<PAGE> 1
As filed pursuant to Rule 424(b)(3)
under the Securities Act of 1933
Registration No. 333-41510
PROSPECTUS
800,000 SHARES
MAXICARE HEALTH PLANS, INC.
COMMON STOCK
------------------------
This prospectus covers the reoffer and resale by a selling shareholder of
Maxicare Health Plans, Inc. of 800,000 shares of common stock of Maxicare Health
Plans, Inc.
The common stock is quoted on The Nasdaq National Market System under the
trading symbol MAXI.
The common stock may be offered for sale from time to time in the market or
in privately negotiated transactions. Maxicare Health Plans, Inc. will not
receive any proceeds from the sale of these shares of common stock.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 4.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED THAT
THIS PROSPECTUS IS COMPLETE OR ACCURATE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is September 14, 2000.
<PAGE> 2
PROSPECTUS SUMMARY
THE COMPANY
We are Maxicare Health Plans, Inc., a Delaware corporation, a holding
company which owns various operating subsidiaries, primarily in the field of
managed health care. We own and operate two health maintenance organizations, or
HMOs, in California and Indiana which have a combined enrollment of
approximately 430,000 as of September 1, 2000. We also operate Maxicare Life and
Health Insurance Company and HealthAmerica Corporation. Through these
subsidiaries, we offer an array of employee benefit packages, including group
HMO, Medicaid and Medicare HMO, preferred provider organization, point of
service, group life and accidental death and dismemberment insurance,
administrative services only programs, wellness programs and other services and
products.
Through our HMO operations we arrange for the delivery of comprehensive
health care services to our members for a predetermined, prepaid fee. We
generally provide these services by contracting on a prospective basis with
physician groups for a fixed fee per member per month regardless of the extent
and nature of services provided to members, and with hospitals and other
providers under a variety of fee arrangements.
We believe that an HMO offers certain advantages over traditional indemnity
health insurance. To the member, an HMO offers comprehensive and coordinated
health care programs, including preventive services, with predictable
out-of-pocket expense and generally without requiring claims forms. To the
employer, an HMO offers an opportunity to improve the breadth and quality of
health benefit programs available to employees and their families without a
significant increase in cost or administrative burdens. To health care
providers, such as physician groups and hospitals, an HMO provides a more
predictable revenue source.
Our executive offices are located at 1149 South Broadway Street, Los
Angeles, California 90015, and our telephone number is (213) 765-2000. Our Web
site address is www.maxicare.com. The information contained on our Web site is
not part of this prospectus.
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SUMMARY CONSOLIDATED FINANCIAL DATA
The following summary consolidated financial data are qualified by
reference to, and should be read in conjunction with, our Consolidated Financial
Statements and the Notes thereto incorporated by reference in this prospectus
from our Annual Report on Form 10-K for the year ended December 31, 1999 and our
Quarterly Report on Form 10-Q for the six months ended June 30, 2000. The
summary consolidated financial data for each of the years ended December 31,
1999, 1998 and 1997 are derived from our audited Consolidated Financial
Statements. The summary consolidated financial data as of June 30, 2000 and 1999
and for the six months ended June 30, 2000 and June 30, 1999 are unaudited, but,
in the opinion of management, included all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of the results of
operations for those periods. The results of operations for the six months ended
June 30, 2000 are not necessarily indicative of the results to be expected for
the full fiscal year.
<TABLE>
<CAPTION>
SIX MONTHS ENDED FOR THE YEARS ENDED
JUNE 30, DECEMBER 31,
------------------- ------------------------------
2000 1999 1999 1998 1997
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Revenues
Premiums.............................. $369,220 $348,743 $704,996 $727,220 $658,080
Investment income..................... 2,532 1,801 3,777 5,403 7,481
Other income.......................... 354 4,327 4,865 2,530 5,743
-------- -------- -------- -------- --------
Total Revenues................... 372,106 354,871 713,638 735,153 671,304
-------- -------- -------- -------- --------
Expenses
Health care expenses.................. 339,429 320,870 652,274 684,362 630,869
Marketing, general and administrative
expenses........................... 34,658 31,673 63,955 61,068 55,765
Depreciation and amortization......... 649 447 1,173 756 751
Loss contracts, divestiture costs,
litigation, management settlement
and other charges(1)............... 2,000 8,500 8,500 16,500 9,000
-------- -------- -------- -------- --------
Total Expenses................... 376,736 361,490 725,902 762,686 696,385
-------- -------- -------- -------- --------
Loss From Operations.................... (4,630) (6,619) (12,264) (27,533) (25,081)
Income Tax Benefit......................
-------- -------- -------- -------- --------
Net Loss................................ $ (4,630) $ (6,619) $(12,264) $(27,533) $(25,081)
======== ======== ======== ======== ========
Net Loss Per Common Share:
Basic:
Basic loss per common share........... $ (.26) $ (.37) $ (.68) $ (1.54) $ (1.40)
======== ======== ======== ======== ========
Weighted average number of common
shares outstanding................. 17,939 17,925 17,925 17,928 17,897
Diluted:
Diluted loss per common share......... $ (.26) $ (.37) $ (.68) $ (1.54) $ (1.40)
======== ======== ======== ======== ========
Weighted average number of common and
common dilutive potential shares
outstanding........................ 17,939 17,925 17,925 17,928 17,897
</TABLE>
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<TABLE>
<CAPTION>
AT JUNE 30, AT DECEMBER 31,
------------------- ------------------------------
2000 1999 1999 1998 1997
-------- -------- -------- -------- --------
(AMOUNTS IN THOUSANDS EXCEPT FOR MEMBERSHIP DATA)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $151,881 $121,752 $133,215 $136,254 $167,422
Total indebtedness(2)................. $112,449 $ 72,869 $ 90,059 $ 83,298 $ 86,386
Shareholders' equity.................. $ 39,432 $ 48,883 $ 43,156 $ 52,956 $ 81,036
MEMBERSHIP DATA:
Number of members..................... 446,000 482,000 466,600 512,000 514,000
</TABLE>
NOTES TO SUMMARY CONSOLIDATED FINANCIAL DATA
The summary consolidated financial data should be read in conjunction with
our Quarterly Report on Form 10-Q for the six months ended June 30, 2000 and
"Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Item 8. Financial Statements and Supplementary Data" of our
Annual Report on Form 10-K for the year ended December 31, 1999.
(1) A $2.0 million charge for losses associated with certain of the Company's
capitated provider arrangements was recorded in the second quarter of 2000.
A $3.0 million charge for loss contracts related to our Carolinas commercial
line of business and a $5.5 million charge for management settlement costs
were recorded in the first quarter of 1999. A $10 million charge for loss
contracts and divestiture costs and a $6.5 million charge for litigation,
provider insolvency/impairment, and an increase to the loss contracts and
divestiture costs reserve were recorded in the second and fourth quarters of
1998, respectively. A $6 million litigation charge was recorded in the first
quarter of 1997 as a result of a ruling by the Commonwealth of Pennsylvania
Board of Claims denying us recovery on our receivable of $5 million due us
from the Pennsylvania Department of Public Welfare in connection with the
operation of a Medicaid managed care program from 1986 through 1989 by one
of our subsidiaries, and related litigation costs. A $3 million management
restructuring charge was recorded in the fourth quarter of 1997 for
termination expenses primarily related to the settlement of certain
obligations pursuant to the former chief financial officer's employment
agreement.
(2) Includes long-term liabilities of $2.5 million and $2.4 million at June 30,
2000 and 1999, respectively. Includes long-term liabilities of $3.0 million,
$.6 million and $.2 million, at December 31, 1999, 1998 and 1997,
respectively.
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RISK FACTORS
You should carefully consider the following risks, in addition to the other
information contained in this prospectus, before making any investment decision.
We believe that the risks and uncertainties described below are the most
significant factors that make an investment in our common stock speculative and
risky. As a result of any of the risks we encounter, our business, financial
condition and results of operations could be materially adversely affected. Any
of these adverse effects could cause the trading price of our common stock to
decline and you may correspondingly lose all or some portion of your investment
in us.
FUTURE COSTS OF HEALTH CARE SERVICES THAT WE PROVIDE TO OUR MEMBERS MAY RISE
FASTER THAN THE RELATED PREMIUMS WE RECEIVE.
Commercial premium rates for managed care plans have generally increased
over the past year and recent months; however, if costs of health care services
rise and we are unable to adequately increase commercial premium rates, our
margins will shrink and have a corresponding adverse impact on operating
results. For the six months ended June 30, 2000, approximately 41% of our
premium revenues were derived from governmental programs, including Medicare and
Medicaid. The government generally fixes these premium rates and we are unable
or limited in our ability to adjust these rates based on anticipated costs.
Recent legislation regarding Medicare reimbursement has substantially limited
premium rate increases as compared to increases granted in prior years. As a
result, the costs of our governmental programs could exceed the related premiums
we receive from these programs. In addition, although we recently announced our
withdrawal, effective as of January 1, 2001, from certain Medicare markets which
we do not consider profitable, this withdrawal will not affect the losses which
we may have on this business during this current year.
HIGHER THAN ESTIMATED HEALTH CARE COSTS MAY ADVERSELY AFFECT OUR BUSINESS.
We generally set our rates annually and in advance based on estimates of
future health care costs over the related premium period. However, many factors
may adversely impact our ability to estimate and manage future health care costs
including increased utilization, high dollar claims, inflation, catastrophic
events, epidemics, new mandated benefits, new technologies and health care
practices, inability to secure cost effective provider compensation
arrangements, and the inherent variability of estimated claims reserves. Because
our rates are set in advance, we generally cannot adjust if health care costs
turn out higher than our estimates. Consequently, our results of operations may
be adversely affected. In addition, we are impacted more than certain of our
competitors because our relatively small size exacerbates the effect of greater
than anticipated high dollar claims.
PHARMACEUTICAL COSTS CONTINUE TO RISE AT A RATE IN EXCESS OF OUR ABILITY TO BE
REIMBURSED.
Prescription drug costs continue to rise at a rate in excess of most other
health care services and at a rate in excess of our ability to be reimbursed
through increased rates. Although we have implemented strategies to seek to
mitigate this cost trend there can be no assurance that we will be able to
effectively manage this problem or successfully recoup the cost increases.
THE RISK OF ADVERSE VARIATIONS IN OUR CLAIMS RESERVES HAS INCREASED.
Our claims reserves are estimates of incurred health care costs based upon
various assumptions and environmental factors. The accuracy of these estimates
may be affected by variables such as changes in the rate of inflation/medical
costs, the processing of claims, provider contract arrangements, the regulatory
environment and other factors. Given the inherent variability of our estimates,
the actual development of our reserves could be materially different from
amounts provided. During the past year we have assumed the risk for a much
larger percentage of our
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members as a result of a trend away from capitated arrangements with our medical
providers. Accordingly, the risks we face with respect to material variations in
our claims reserves have increased.
OUR INABILITY TO OBTAIN COST EFFECTIVE CONTRACTS WITH PROVIDERS MAY RESULT IN
HIGHER HEALTH CARE COSTS AND LOSS OF MEMBERSHIP.
Our marketability and profitability depends, in large part, on our ability
to attract and contract on a cost effective basis with hospitals, medical
groups, physicians and other provider contracting entities. In selected markets,
certain providers, particularly hospitals, physicians/hospital organizations or
multi-specialty physician groups may have significant market positions and/or
compete directly with us. In the past certain providers have refused to contract
with us or utilized their market position to place us at a competitive
disadvantage. To the extent this continues to occur our ability to market our
managed care products and control our costs could be adversely affected
resulting in higher health care costs and loss of membership.
THE FINANCIAL INSTABILITY OF OUR PROVIDERS MAY EXPOSE US TO LIABILITY FOR UNPAID
CLAIMS, LOSS OF MEMBERSHIP AND INCREASED HEALTH CARE COSTS.
We contract with providers and other provider contracting entities
primarily through capitation arrangements. We pay the provider a fixed dollar
amount per member per month and the provider accepts the financial risk of the
frequency and cost of member utilization of services. The inability of
contracted provider entities to properly manage costs under capitation
arrangements can result in financial instability and insolvency of those
providers resulting in the termination of their relationship with us, and
subjecting us to possible liability for unpaid claims and loss of membership.
During the past few years several of our significant providers in California and
Indiana either became insolvent or declared bankruptcy. The termination of a
capitated provider arrangement may also result in members selecting other
providers with whom we may not have as favorable contractual arrangements
resulting in increased health care costs.
IT IS DIFFICULT FOR US TO COMPETE IN THE HMO BUSINESS BECAUSE OUR MARKET SHARE
IS RELATIVELY LOW.
We operate in an environment, especially in California, where many of our
principal competitors enjoy significantly greater market share and greater
capital resources. As a result of competitive pressures, we have been and may
continue to be adversely affected in our ability to retain our customer base,
limited in our premium pricing flexibility and adversely affected in our ability
to maintain or improve operating margins.
OUR GEOGRAPHIC AND LINES OF BUSINESS CONCENTRATIONS SUBJECT US TO INCREASED
BUSINESS RISK.
Our commercial and governmental business is concentrated in California and
Indiana which accounted for approximately 96% of our premium revenues for the
six months ended June 30, 2000. Changes in regulatory, market or health care
provider conditions in either of these states could have a material adverse
effect on our business, financial condition and operating results.
Our Medicaid and Medicare lines of business are subject to our ongoing
ability to secure contracts with governmental entities who contract with us.
Governmental programs are also subject to extensive federal and state
regulation. Our Medicaid and Medicare premium revenues represented approximately
25% and 16%, respectively, of our total premium revenues for the six months
ended June 30, 2000. Our failure to retain one or more of our governmental
contracts could have a material adverse effect on our business and operations.
Our 10 largest commercial employer groups accounted for approximately 34%
of our commercial membership as of June 30, 2000. Our largest commercial
employer group, the state of Indiana,
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accounted for approximately 10% of our commercial membership and approximately
23% of the Indiana HMO's commercial membership as of June 30, 2000. The loss of
one or more of our largest commercial employer groups could have a material
adverse effect on our business and operations.
WE MAY BE ADVERSELY AFFECTED BY COMPLICATIONS IN THE ENHANCEMENT OF OUR
MANAGEMENT INFORMATION SYSTEMS.
Our business operations are significantly dependent on the functionality
and effectiveness of our management information systems. In addition, our
current management information systems are based on a highly capitated business
model which we are in the process of shifting towards a shared risk model. We
are presently assessing installation of significant system enhancements and/or
conversions including internet-based systems. Any significant service
disruptions resulting from the implementation of these initiatives and/or
conversions could result in a material adverse impact on our business processes,
customer and provider relationships, results of operations and financial
condition. Further, any complications in adjusting our management information
systems to deal with our increasingly non-capitated business model may place
additional burdens on us.
WE ARE SUBJECT TO EXTENSIVE FEDERAL AND STATE LAWS AND REGULATION AND PENDING
LEGISLATION.
The health care industry is subject to extensive laws and regulations,
including, but not limited to, requirements related to licensing, policy
benefits design, member disclosure and enrollment, cash reserves, net worth and
restrictions on dividending. In addition, we are subject to various reviews and
audits regarding compliance with applicable laws and regulations. These laws and
regulations are subject to frequent changes and future changes related to
pending legislation or regulation could force us to change the way we do
business resulting in a material adverse impact on our operations. Since
approximately 41% of our premium revenues for the six months ended June 30, 2000
were derived from governmental contracts, we are especially vulnerable to
changes in laws or regulations concerning these programs.
IN THE FUTURE, THE STATES IN WHICH WE DO BUSINESS MAY ADOPT MORE STRINGENT
MINIMUM CAPITALIZATION REQUIREMENTS.
The managed care industry is subject to various state regulations including
financial requirements related to minimum net worth or capitalization
requirements. The National Association of Insurance Commissioners has proposed
that states adopt risk-based capital standards that, if implemented, would
generally require higher minimum capitalization limits for health care coverage
provided by HMOs and other risk bearing entities. To date, neither California
nor Indiana has adopted these standards for HMOs; however, if these standards
were adopted (or similar standards requiring increased capitalization), we may
not be able to meet these capitalization limits without securing additional
capital resources.
COSTS ASSOCIATED WITH LITIGATION AND OTHER ACTIONS MAY RESULT IN LOSSES.
We are subject to a variety of legal actions related to our business
including claims for failure to pay for, provide or arrange for health care,
provider disputes, breach of contract and other actions the ultimate outcome of
which is not yet certain. Adverse results in one or more of these proceedings
may result in liabilities that could have a material adverse effect on our
operations, financial condition and future prospects.
The HMO industry has been subject to a number of separate class action
lawsuits against certain select national HMOs which may cause or force changes
in business practices of the HMO industry, which could adversely affect the way
we do business.
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WE HAVE EXPERIENCED RECENT OPERATING LOSSES AND OUR RETURN TO PROFITABILITY IS
DEPENDENT UPON THE SUCCESSFUL IMPLEMENTATION OF OPERATING INITIATIVES AND OTHER
FACTORS.
We incurred losses during our fiscal years ended December 31, 1997, 1998
and 1999 and the six months ended June 30, 2000 of $25.1 million, $27.5 million,
$12.3 million and $4.6 million, respectively, and anticipate incurring
additional losses this fiscal year. We are undertaking a variety of operating
initiatives designed to improve our market position, strengthen our medical
management, enhance our administration and control over claims processing and
payment, and improve other critical business processes. We have recently added
senior management talent to our organization to direct these operating
initiatives and have added staff resources to complement these initiatives. We
are also pursuing the implementation of significant information systems
enhancements and/or conversions including internet-based systems. There is no
guarantee, however, that we will be able to successful implement these
initiatives or if implemented they will result in our return to profitability.
OUR RIGHTS OFFERING OF UP TO 28,088,072 SHARES OF COMMON STOCK MAY JEOPARDIZE
OUR UTILIZATION OF SIGNIFICANT TAX BENEFITS.
As of December 31, 1999, we had approximately $407.5 million of federal net
operating tax losses that we can use to offset future federal taxable income and
which expire in the years 2003 through 2019. However, our issuance of common
stock in this rights offering may prevent us from fully utilizing these benefits
because it increases the likelihood of a statutory "ownership change" as defined
by the Internal Revenue Code of 1986, as amended. If an ownership change occurs,
the tax code limits the amount of tax benefits that we can use in a year to an
amount based on the fair market value of our stock multiplied by a long-term tax
exempt rate. This amount is significantly less than $407.5 million. This
limitation may cause some of our tax benefits to expire unutilized. Therefore,
if we were successful in generating future taxable income, we may have to pay
more income taxes or pay these taxes sooner than if our tax benefits were not
limited.
Although the terms of the rights offering seek to prohibit sales to
shareholders holding 5% or more of our common stock or which would enable any
shareholder to acquire 5% or more of our common stock without our board's
approval, there can be no assurances that these restrictions will be effective.
In light of the potential for these adverse tax consequences our board
recommended, and our shareholders approved at our 2000 annual meeting of
shareholders, an amendment to our charter that restricts transfers of our
capital stock that could trigger the limitations of the tax code. This amendment
will take effect prior to the effectiveness of the rights offering.
OUR INABILITY TO SUCCESSFULLY COMPLETE THIS RIGHTS OFFERING AND RAISE THE
EXPECTED PROCEEDS WOULD POTENTIALLY LEAVE US WITHOUT ADEQUATE WORKING CAPITAL
WHICH COULD MATERIALLY IMPAIR OUR BUSINESS AND OPERATIONS.
We are a holding company and currently own two health maintenance
organizations, or HMOs, licensed in California and Indiana, and Maxicare Life
and Health Insurance Company. Our HMOs and Maxicare Life are subject to state
regulations which require compliance with certain statutory deposit, dividend
distribution and net worth requirements. To the extent the operating HMOs and
Maxicare Life must comply with these regulations, they may not have the
financial flexibility to transfer funds to us at the parent company level. As a
result of operating losses and regulatory requirements and restrictions, the
amount of our cash generally available to fund our working capital and
operational requirements, including cash we hold and cash held by our operating
subsidiaries available for transfer to us, has diminished from $46.6 million as
of December 31, 1996, to $1.7 million as of June 30, 2000. This lack of
available cash at the parent company level has created increased liquidity
problems and operational and capital adequacy problems which we hope to
alleviate through this rights offering. Our inability to complete this rights
offering and raise the
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expected proceeds would potentially leave us without adequate working capital
which could materially impair our business and operations.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares by the
selling shareholder.
SELLING SHAREHOLDER
This prospectus relates to the possible offer and sale, from time to time,
of shares held by the selling shareholder named below. These shares of common
stock were issued to the selling shareholder in an unregistered private
placement completed in June, 2000. The following table sets forth the name of
the selling shareholder, along with the number of shares of common stock held by
it as of the date of this prospectus and the number of shares offered for sale
in this prospectus. The number of shares offered for sale by the selling
shareholder may be updated in supplements to this prospectus, which will be
filed with the SEC in accordance with Rule 424(b) under the Securities Act of
1933, as amended, as may be necessary.
There exists no material relationship between the selling shareholder and
us or any of our predecessors or affiliates, nor have any material relationships
existed within the past three years.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES
OF COMMON STOCK OF COMMON STOCK NUMBER OF SHARES NUMBER OF SHARES
SELLING BENEFICIALLY COVERED BY THIS OF COMMON STOCK OF COMMON STOCK
SHAREHOLDER OWNED PROSPECTUS AFTER OFFERING (MAXIMUM SOLD)
----------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Meespierson Cayman
Limited, as trustee of
Sofaer Funds/SCI Global
Hedge Fund............. 800,000 800,000 800,000 -0-
</TABLE>
PLAN OF DISTRIBUTION
The selling shareholder may sell the shares covered by this prospectus from
time to time in transactions (including one or more brokerage transactions) or
in one or more privately negotiated transactions. The price of each sale may be
made at the market price prevailing at the time of the sale, a price related to
such prevailing market price, a negotiated price or a fixed price. We will not
receive any of the proceeds from the sale of these shares.
These shares may be offered and sold from time to time in any manner
permitted by law. The shares may be sold directly to one or more purchasers. The
shares may also be sold to or through underwriters, brokers, dealers or agents.
These underwriters, brokers, dealers or agents may receive compensation in the
form of discounts, concessions or commissions from the selling shareholder or
the purchasers of shares for whom they may act as agent or to whom they may sell
as principal, or both.
In order to comply with certain state securities laws, if applicable, these
shares will be sold only through registered or licensed brokers or dealers.
Under applicable rules and regulations under the Securities and Exchange
Act of 1934, as amended, any person engaged in a distribution of these shares
may not simultaneously engage in certain activities with respect to these shares
prior to the commencement of such distribution. In addition to, and without
limiting the foregoing, the selling shareholder and any other person
participating in a distribution will be subject to the applicable provisions of
the Exchange Act.
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EXPERTS AND COUNSEL
The consolidated financial statements of Maxicare Health Plans, Inc.
appearing in Maxicare Health Plans, Inc.'s Annual Report (Form 10-K) for the
year ended December 31, 1999, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report therein and incorporated
herein by reference. The consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
No expert or counsel had or is to receive a substantial direct or indirect
interest in us or any of our subsidiaries in connection with the offering. No
expert or counsel was connected to us or our subsidiaries as a promoter,
underwriter, voting trustee, director, officer or employee.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our filings are available to the
public over the Internet at the SEC's home page located at http://www.sec.gov or
you may read and copy any document at the SEC Public Reference Rooms located at:
405 Fifth Street, N.W., Room 1024 Washington, D.C. 20549-1004;
CitiCorp Center 500 W. Madison Street, Suite 1400, Chicago, Illinois
60661; and
Seven World Trade Center 13th Floor New York, New York 10048
Please call the SEC at 1-800-732-0330 for more information about the public
reference rooms and requesting documents.
The SEC allows us to "incorporate by reference" in this prospectus the
information we file with them, which means we can refer you to important
information without restating it in this prospectus. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings, prior to the termination of this offering, made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act:
Our Form 8-K Report dated September 5, 2000;
Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2000 and June 30, 2000;
Our Annual Report on Form 10-K for the year ended December 31, 1999;
and
"Description of Registrant's Securities to be Registered" contained in
Item 11 of our registration statement on Form 10 filed on January 17, 1991.
You may request a copy of any or all of the information incorporated in
this prospectus by reference, at no cost, by writing or telephoning us at the
following address:
Maxicare Health Plans, Inc.
1149 South Broadway Street
Los Angeles, CA 90015
(213) 765-2000
Attn: Joseph White
You may also direct your requests via e-mail to [email protected].
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Prospective investors may rely only on the information contained in this
prospectus. We have not authorized anyone to provide prospective investors with
different or additional information. This prospectus is not an offer to sell nor
is it seeking an offer to buy these securities in any jurisdiction where the
offer or sale is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the
delivery of this prospectus or any sale of these securities.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our certificate of incorporation and bylaws provide for indemnification of
our officers and directors, among other things, in instances in which they acted
in good faith and in a manner they reasonably believed to be in, and not
opposed, to our best interests and in which, with respect to criminal
proceedings, they had no reasonable cause to believe their conduct was unlawful.
There is no limit regarding their liability for breaches of the duty of loyalty,
acts or omissions not in good faith or involving intentional misconduct or
knowing violation of the law, the unlawful purchase or redemption of stock or
payment of unlawful dividends or the receipt of improper personal benefits. We
may also indemnify employees and others at the discretion of our board. This
indemnification must be authorized by our board. The indemnification provisions
of the Delaware General Corporation Law make mandatory the indemnification of a
director or officer to the extent that the director or officer has been
"successful on the merits or otherwise," thus possibly requiring indemnification
of settlements in certain instances. The Delaware law also provides that a
director or officer may be indemnified by us for expenses of a derivative suit
even if this director or officer is not successful on the merits, provided this
director or officer acted in good faith and in a manner reasonably believed to
be in or not opposed to our best interests, subject, in the case of an adverse
judgment, to court approval. Article Eighth of our certificate of incorporation
requires that we provide indemnification for our directors and officers to the
fullest extent allowable under Delaware law. This may include indemnification
against liabilities under the Securities Act, and may limit the liability of
directors and officers to us or our shareholders, unless the director or officer
fails to meet the prescribed standard of conduct. We have insurance covering
expenditures that might arise in connection with our lawful indemnification of
our directors and officers for certain liabilities and expenses. Our directors
and officers also have the benefit of insurance against certain other
liabilities and expenses. We have also entered into employment and
indemnification agreements with certain of our officers which provide for
indemnification to the fullest extent permitted by law against any liabilities
and expenses.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the registrant
pursuant to the foregoing provisions, we have been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
10
<PAGE> 12
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PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH
DIFFERENT OR ADDITIONAL INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR
IS IT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS
CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE
DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SECURITIES.
NO ACTION IS BEING TAKEN IN ANY JURISDICTION OUTSIDE THE U.S. TO PERMIT A
PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF THIS
PROSPECTUS IN ANY OF THESE JURISDICTIONS. PERSONS WHO COME INTO POSSESSION OF
THIS PROSPECTUS IN JURISDICTIONS OUTSIDE THE U.S. AND CANADA ARE REQUIRED TO
INFORM THEMSELVES ABOUT AND TO OBSERVE THE RESTRICTIONS OF THAT JURISDICTION
RELATED TO THIS OFFERING AND THE DISTRIBUTION OF THIS PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 1
Risk Factors........................ 4
Use of Proceeds..................... 8
Selling Shareholder................. 8
Plan of Distribution................ 8
Experts and Counsel................. 9
Where You Can Find More
Information....................... 9
Indemnification of Directors and
Officers.......................... 10
</TABLE>
UNTIL OCTOBER 9, 2000 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT BUY, SELL OR TRADE THESE SHARES OF COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
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800,000 SHARES
MAXICARE
HEALTH PLANS, INC.
COMMON STOCK
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PROSPECTUS
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September 14, 2000
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