
healthcare software vendors, including, but not limited to, Epic Systems, Inc.,
ERISCO Managed Care Technologies, Inc., Medic Computer Systems, Inc., Medical
Manager Corporation, Raintree Systems, Inc., InfoMedtrics, Inc., CTR Business
Systems, Inc., McKesson HBOC, Inc., Penchart, and QCSI.
HealthWeb, our branded healthcare business to business Internet platform
and related e-applications, is currently being used by providers and a number of
payors, and is designed to facilitate the exchange of information and to enable
e-commerce among all constituents of the healthcare industry. HealthWeb is also
designed to integrate and deliver the software applications that we host for our
customers though an easy-to-use common Internet browser interface. We are
promoting our HealthWeb brand in order to establish its reputation as a leading
healthcare e-commerce platform.
HealthWeb is architected to specifically address the requirements of
individual users that we expect will include most types of healthcare
professionals and administrative staff. Currently, providers use HealthWeb for
day to day office administration activities, access to health plans and
communications with patients. Currently, payors use HealthWeb for information
exchange with providers and members. We are working on the development of
additional features and functionality that will be offered and deployed as
developed.
Our Transformation Services Group helps our customers become more efficient
in applying and using their information technology. We use our proprietary
methodologies to identify information technology solutions that are suitable for
our customers. In many cases, these solutions include software applications
hosted in our Customer Connectivity Centers as well as our HealthWeb platform
and e-applications. The Transformation Services Group implements selected
solutions for which we provide ongoing application services and support.
1
<PAGE> 5
RISK FACTORS
An investment in our common stock involves a high degree of risk. We have
attempted to identify the material risks that we believe exist. Additional risks
not presently known to us or which we currently consider immaterial may also
adversely affect us. You should carefully consider the following risks, as well
as all of the other information contained in this prospectus, before purchasing
any of our common stock. Any of the following risks could materially adversely
affect our business, financial condition and operating results. If events
outlined below were to occur, the trading price of our common stock could
decline, and you may lose all or part of your investment.
BECAUSE WE HAVE A LIMITED OPERATING HISTORY, IT IS DIFFICULT TO EVALUATE OUR
BUSINESS.
We were incorporated in May 1997 and had revenue of $2.5 million for the
period from May 27, 1997 (date of inception) to December 31, 1997, $11.4 million
for the year ended December 31, 1998, $32.9 million for the year ended December
31, 1999, and $54.9 million for the nine months ended September 30, 2000.
Accordingly, we have a limited operating history. Our stockholders must consider
the risks, uncertainties, expenses and difficulties frequently encountered by
companies in their early stages of development, particularly companies in
rapidly evolving markets. These risks and difficulties include our ability to:
- respond effectively to the offerings of competitive providers of
healthcare information technology and services;
- increase awareness and market penetration of our brand;
- maintain our existing, and develop new, affiliate relationships;
- continue to develop and upgrade our technology; and
- attract, retain and motivate qualified personnel.
We depend on the continued demand for outsourcing of health information
technology services, on the growing use of the Internet for advertising,
commerce and communication and on favorable general economic conditions. We
cannot assure you that our business strategy will be successful or that we will
successfully address these risks or difficulties. If we should fail to
adequately address any of these risks or difficulties, our business would likely
suffer.
WE DEPEND ON OUR SOFTWARE APPLICATION VENDOR RELATIONSHIPS, AND IF OUR
SOFTWARE APPLICATION VENDORS TERMINATE OR MODIFY EXISTING CONTRACTS OR
EXPERIENCE BUSINESS DIFFICULTIES, OR IF WE ARE UNABLE TO ESTABLISH NEW
RELATIONSHIPS WITH ADDITIONAL SOFTWARE APPLICATION VENDORS, IT COULD HARM OUR
BUSINESS.
We depend, and will continue to depend, on our licensing and business
relationships with our third party software application vendors. Our success
depends significantly on our ability to maintain our existing relationships with
our vendors and to build new relationships with other vendors in order to
enhance our services and application offerings and remain competitive. Although
most of our licensing agreements are perpetual or automatically renewable, they
are subject to termination in the event that we materially breach such
agreements. We cannot assure you that we will be able to maintain relationships
with our vendors or establish relationships with new vendors. Our customer
satisfaction is also dependent upon the functional uses and reliability of the
software, products and services of our application vendors. We cannot assure you
that the software, products or services of our third party vendors will achieve
market acceptance or commercial success. Accordingly, we cannot assure you that
our existing relationships will result in sustained business partnerships,
successful product or service offerings or the generation of significant
revenues for us.
Our arrangements with third party software application vendors are not
exclusive. We cannot assure you that these third party vendors regard our
relationships with them as important to their own respective businesses and
operations. They may reassess their commitment to us at any time and may choose
to develop or enhance their own competing distribution channels and product
support services. If we do not
2
<PAGE> 6
maintain our existing relationships or if the economic terms of our business
relationships change, we may not be able to license and offer these services and
products on commercially reasonable terms or at all. Our inability to obtain any
of these licenses could delay service development or timely introduction of new
services and divert our resources. Any such delays could materially adversely
affect our business, financial condition and operating results.
There are a variety of additional reasons why our relationships with our
software application vendors or our ability to establish relationships with
additional vendors may be impaired. Vendors may experience business difficulties
or enter into bankruptcy. Additionally, they may discontinue service and support
of products that we currently offer to our customers. Our software application
vendors may participate in industry consolidation that may impact the products
they offer, their support services and their willingness to do business with us.
OUR BUSINESS IS CHANGING RAPIDLY, WHICH COULD CAUSE OUR QUARTERLY OPERATING
RESULTS TO VARY AND OUR STOCK PRICE TO FLUCTUATE.
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,
not all of which are within our control. The variation in our quarterly
operating results could affect the market price of our common stock in a manner
that may be unrelated to our long-term operating performance.
Our services revenue in any quarter depends on our mix of non-recurring and
recurring revenue and our ability to meet project milestones and customer
expectations. To increase our revenue in any operating period, we must penetrate
new markets, expand within existing markets and develop new application and
service offerings required by our customers. Our operating results will be
harmed if we experience delays in developing new applications and services for
our customers or defects in our current applications.
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 revenues, and these expense levels are relatively fixed in the
short-term. If we have lower revenue, we may not be able to reduce our
short-term spending 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 HAVE A LIMITED NUMBER OF CUSTOMERS AND RELATIVELY FIXED OPERATING COSTS, AND
IF OUR CUSTOMERS TERMINATE OR MODIFY EXISTING CONTRACTS OR EXPERIENCE BUSINESS
DIFFICULTIES, IT COULD ADVERSELY AFFECT OUR EARNINGS.
Our operating expenses are relatively fixed and cannot be reduced on short
notice to compensate for unanticipated contract cancellations or reductions. As
a result, any termination, significant reduction or modification of our business
relationships with any of our significant customers or with a number of smaller
customers could have a material adverse effect on our business, financial
condition and operating results.
As of June 30, 2000, we were providing services to approximately 152
customers. Two of our customers, Qualchoice of Arkansas and Preferred Health
Network of Maryland represent approximately 37% of our total revenue for the six
months ended June 30, 2000.
We believe that our long-term success largely depends upon our ability to
retain our customers and generate recurring revenues from contracts. Although we
typically enter into multi-year customer agreements, a majority of our customers
are able to reduce or cancel their use of our services before the end of the
contract term, subject to monetary penalties. We also provide services to some
customers without long-term contracts.
Many of our contracts are structured so that we generate revenue based on
units of volume, which include the number of physicians, number of patients,
number of members or number of users. If our customers experience business
difficulties and the units of volume decline or if that customer ceases
3
<PAGE> 7
operations for any reason, we will generate less revenue under these contracts
and our operating results may be materially and adversely impacted.
OUR SUCCESS DEPENDS ON OUR ABILITY TO ATTRACT, RETAIN AND MOTIVATE MANAGEMENT
AND OTHER SKILLED EMPLOYEES.
Our success will depend in large part on the continued services of key
management and skilled personnel. Competition for personnel in the healthcare
information technology market is intense, and there are a limited number of
persons with knowledge of, and experience in, this industry. We do not have
employment agreements with most of our executive officers, so any of these
individuals may terminate his or her employment with us at any time. We
currently maintain a $5,000,000 key man life insurance policy on Jeffrey H.
Margolis, our Chief Executive Officer. The loss of services of one or more of
our key management employees, or the inability to hire additional key management
personnel as needed, could have a material adverse effect on our business,
financial condition and operating results. Although we currently experience
relatively low rates of turnover for our skilled employees, the rate of turnover
may increase in the future. In addition, we expect to further grow our
operations, and our needs for additional skilled employees will increase. Our
continued ability to compete effectively in our business depends on our ability
to attract, retain and motivate these individuals.
WE ARE GROWING RAPIDLY, AND OUR INABILITY TO MANAGE THIS GROWTH COULD HARM OUR
BUSINESS.
We have rapidly and significantly expanded our operations and expect to
continue to do so. This growth has placed, and is expected to continue to place,
a significant strain on our managerial, operational, financial, information
systems and other resources. As of September 30, 2000, we had grown to
approximately 900 employees and independent contractors, from approximately 75
employees and independent contractors in December 1997. We expect to hire a
significant number of new employees to support our business. If we are unable to
manage our growth effectively, it could have a material adverse effect on our
business, financial condition and operating results.
OUR ACQUISITION STRATEGY MAY DISRUPT OUR BUSINESS AND REQUIRE ADDITIONAL
FINANCING.
Since inception, we have made numerous acquisitions and expect to continue
to acquire companies as part of our growth strategy. We compete with other
companies to acquire businesses. We expect this competition to continue to
increase, making it more difficult in the future to acquire suitable companies
on favorable terms.
Although we may acquire additional companies, we may be unable to
successfully integrate them in a timely manner. If we are unable to successfully
integrate acquired businesses, we may incur substantial costs and delays or
other operational, technical or financial problems. In addition, the failure to
successfully integrate acquisitions may divert management's attention from our
existing business and may damage our relationships with our key customers and
employees.
To finance future acquisitions, we may issue equity securities that could
be dilutive to our stockholders. We may also incur debt and additional
amortization expenses related to goodwill and other intangible assets in future
acquisitions. The interest expense related to this debt and additional
amortization expense may significantly reduce our profitability and have a
material adverse effect on our business, financial condition and operating
results.
WE EXPECT OUR LOSSES AND FLUCTUATIONS IN OPERATING RESULTS TO CONTINUE, WHICH
MAY ADVERSELY IMPACT OUR BUSINESS AND OUR STOCKHOLDERS.
We have lost money in seven of our past 14 fiscal quarters (through
September 30, 2000). Although our revenue has grown in recent periods, we cannot
assure you that our revenues will continue at their current level or increase in
the future. We cannot assure you that we will be consistently profitable on
either a quarterly or annual basis.
4
<PAGE> 8
We currently derive our revenue primarily from providing application
services and non-recurring services. We plan to invest heavily in acquisitions,
infrastructure development, applications development and sales and marketing. As
a result, we expect that we will lose money through at least the fiscal year
ending December 31, 2000, and we may never achieve or sustain profitability.
IF OUR ABILITY TO EXPAND OUR NETWORK INFRASTRUCTURE IS CONSTRAINED IN ANY WAY,
WE COULD LOSE CUSTOMERS AND DAMAGE OUR OPERATING RESULTS.
We must continue to expand and adapt our network and technology
infrastructure to accommodate additional users, increase transaction volumes and
changing customer requirements. We may not be able to accurately project the
rate or timing of increases, if any, in the use of our application services or
our portal or be able to expand and upgrade our systems and infrastructure to
accommodate such increases. We may be unable to expand or adapt our network
infrastructure to meet additional demand or our customers' changing needs on a
timely basis, at a commercially reasonable cost or at all. Our current
information systems, procedures and controls may not continue to support our
operations while maintaining acceptable overall performance and may hinder our
ability to exploit the market for healthcare applications and services. Service
lapses could cause our users to switch to the services of our competitors.
WE COULD LOSE CUSTOMERS AND REVENUE IF WE FAIL TO MEET THE PERFORMANCE STANDARDS
IN OUR CONTRACTS.
Many of our service agreements contain performance standards. If we fail to
meet these standards, our customers could terminate their agreements with us or
require that we refund part or all of the fees charged under those agreements.
The termination of any of our material services agreements and/or associated
revenue could have a material adverse effect on our business, financial
condition and operating results.
ANY FAILURE OR INABILITY TO PROTECT OUR TECHNOLOGY AND CONFIDENTIAL INFORMATION
COULD ADVERSELY AFFECT OUR BUSINESS.
Our success depends in part upon proprietary software and other
confidential information. The software and information technology industries
have experienced widespread unauthorized reproduction of software products and
other proprietary technology. We do not own any patents. We rely on a
combination of copyright, trademark and trade secret laws, confidentiality
procedures and contractual provisions to protect our intellectual property.
However, these protections may not be sufficient, and they do not prevent
independent third party development of competitive products or services.
We believe that our proprietary rights do not infringe upon the proprietary
rights of third parties. However, third parties may assert infringement claims
against us in the future, and we could be required to enter into a license
agreement or royalty arrangement with the party asserting the claim. We may also
be required to indemnify customers for claims made against them.
PERFORMANCE OR SECURITY PROBLEMS WITH OUR SYSTEMS COULD DAMAGE OUR BUSINESS.
Our customers' satisfaction and our business could be harmed if our
customers or we experience any system delays, failures or loss of data. We
currently process substantially all our customers' transactions and data at our
facilities in Englewood, Colorado, Albany, New York, and Birmingham, Alabama.
Although we have safeguards for emergencies and we have contracted backup
processing for a portion of our customers' critical functions, we do not have
sufficient backup facilities to process information if these facilities are not
functioning. The occurrence of a major catastrophic event or other system
failure at any of our facilities could interrupt data processing or result in
the loss of stored data. In addition, we depend on the efficient operation of
Internet connections from customers to our systems. These connections, in turn,
depend on the efficient operation of web browsers, Internet service providers
and Internet backbone service providers, all of which have had periodic
operational problems or experienced outages.
A material security breach could damage our reputation or result in
liability to us. We retain confidential customer and patient information in our
Customer Connectivity Centers. Therefore, it is
5
<PAGE> 9
critical that our facilities and infrastructure remain secure and that our
facilities and infrastructure are perceived by the marketplace to be secure.
Despite the implementation of security measures, our infrastructure may be
vulnerable to physical break-ins, computer viruses, programming errors, attacks
by third parties or similar disruptive problems.
DEFECTIVE PRODUCTS, ERRORS OR IMPROPER HANDLING OF CUSTOMER DATA MAY CAUSE US TO
LOSE CUSTOMERS OR SUBJECT US TO LIABILITY.
Our customers demand reliability in the delivery of application services
and quality when their transactions are processed. Although we devote
substantial resources to meeting these demands, errors may occur. Errors and
mistakes in the processing of customer data may result in loss of data,
inaccurate information and delays. Such errors could cause us to lose customers
and could result in liability and penalties. Our services agreements generally
contain limitations on liability, and we maintain insurance with coverage limits
of $24 million to protect against claims associated with the use of our products
and services. However, the contractual provisions and insurance coverage may not
provide adequate coverage against all possible claims that may be asserted. In
addition, appropriate insurance may be unavailable in the future at commercially
reasonable rates. A successful claim in excess of our insurance coverage could
have a material adverse effect on our business, financial condition and
operating results. Even unsuccessful claims could result in litigation or
arbitration costs and may divert management's attention from our existing
business.
OUR BUSINESS WILL SUFFER IF OUR SOFTWARE PRODUCTS CONTAINS ERRORS.
The proprietary and third-party software products we offer are inherently
complex. Despite testing and quality control, we cannot be certain that errors
will not be found in current versions, new versions or enhancements of our
products. Significant technical challenges also arise with our products because
our customers purchase and deploy those products across a variety of computer
platforms and integrate them with a number of third-party software applications
and databases. If new or existing customers have difficulty deploying our
products or require significant amounts of customer support, our operating
margins could be harmed. Moreover, we could face possible claims and higher
development costs if our software contains undetected errors or if we fail to
meet our customers' expectations. As a result of the foregoing, we could
experience:
- loss of or delay in revenues and loss of market share;
- loss of customers;
- damage to our reputation;
- failure to achieve market acceptance;
- diversion of development resources;
- increased service and warranty costs;
- legal actions by customers against us which could, whether or not
successful, increase costs and distract our management; and
- increased insurance costs.
In addition, a product liability claim, whether or not successful, could
harm our business by increasing our costs and distracting our management.
WE INCORPORATE SOFTWARE LICENSED FROM THIRD PARTIES INTO SOME OF OUR PRODUCTS
AND ANY SIGNIFICANT INTERRUPTION IN THE AVAILABILITY OF THESE THIRD-PARTY
SOFTWARE PRODUCTS OR DEFECTS IN THESE PRODUCTS COULD REDUCE THE DEMAND FOR OUR
PRODUCTS.
Our software products contain components developed and maintained by
third-party software vendors. For example, a relational database system offered
by Sybase is used in ERISCO's Facets product. We
6
<PAGE> 10
expect that we may have to incorporate software from third-party vendors in our
future products. We may not be able to replace the functionality provided by the
third-party software currently offered with our products if that software
becomes obsolete, defective or incompatible with future versions of our products
or is not adequately maintained or updated. Any significant interruption in the
availability of these third-party software products or defects in these products
could harm the sale of our products unless and until we can secure an
alternative source. If Sybase stops offering its relational database system, we
may need to incur significant expenses to develop an alternative relational
database system for Facets. Although we believe there are adequate alternate
sources for the technology currently licensed to us, such alternate sources may
not provide us with the same functionality as that currently provided to us.
WE RELY ON AN ADEQUATE SUPPLY AND PERFORMANCE OF COMPUTER HARDWARE AND
PERIPHERALS FROM THIRD PARTIES WHICH OUR CUSTOMERS MAY REQUIRE TO USE OUR
PRODUCTS AND ANY SIGNIFICANT INTERRUPTION IN THE AVAILABILITY OR PERFORMANCE OF
THIRD PARTY HARDWARE AND PERIPHERALS COULD ADVERSELY AFFECT OUR ABILITY TO
DELIVER OUR PRODUCTS TO CERTAIN CUSTOMERS ON A TIMELY BASIS.
As we offer our application services and software to a greater number of
customers and particularly to larger customers, we may require specialized
computer equipment and peripherals which may be difficult to obtain on short
notice. Any delay in obtaining such equipment and peripherals may prevent us
from delivering large systems to our customers on a timely basis. We also rely
on such equipment and peripherals to meet required performance standards. If
such performance standards are not met, we may be adversely impacted under our
service level agreements with our customers.
WE ARE SUBJECT TO ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND IN OUR CONTRACTS
THAT COULD DELAY OR PREVENT AN ACQUISITION OF OUR COMPANY, EVEN IF SUCH AN
ACQUISITION WOULD BE BENEFICIAL TO OUR STOCKHOLDERS.
Certain provisions of our certificate of incorporation, our bylaws,
Delaware law and our contracts could delay or prevent a third party from
acquiring us, even if doing so might be beneficial to our stockholders. Some of
these provisions:
- authorize the issuance of preferred stock which can be created and issued
by the board of directors without prior stockholder approval, commonly
referred to as "blank check" preferred stock, with rights senior to those
of common stock;
- prohibit stockholder action by written consent;
- establish a classified board of directors; and
- require advance notice for submitting nominations for election to the
board of directors and for proposing matters that can be acted upon by
stockholders at a meeting.
In addition, our Board of Directors has recently authorized the adoption of a
shareholder rights plan which, when implemented, could delay or prevent a third
party from acquiring us.
OUR BUSINESS WILL SUFFER IF COMMERCIAL USERS DO NOT ACCEPT INTERNET SOLUTIONS.
Our success depends in part on the adoption of Internet solutions by
commercial users. Our business could suffer dramatically if Internet solutions
are not accepted or not perceived to be effective. The Internet may not prove to
be a viable commercial marketplace for a number of reasons, including:
- inadequate development of the necessary infrastructure for communication
speed, access and server reliability;
- security and confidentiality concerns;
- lack of development of complementary products, such as high-speed modems
and high-speed communication lines;
- implementation of competing technologies;
- delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity; and
- governmental regulation.
7
<PAGE> 11
We expect Internet use to grow in number of users and volume of traffic.
The Internet infrastructure may be unable to support the demands placed on it by
this continued growth.
Growth in the demand for our application and Internet platform services
depends on the adoption of Internet solutions by healthcare participants, which
requires the acceptance of a new way of conducting business and exchanging
information. To maximize the benefits of our solutions, our customers must be
willing to allow their applications and data to be hosted in our Customer
Connectivity Centers.
IF WE FAIL TO MEET THE CHANGING DEMANDS OF TECHNOLOGY, WE MAY NOT CONTINUE TO BE
ABLE TO COMPETE SUCCESSFULLY WITH OTHER PROVIDERS OF SOFTWARE APPLICATIONS AND
HEALTHCARE PORTALS.
The market for our technology and services is highly competitive and
rapidly changing and requires potentially expensive technological advances. We
believe our ability to compete in this market will depend in part upon our
ability to:
- maintain and continue to develop partnerships with vendors;
- enhance our current technology and services;
- respond effectively to technological changes;
- sell additional services to our existing customer base;
- introduce new technologies; and
- meet the increasingly sophisticated needs of our customers.
Competitors may develop products or technologies that are better or more
attractive than those offered by us or that may render our technology and
services obsolete. Many of our current and potential competitors are larger and
offer broader services and have significantly greater financial, marketing and
other competitive resources than us.
THE INTENSIFYING COMPETITION WE FACE FROM BOTH ESTABLISHED ENTITIES AND NEW
ENTRIES IN THE MARKET MAY ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY.
We face intense competition. Many of our competitors and potential
competitors have significantly greater financial, technical, product
development, marketing and other resources and greater market recognition than
we have. Many of our competitors also have, or may develop or acquire,
substantial installed customer bases in the healthcare industry. As a result,
our competitors may be able to respond more quickly to new or emerging
technologies and changes in customer requirements or to devote greater resources
to the development, promotion and sale of their applications or services than we
can devote.
Our competitors can be categorized as follows:
- application service providers, such as USinternetworking, Inc. and Exodus
Communications, Inc.;
- healthcare e-commerce and portal companies, such as WebMD Corporation and
CareInsite, Inc.;
- information technology outsourcing companies, such as Perot Systems
Corporation, Computer Sciences Corporation and Electronic Data Systems
Corporation;
- information technology consulting firms, such as Superior Consultant
Holdings Corporation, First Consulting Group, Inc. and the consulting
divisions of the major accounting firms; and
- healthcare information software vendors, such as IDX Systems Corporation,
McKesson HBOC, Inc., and Cerner Corporation.
Each of these types of companies can be expected to compete with us within
the various segments of the healthcare information technology market.
Furthermore, major software information systems companies and other entities,
including those specializing in the healthcare industry that are not presently
offering applications that compete with our technology and services, may enter
these markets. In addition, some of
8
<PAGE> 12
our third party software vendors with whom we have licensing agreements, may
compete with us from time to time by selling software on a stand-alone basis.
We cannot assure you that we will be able to compete successfully against
current and future competitors or that competitive pressures faced by us will
not have a material adverse effect on our business, financial condition and
operating results.
CHANGES IN GOVERNMENT REGULATION OF THE HEALTHCARE INDUSTRY COULD ADVERSELY
AFFECT OUR BUSINESS.
Our software applications, information technology services and HealthWeb
are designed to function within the current healthcare financing and
reimbursement system. During the past several years, the healthcare industry has
been subject to increasing levels of government regulation of, among other
things, reimbursement rates and certain capital expenditures. In addition,
proposals to reform the healthcare system have been considered by Congress.
These proposals, if enacted, may further increase government involvement in
healthcare, lower reimbursement rates and otherwise adversely affect the
healthcare industry which could adversely impact our business.
Healthcare organizations may react to these proposals and the uncertainty
surrounding such proposals in ways that could result in a reduction or deferral
in the use of our technologies and services. We cannot predict with any
certainty what impact, if any, such proposals or healthcare reforms might have
on our business, financial condition and operating results.
Legislation currently being considered at the federal level could impact
the manner in which we conduct our business. The Health Insurance Portability &
Accountability Act (HIPAA) of 1996 mandates the use of standard transaction
formats, codes sets, identifiers and privacy and security requirements.
Publication of transaction standards were scheduled for June 2000 and compliance
will be required by August 2002. Other regulations will be published in stages
after June 2000.
We must deliver HIPAA compliant systems and our clients must be responsible
for their overall HIPAA compliance. Our ability to provide HIPAA compliant
applications to our customers through the ASP model could relieve customers of
significant application remediation requirements. This potentially represents a
significant competitive advantage. Conversely, any failure to become HIPAA
compliant could negatively impact our competitive advantage and involve
financial and/or criminal penalties.
We perform billing and claims services that are governed by numerous
federal and state civil and criminal laws. The federal government in recent
years has placed increased scrutiny on billing and collection practices of
healthcare providers and related entities and particularly on potential
fraudulent billing practices, such as submissions of inflated claims for payment
and upcoding. Violations of the laws regarding billing and coding may lead to
civil monetary penalties, criminal fines, imprisonment or exclusion from
participation in Medicare, Medicaid and other federally funded healthcare
programs for us and our customers. Any of these results could have a material
adverse effect on our business, financial condition and operating results.
Federal and state consumer protection laws may apply to us when we bill
patients directly for the cost of physician services provided. Failure to comply
with any of these laws or regulations could result in a loss of licensure or
other fines and penalties. Any of these results could have a material adverse
effect on our business, financial condition and operating results.
The confidentiality of patient records and the circumstances under which
records may be released for inclusion in the databases we host are subject to
substantial regulation by state governments. These state laws and regulations
govern both the disclosure and the use of confidential patient medical record
information. Although compliance with these laws and regulations is at present
principally the responsibility of the hospital, physician or other healthcare
provider, regulations governing patient confidentiality rights are evolving
rapidly. Additional legislation governing the dissemination of medical record
information has been proposed at both the state and federal level. This
legislation may require holders of this information to implement security
measures that may require substantial expenditures by us. For example, the
proposed Health Information Modernization and Security Act would establish
9
<PAGE> 13
standards and requirements for the electronic transmission of health
information. There can be no assurance that changes to state or federal laws
will not materially restrict the ability of healthcare providers to submit
information from patient records using our applications.
SINCE WE OPERATE AN INTERNET-BASED NETWORK, OUR BUSINESS IS SUBJECT TO
GOVERNMENT REGULATION RELATING TO THE INTERNET THAT COULD IMPAIR OUR OPERATIONS.
There are increasing numbers of laws and regulations pertaining to the
Internet. In addition, a number of legislative and regulatory proposals are
under consideration by federal, state, local and foreign governments and
agencies. Laws or regulations may be adopted with respect to the Internet
relating to liability for information retrieved from or transmitted over the
Internet, on-line content regulation, user privacy, taxation and quality of
products and services. The requirement that we comply with any new legislation
or regulation may decrease the growth in the use of the Internet, which could in
turn decrease the demand for our services, increase our cost of doing business
or otherwise have a material adverse effect on our business, results of
operations and financial conditions. In particular, a number of legislative
proposals have been made that would impose additional taxes on the sale of goods
and services over the Internet. Although in October 1998 Congress placed a
three-year moratorium on state and local taxes on Internet access or on
discriminatory taxes on electronic commerce, existing state or local laws were
expressly excepted from this moratorium. Once this moratorium is lifted, some
type of federal and/or state taxes may be imposed upon Internet commerce which
could adversely affect our opportunity to derive financial benefit from such
activities.
OUR NEED FOR ADDITIONAL FINANCING IS UNCERTAIN AS IS OUR ABILITY TO RAISE
FURTHER FINANCING IF REQUIRED.
We expect to pay for future acquisitions by issuing additional common
stock, and if necessary by using cash. We cannot assure you that we will be able
to raise additional funds through public and private financings. We cannot
assure you that we will be able to raise additional funds at any particular
point in the future or on favorable terms.
Future financing could adversely affect your ownership interest in
comparison with those of other stockholders.
THE TRADING PRICES AND VOLUMES OF OUR STOCK HAVE BEEN VOLATILE AND WE EXPECT
THAT THIS VOLATILITY WILL CONTINUE.
Our stock price and trading volumes have been highly volatile since our
initial public offering on October 8, 1999. We expect that this volatility will
continue in the future due to factors such as:
- Actual or anticipated fluctuations in results of operations;
- Changes in or failure to meet securities analysts' expectations;
- Announcements of technological innovations and acquisitions;
- Introduction of new services by us or our competitors;
- Developments with respect to intellectual property rights;
- Conditions and trends in the Internet, technology and healthcare
industries; and
- General market conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations that have affected the market prices for the
common stocks of technology companies. These broad market fluctuations may
result in a material decline in the market price of our common stock. In the
past, following periods of volatility in the market price of a particular
company's securities, securities class action litigation has often been brought
against that company. We may become involved in this type of litigation in the
future. Litigation is often expensive and diverts management's attention and
resources, which could have a material adverse effect on our business and
operating results.
10
<PAGE> 14
FUTURE SALES OF OUR COMMON STOCK MAY DEPRESS THE PRICE OF OUR COMMON STOCK.
As of October 31, 2000, we had approximately 33.9 million shares of common
stock outstanding. Sales of a substantial number of shares of common stock in
the public market could cause the market price of our common stock to decline.
Certain of our stockholders have registration rights with respect to the common
stock. The exercise of these registration rights and subsequent sale of the
securities could depress the price of our common stock.
USE OF PROCEEDS
The proceeds from the sale of each Selling Stockholder's common stock will
belong to that Selling Stockholder. We will not receive any proceeds from such
sales.
SELLING STOCKHOLDERS
We issued 480,770 shares of Series B Preferred Stock to certain of the
Selling Stockholders (the "Fidelity Selling Stockholders") on April 12, 1999
pursuant to the terms of a Series B Convertible Preferred Stock Purchase
Agreement dated as of such date among TriZetto and the purchasers listed
therein. Pursuant to the First Amended and Restated Investor Rights Agreement
dated April 12, 1999 between TriZetto and certain stockholders, the stockholders
of the Series B Preferred Stock were granted registration rights. All of the
outstanding preferred stock automatically converted into common stock in
connection with TriZetto's initial public offering.
We issued 549,786 shares of common stock to certain of the Selling
Stockholders (the "Novalis Selling Stockholders") on November 29, 1999, pursuant
to the terms of the Stock Purchase Agreement dated as of such date among
TriZetto, Novalis Corporation, and the Novalis Selling Stockholders pursuant to
which we acquired all of the outstanding common stock of Novalis Corporation.
Pursuant to the Registration Rights Agreement dated November 29, 1999 between
TriZetto and the Novalis Selling Stockholders, we agreed to file a registration
statement with the SEC to register the shares of common stock received by the
Novalis Selling Stockholders for resale by them, and to keep the registration
statement effective until November 29, 2001. The Registration Statement of which
this prospectus is a part was filed with the SEC pursuant to the Registration
Rights Agreement.
We issued 48,998 shares of common stock to certain of the Selling
Stockholders (the "Finserv Selling Stockholders") on December 22, 1999, pursuant
to the terms of the Agreement and Plan of Merger dated as of such date among
TriZetto, Finserv Acquisition Corp., Finserv Health Care Systems, Inc., and the
Finserv Selling Stockholders pursuant to which we acquired all of the
outstanding common stock of Finserv Health Care Systems, Inc. Pursuant to a
Registration Rights Agreement dated December 22, 1999 between TriZetto and the
Finserv Selling Stockholders, we agreed to file a registration statement with
the SEC to register the shares of common stock received by the Finserv Selling
Stockholders for resale by them, and to keep the registration statement
effective until December 22, 2001. The Registration Statement of which this
prospectus is a part was filed with the SEC pursuant to the Registration Rights
Agreement.
11
<PAGE> 15
The following table sets forth: (1) the name of each of the Selling
Stockholders for whom we are registering shares under the Registration
Statement; (2) the number of shares of our common stock owned by each Selling
Stockholder prior to this offering, and (3) the number of shares, and (if one
percent or more) the percentage of the total of the outstanding shares, of our
common stock to be owned by each such Selling Stockholder after this offering.
Upon completion of this offering, assuming all of the shares held by the Selling
Stockholders being registered hereby are sold and that the Selling Stockholders
acquire no additional shares of common stock prior to the completion of this
offering, the Selling Stockholders will beneficially own no shares of our common
stock.
<TABLE>
<CAPTION>
PERCENTAGE
OF COMMON
STOCK
COMMON STOCK COMMON STOCK OWNED UPON
COMMON STOCK BEING OFFERED OWNED UPON COMPLETION
OWNED PRIOR TO PURSUANT TO THIS COMPLETION OF OF THIS
NAME OF SELLING STOCKHOLDER THE OFFERING PROSPECTUS THIS OFFERING OFFERING
--------------------------- -------------- ---------------- ------------- ----------
<S> <C> <C> <C> <C>
FIDELITY SELLING STOCKHOLDERS:
Fidelity Ventures Limited................. 1,139,336 240,385 898,951 3%
Fidelity Investors II Limited
Partnership............................. 398,210 240,385 157,825 *
NOVALIS SELLING STOCKHOLDERS(1):
ABS Capital Partners, L.P................. 258,722 258,722 0 *
BancBoston Investments Inc................ 97,021 97,021 0 *
St. Paul Fire and Marine Insurance
Company................................. 74,740 74,740 0 *
St. Paul Venture Capital V, L.L.C......... 22,281 22,281 0 *
Edison Venture Fund III, L.P.............. 64,682 64,682 0 *
Galen Employee Fund, L.P.................. 140 140 0 *
Galen Partners II, L.P.................... 23,289 23,289 0 *
Galen Partners International II, L.P...... 8,911 8,911 0 *
FINSERV SELLING STOCKHOLDERS(1):
Stuart Schloss............................ 42,521 42,521 0 *
Franc Richardson.......................... 4,899 4,899 0 *
Olga Pizzo................................ 789 789 0 *
William Nice.............................. 789 789 0 *
</TABLE>
-------------------------
* less than 1%
(1) To our knowledge, the number of shares of common stock which each Selling
Stockholder owned prior to this offering consists solely of those shares of
common stock issued in connection with our acquisitions of Novalis and
Finserv, respectively.
Prior to our acquisition of Finserv, Stuart Schloss served as a director
and the president and chief executive officer, and Franc Richardson served as a
director and the chief financial officer and secretary, of Finserv. Upon the
consummation of our acquisition of Finserv, Stuart Schloss and Franc Richardson
resigned as directors and officers of Finserv, but remained employees of Finserv
in substantially their same employment capacities. Stuart Schloss, Franc
Richardson, Olga Pizzo and William Nice are currently employees of Finserv,
which is now our wholly-owned subsidiary. Other than as described in this
prospectus, the Selling Stockholders do not have any material relationships with
us.
12
<PAGE> 16
PLAN OF DISTRIBUTION
The shares of our common stock offered pursuant to this prospectus may be
offered and sold from time to time by the Selling Stockholders or their
permitted transferees. The Selling Stockholders will act independently of us in
making decisions with respect to the timing, manner and size of each sale. All
or a portion of the common stock offered by this prospectus may be offered for
sale from time to time on the Nasdaq National Market or on one or more
exchanges, or otherwise at prices and terms than obtainable, or in negotiated
transactions. The distribution of these securities may be effected in one or
more transactions that may take place on the over-the-counter market, including,
among others, ordinary brokerage transactions, privately negotiated transactions
or through sales to one or more dealers for resale of such securities as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Stockholders.
We will not receive any part of the proceeds from the sale of common stock.
The Selling Stockholders and intermediaries through whom such securities are
sold may be deemed "underwriters" within the meaning of the Securities Act, in
which event commissions received by such intermediary may be deemed to be
underwriting commissions under the Securities Act. We will pay all expenses of
the registration of securities covered by this prospectus. The Selling
Stockholders will pay any applicable underwriters' commissions and expenses,
brokerage fees or transfer taxes.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed on
by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach,
California.
EXPERTS
The financial statements of TriZetto incorporated in this prospectus by
reference to TriZetto's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The financial statements of ERISCO Managed Care Technologies, Inc.
incorporated in this prospectus by reference to the audited historical financial
statements included on pages F-25 through F-40 of TriZetto's Proxy Statement
filed with the SEC on September 7, 2000 have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements of Novalis Corporation incorporated in this
prospectus by reference to the audited historical financial statements included
as Exhibit 99.1 to TriZetto's Form 8-K/A filed with the SEC on February 14, 2000
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements of Finserv Health Care Systems, Inc. incorporated
in this prospectus by reference to the audited historical financial statements
included as Exhibit 99.1 to TriZetto's Form 8-K/A filed with the SEC on March 6,
2000 have been so incorporated in reliance on the report of Citrin Cooperman &
Company, LLP, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
13
<PAGE> 17
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed a registration statement on Form S-3 with the SEC with
respect to the common stock offered by this prospectus. This prospectus, which
constitutes a part of the registration statement, does not contain all of the
information set forth in the registration statement or the exhibits and
schedules which are part of the registration statement. You may read and copy
any document we file at the SEC's public reference rooms in Washington D.C. We
refer you to the registration statement and the exhibits and schedules thereto
for further information with respect to us and our common stock. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference room. Our
SEC filings are also available to the public from the SEC's website at
www.sec.gov.
We are subject to the information and periodic reporting requirements of
the Securities Exchange Act of 1934 and, in accordance with those requirements,
will continue to file periodic reports, proxy statements and other information
with the SEC. These periodic reports, proxy statements and other information
will be available for inspection and copying at the SEC's public reference rooms
and the SEC's website referred to above.
The SEC allows us to "incorporate by reference" the information we file
with the SEC, which means that we can disclose important information to you by
referring to those documents. We incorporate by reference the documents listed
below and any additional documents filed by us with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until this offering of
securities is terminated. The information we incorporate by reference is an
important part of this prospectus, and any information that we file later with
the SEC will automatically update and supersede this information.
The documents we incorporate by reference are:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999 as filed with the SEC on March 30, 2000;
2. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2000
as filed with the SEC on May 15, 2000;
3. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 2000
as filed with the SEC on August 14, 2000;
4.Our Quarterly Report on Form 10-Q for the quarter ended September 30,
2000 as filed with the SEC on November 14, 2000;
5. Our Current Report on Form 8-K as filed with the SEC on December 14,
1999, as amended by our Form 8-K/A filed with the SEC on February 14,
2000;
6. Our Current Report on Form 8-K as filed with the SEC on January 6,
2000, as amended by our Form 8-K/A filed with the SEC on March 6, 2000;
7. Our Current Report on Form 8-K as filed with the SEC on April 21, 2000;
8. Our Current Report on Form 8-K as filed with the SEC on May 19, 2000;
9.Our Current Report on Form 8-K as filed with the SEC on October 17,
2000;
10. The following financial information which is contained in our proxy
statement dated September 7, 2000 relating to our acquisition of ERISCO
Managed Care Technologies, Inc.: information required by Rule 3-05 and
Article 11 of Regulation S-X;
11. The description of our common stock that is contained in our
registration statement on Form 8-A filed under Section 12 of the
Securities Exchange Act of 1934 as filed with the SEC on October 1,
1999, including any amendment or report filed for the purpose of
updating such description; and
12. All other reports filed by us pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 since December 31, 1999.
14
<PAGE> 18
You may request a copy of these filings, at no cost, by writing or calling
us at The TriZetto Group, Inc., 567 San Nicolas Drive, Suite 360, Newport Beach,
CA 92660, telephone number (949) 719-2200, Attention: Investor Relations.
You should rely only on the information contained in this prospectus or any
supplement and in the documents incorporated by reference above. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus or any supplement or in the
documents incorporated by reference is accurate on any date other than the date
on the front of those documents.
15
<PAGE> 19
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following sets forth the costs and expenses, all of which shall be
borne by us, in connection with the offering of the shares of common stock
pursuant to this Registration Statement:
<TABLE>
<S> <C>
Securities and Exchange Commission Fee...................... $4,551.49
Accounting Fees and Expenses*............................... **
Legal Fees and Expenses*.................................... 7,500.00
Printing Costs*............................................. **
---------
Total..................................................... $ **
=========
</TABLE>
-------------------------
* Estimated
** To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Bylaws provide that we shall indemnify our directors and officers and
may indemnify our employees and other agents to the fullest extent permitted by
the General Corporation Law of the State of Delaware (the "DGCL"). We believe
that indemnification under our Bylaws covers at least negligence and gross
negligence by indemnified parties, and permits us to advance litigation expenses
in the case of stockholder derivative actions or other actions, against an
undertaking by the indemnified party to repay such advances if it is ultimately
determined that the indemnified party is not entitled to indemnification. We
maintain liability insurance for our officers and directors.
In addition, our Certificate of Incorporation provides that, pursuant to
the DGCL, our directors shall not be liable for monetary damages for breach of
the directors' fiduciary duty to us and our stockholders. This provision in the
Certificate of Incorporation does not eliminate the directors' fiduciary duty,
and in appropriate circumstances equitable remedies such as injunctive or other
forms of non-monetary relief will remain available under the DGCL. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to us for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for actions
leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under the DGCL. The provision also does not affect a director's responsibilities
under any other law, such as the federal securities laws or state or federal
environmental laws.
We have entered into separate indemnification agreements with our directors
and officers. These agreements require us, among other things, to indemnify them
against liabilities that may arise by reason of their status or service as
directors or officers (other than liabilities arising from actions not taken in
good faith or in a manner the indemnitee believed to be opposed to our best
interests), and to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified. Insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended, may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, we have been informed that in the opinion of the SEC, such
indemnification is against public policy as expressed in the 1933 Act and is
therefore unenforceable.
II-1
<PAGE> 20
ITEM 16. EXHIBITS.
The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
2.1 Stock Purchase Agreement, dated November 29, 1999, by and
among TriZetto, Novalis Corporation, the Novalis Noteholders
described therein, and the Novalis Stockholders described
therein (Incorporated by reference to Exhibit 2.1 of
TriZetto's Form 8-K as filed with the SEC on December 14,
1999, File No. 000-27501).
2.2 Registration Rights Agreement, dated as of November 29,
1999, by and among TriZetto and certain TriZetto
stockholders (Incorporated by reference to Exhibit 2.3 of
TriZetto's Form 8-K as filed with the SEC on December 14,
1999, File No. 000-27501).
2.3 Agreement and Plan of Merger, dated as of December 22, 1999,
by and among TriZetto, Finserv Acquisition Corp., Finserv
Health Care Systems, Inc., and the Finserv Securityholders
described therein (Incorporated by reference to Exhibit 2.1
of TriZetto's Form 8-K as filed with the SEC on January 6,
2000, File No. 000-27501).
2.4 Registration Rights Agreement, dated as of December 22,
1999, by and among TriZetto and certain TriZetto
stockholders (Incorporated by reference to Exhibit 2.4 of
TriZetto's Form 8-K as filed with the SEC on January 6,
2000, File No. 000-27501).
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation, legal counsel to TriZetto (to be filed by
amendment).
23.1 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in the Opinion filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants, with respect to financial statements of The
TriZetto Group, Inc., ERISCO Managed Care Technologies,
Inc., and Novalis Corporation.
23.3 Consent of Citrin Cooperman & Company, LLP, independent
accountants, with respect to the financial statements of
Finserv Health Care Systems, Inc.
24.1 Power of Attorney (included on signature page to the
Amendment No. 1 to Registration Statement).
</TABLE>
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 this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply
if the information required to be included in a post-effective amendment by
these paragraphs is contained in periodic reports filed 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
II-2
<PAGE> 21
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.
(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 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) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and where, interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or give, the
latest quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it has met all of the
requirements for filing on Form S-3 and has caused this Amendment No. 1
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Newport Beach, State of California, on the 27th
day of November 2000.
THE TRIZETTO GROUP, INC.
By: /s/ JEFFREY H. MARGOLIS
------------------------------------
Jeffrey H. Margolis
Chairman of the Board, President and
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of The TriZetto Group, Inc., do
hereby constitute and appoint Jeffrey H. Margolis and Michael J. Sunderland, or
either of them, our true and lawful attorney-in-fact and agent with full power
of substitution and re-substitution, for him and in his name, place and stead,
in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, or any related
registration statement that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, as amended, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the SEC,
granting unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ JEFFREY H. MARGOLIS President, Chief Executive Officer November 27, 2000
------------------------------------ and Chairman of the Board of
Jeffrey H. Margolis Directors (Principal Executive
Officer)
/s/ MICHAEL J. SUNDERLAND Chief Financial Officer and November 27, 2000
------------------------------------ Secretary (Principal Financial and
Michael J. Sunderland Accounting Officer)
Director November , 2000
------------------------------------
Donald J. Lothrop
/s/ WILLIAM E. FISHER Director November 27, 2000
------------------------------------
William E. Fisher
/s/ PAUL F. LEFORT Director November 27, 2000
------------------------------------
Paul F. LeFort
</TABLE>
II-4
<PAGE> 23
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <C> <S>
/s/ WILLARD A. JOHNSON, JR. Director November 27, 2000
------------------------------------
Willard A. Johnson, Jr.
Director November , 2000
------------------------------------
Eric D. Sipf
/s/ VICTORIA R. FASH Director November 24, 2000
------------------------------------
Victoria R. Fash
</TABLE>
II-5
<PAGE> 24
EXHIBIT INDEX
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
2.1 Stock Purchase Agreement, dated November 29, 1999, by and
among TriZetto, Novalis Corporation, the Novalis Noteholders
described therein, and the Novalis Stockholders described
therein (Incorporated by reference to Exhibit 2.1 of
TriZetto's Form 8-K as filed with the SEC on December 14,
1999, File No. 000-27501).
2.2 Registration Rights Agreement, dated as of November 29,
1999, by and among TriZetto and certain TriZetto
stockholders (Incorporated by reference to Exhibit 2.3 of
TriZetto's Form 8-K as filed with the SEC on December 14,
1999, File No. 000-27501).
2.3 Agreement and Plan of Merger, dated as of December 22, 1999,
by and among TriZetto, Finserv Acquisition Corp., Finserv
Health Care Systems, Inc., and the Finserv Securityholders
described therein (Incorporated by reference to Exhibit 2.1
of TriZetto's Form 8-K as filed with the SEC on January 6,
2000, File No. 000-27501).
2.4 Registration Rights Agreement, dated as of December 22,
1999, by and among TriZetto and certain TriZetto
stockholders (Incorporated by reference to Exhibit 2.4 of
TriZetto's Form 8-K as filed with the SEC on January 6,
2000, File No. 000-27501).
5.1 Opinion of Stradling Yocca Carlson & Rauth, a Professional
Corporation, legal counsel to TriZetto (to be filed by
amendment).
23.1 Consent of Stradling Yocca Carlson & Rauth, a Professional
Corporation (included in the Opinion filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants, with respect to financial statements of The
TriZetto Group, Inc., ERISCO Managed Care Technologies, Inc.
and Novalis Corporation.
23.3 Consent of Citrin Cooperman & Company, LLP, independent
accountants, with respect to the financial statements of
Finserv Health Care Systems, Inc.
24.1 Power of Attorney (included on signature page to the
Amendment No. 1 to Registration Statement).
</TABLE>
