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As filed with the Securities and Exchange Commission on March 31, 2000.
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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HEALTHAXIS INC.
(Exact name of Registrant as specified in its charter)
Pennsylvania 23-2214195
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
HealthAxis Inc.
2500 DeKalb Pike
East Norriton, PA 19401
Telephone (610)279-2500
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Michael Ashker
President and Chief Executive Officer
HealthAxis Inc.
2500 DeKalb Pike
East Norriton, PA 19401
Telephone (610)279-2500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Barry H. Genkin, Esq. Michael F. Beausang, Jr., Esquire
Blank Rome Comisky & McCauley LLP Butera, Beausang, Cohen & Brennan
One Logan Square 630 Freedom Business Center, Suite 212
Philadelphia, Pennsylvania 19103 King of Prussia, PA 19406
Telephone: (215) 569-5500
Facsimile (215) 569-5555
Approximate date of commencement of proposed sale to the 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. | |
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
maximum maximum Amount of
Title of securities Amount to be offering price aggregate registration
to be registered Registered per share offering price fee
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<S> <C> <C> <C> <C>
Common Stock, par value $.10 per share, issuable
upon conversion of debentures.................. 1,588,403(1) $20.34(2) $32,308,117(2)
Common Stock, par value $.10 per share, issuable
upon exercise of warrants and options.......... 861,124(3) (4) $ 8,550,954(4)
Total.......................................... 2,449,527 $40,859,071 $10,787
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(1) This Registration Statement covers 1,588,403 shares of HealthAxis Inc.
common stock issuable upon the conversion of debentures owned by
selling shareholders of which shares may be offered from time to time.
(2) Based upon the maximum conversion price of $20.34 as set forth in the
debentures, estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457(g) under the Securities
Act of 1933, as amended.
(3) This Registration Statement covers 861,124 shares of HealthAxis Inc.
common stock issuable upon the exercise of warrants and options owned
by selling shareholders of which shares may be offered from time to
time.
(4) Based upon the exercise price of $4.48 with respect to 300,000 shares
and $3.28 with respect to 20,000 shares, $4.75 with respect to 2,875
shares, $5.00 with respect to 175,667 shares, $7.00 with respect to
10,000 shares, $10.00 with respect to 54,500 shares, $14.625 with
respect to 75,000 shares, and $20.34 with respect to 223,082 shares,
as set forth in the warrants and options, estimated solely for the
purpose of calculating the registration fee in accordance with Rule
457(g) under the Securities Act of 1933, as amended.
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 Commission, acting pursuant to Section 8(A), may
determine.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion, Dated March 31, 2000
PROSPECTUS
HEALTHAXIS INC.
2,449,527 Shares of Common Stock
This Prospectus relates to the offering, which is not being
underwritten, of 2,449,527 shares of our common stock by some of our current
shareholders listed on page 16. We refer to these shareholders as selling
shareholders in this document. 1,588,403 of the shares of common stock being
sold by these selling shareholders are issuable upon conversion of debentures
which were issued on September 14, 1999, including the payment of interest on
the debentures. 861,124 of the shares of common stock being sold by these
selling shareholders are issuable upon exercise of warrants or options.
These selling shareholders may sell their HealthAxis Inc. common stock
in one or more transactions on the Nasdaq National Market at market prices
prevailing at the time of sale or in private transactions at negotiated prices.
We will not receive any of the proceeds from the sale of the common stock sold
by selling shareholders, except that we may receive the exercise price from the
exercise of options and warrants underlying the common stock registered, to the
extent the selling shareholders do not utilize the cashless exercise provisions
contained in the option or warrant agreements.
Prospective investors should carefully consider "Risk Factors"
beginning on page 2 of this prospectus.
Our common stock is traded on the Nasdaq National Market under the
symbol "HAXS." On March 27, 2000, the last sales price of our common stock as
reported on the Nasdaq National Market was $18.5625 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _____________, 2000.
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TABLE OF CONTENTS
PAGE
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Prospectus Summary..........................................................2
Risk Factors................................................................2
Forward Looking Statements.................................................12
Recent Developments........................................................12
The Company................................................................12
Use of Proceeds............................................................15
Selling Shareholders.......................................................16
Plan of Distribution.......................................................19
Description of Securities..................................................21
Experts....................................................................23
Legal Matters..............................................................23
Where You Can Find More Information........................................23
You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone else to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. The shareholders selling
common stock under this prospectus will not make an offer of their shares in any
state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front page of this prospectus. Our business, financial condition, results of
operations and prospects may have changed since that date.
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Prospectus Summary
This summary highlights information contained in other parts of this
prospectus. It is not complete and may not contain all of the information that
you should consider before investing in the shares. You should read the entire
prospectus carefully.
As used in this prospectus, the terms "we," "us," "our" and "HAI" mean
HealthAxis Inc. (formerly Provident American Corporation) and its subsidiaries,
including HealthAxis, and the term "common stock" means HealthAxis Inc. common
stock, $0.10 par value. Additionally, HealthAxis.com, Inc. is referred to as
"HealthAxis." Unless otherwise stated, reference to a "year" in this prospectus
means our fiscal year, which ends on December 31.
Our principal executive offices are located 2500 DeKalb Pike, East
Norriton, Pennsylvania 19401 and our telephone number is (610) 279-2500.
HAI's operations are principally those of its subsidiary, HealthAxis.
HAI was formerly an insurance holding company and its insurance operations were
conducted through its wholly owned subsidiary, Provident Indemnity Life
Insurance Company, prior to the sale of this subsidiary in November 1999.
Risk Factors
You should consider carefully the risks associated with the ownership
of our common stock. These risks are described in detail below. You should
consider carefully these risk factors, together with all of the other
information in this prospectus and the documents we have incorporated by
references in the section "Where You Can Find More Information" before you
decide to purchase shares of our common stock.
Business Related Risks
Our consumer services group has not had any profits in the past and may not be
profitable in the future.
Since its inception, the consumer services group has incurred
significant losses and expects to continue to incur losses on a quarterly and
annual basis for the foreseeable future. As of December 31, 1999, the consumer
services group had an accumulated deficit of approximately $35.3 million. The
consumer services group currently intends:
o to increase substantially its operating expenses to enhance its
website and technology;
o to fund increased sales efforts and marketing;
o to establish additional insurance carrier relationships; and
o to fund increased salaries and other operating costs.
To the extent that these expenses precede or are not subsequently
followed by increased revenues, we may be unable to achieve or maintain
profitability on a quarterly or annual basis in the future. We expect negative
cash flow from operations to continue for the foreseeable future.
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Our consumer services group has a limited operating history so it is difficult
to predict its future performance.
HealthAxis was incorporated in March 1998 and began selling a limited
line of health insurance products over the Internet in December 1998. The
limited operating history of the HealthAxis' consumer services group makes it
difficult to evaluate our future prospects. Furthermore, our prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in new, unproven and rapidly evolving markets. We may
be successful in addressing these risks. If we are not successful in developing
the consumer services group and expanding the application solutions group, we
may never attain profitable operations.
If the healthcare industry does not accept our new information technology, or
acceptance occurs at a slower pace than anticipated, our profits may be
negatively impacted.
We believe that the claims and administration segment of the healthcare
industry has historically under invested in information technology and existing
technological platforms have failed to address the unique needs of the
healthcare industry. If the conversion from traditional paper methods to
electronic information exchange does not continue to occur or this conversion
occurs at levels below those we currently anticipate, we would be unable to sell
a sufficient amount of our products and services to increase revenues and
generate net income. In fact, electronic information exchange and transaction
processing by the industry is still developing. In addition, even if industry
participants convert to electronic information exchange, they may not elect to
use our applications and services.
Competition from other entities with longer operating histories and greater
financial resources may have a material adverse effect on our business.
Although we believe we are the first direct distributor of health
insurance which permits customers to purchase and administer insurance policies
over the Internet, other competitors have established similar websites.
HealthAxis' principal online competitors are Intuit's InsureMarket
(www.insuremarket.com), Quotesmith (www.quotesmith.com), Insweb (www.insweb.com)
and ehealthinsurance.com (www.ehealthinsurance.com). In addition, in the area of
health insurance sales, we will compete with large insurance and financial
service companies with established insurance agent networks as well as with
independent insurance agents and brokers. Substantially all of our potential
competitors have longer operating histories, significantly greater financial,
marketing and other resources, greater name recognition and significantly larger
existing customer bases than us. These competitors may be able to respond more
quickly to changes in consumer preferences and to devote greater resources to
the development, promotion and sale of their products or to claims processing
services than us. In addition, UICI significantly increased its ownership
interest in HealthAxis as a result of the Insurdata merger. Although the
existence of UICI as a major shareholder may deter other insurance companies
from offering their products over the HealthAxis website in the future,
HealthAxis believes UICI's share ownership has not been an impediment to
entering into agreements with new insurance companies to date.
The application solutions group's potential competitors in the
healthcare technology area include specialty healthcare information technology
companies, software vendors and large data processing and information companies.
HealthAxis believes that application solutions group's major competitors include
Healtheon/WebMD, RIMS, Erisco, El Dorado, TXEN, a division of Nichols Research
Corp., and Amisys Managed Care Systems, Inc., a division of HBOC. The
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application solutions group also competes with the internal information
resources and systems of certain of its prospective and existing clients. These
competitors could develop or offer superior functionality with respect to
specific or overall applications. Potential and current clients may prefer other
features of competitive products or pricing could erode as competition becomes
more intense. Some of the application solutions group's current and potential
competitors are larger, better capitalized and have greater financial and
operating resources than us. In addition, current and potential competitors,
including providers of information technology to other segments of the
healthcare industry, may establish joint marketing arrangements or other
relationships with new competitors that emerge.
If we are unable to continue to secure the additional financing that we need to
sustain and expand our business, our business will not succeed.
We expect that we will be required to raise additional funds over the
long-term to sustain and expand our sales, marketing and development activities.
We will have to do this in light of the emergence of several well-financed
competitors and the ongoing technological enhancements which are necessary in
order for us to remain competitive.
Our current funding commitments for our Internet marketing agreements
will be approximately $5.0 million in 2000. Although we believe that the funds
previously raised during fiscal 1999 will be sufficient to fund our operations
through the first quarter of 2001, unforeseen events may render these funds
insufficient. As a result, we may need to seek external debt and/or equity
financing. Adequate funds on terms acceptable to us, whether through additional
equity financing, debt financing or other sources, may not be available when
needed or may result in significant dilution to existing shareholders. The
inability to obtain sufficient funds from operations or external sources would
jeopardize future operations.
Errors in the applications solutions group's services could detract from the
reliability and quality of the application solutions group's information
systems, which in turn, would have an adverse effect on our business.
The claims and administration segment of the healthcare industry
demands a high level of reliability and quality from its information systems.
Although the application solutions group devotes substantial resources to
meeting these demands, its application solutions may, from time to time, contain
undetected errors. These errors may result in loss of data, a reduction in the
ability to process transactions, or loss of, or delay in, market acceptance of
its application solutions. Many of the application solutions group's service
agreements contain performance standards, and the application solutions group's
inability to meet these standards could result in the early termination of these
agreements as well as financial penalties. Because of the importance of the
application solutions group's application solutions, errors or delays would have
a negative impact on our business.
We have attempted to limit contractually and through insurance coverage
damages arising from negligent acts, errors, mistakes or omissions in rendering
our services; however, these contractual protections could be insufficient to
protect us from liability for damages in connection with the successful
assertion of one or more large lawsuits.
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We may be unable to protect our proprietary technology.
Our success depends to a significant extent on our ability to protect
the proprietary and confidential aspects of our software applications and the
tradenames associated with them. We rely upon a combination of trade secret,
copyright and trademark laws, license agreements, nondisclosure and other
contractual provisions and various security measures to protect these
proprietary rights. Our software applications are not patented and existing
copyright laws offer only limited practical protection. These legal protections
afforded to us or precautions we take may be inadequate to prevent
misappropriation of our technology or the tradenames associated with them. Any
infringement or misappropriation of our proprietary software applications or the
related tradenames could have the effect of allowing competitors to use our
proprietary information to compete against us. In addition, these limited
protections do not prevent independent third-party development of functionally
equivalent or superior technologies, products or services.
We may be subject to trademark and service mark infringement claims.
As competing healthcare information systems increase in complexity and
overall capabilities and the functionality of these systems further overlap, we
could be subject to claims that our technology infringes on the proprietary
rights of third parties. These claims, even if without merit, could subject us
to costly litigation and could direct the time and attention of our technical
and management teams. Further, if a court determined that we infringed on the
intellectual property rights of a third party, we could be required to:
o develop non-infringing technology or tradenames,
o obtain a license to the intellectual property,
o stop selling the applications or using names that contain the
infringing intellectual property, or
o pay substantial damages awards.
We may not be able to develop non-infringing technology or tradenames or to
obtain a license on commercially reasonable terms. Any of the above listed
potential court-ordered requirements would adversely impact our profits.
In December 1998, a third party notified Insurdata that it believed
Insurdata had infringed upon a common law trademark held by such party through
its use of the name "Insur-Web" because a similar name is currently being
utilized by the third party. In addition, HealthAxis is attempting to overcome
the U.S. Patent and Trademark Office's preliminary denial by negotiating a
consent with the party holding the similar mark. This party has verbally agreed
to HealthAxis' registration of these marks. Until HealthAxis reaches a final
agreement with this party and the U.S. Patent and Trademark Office approves this
agreement, HealthAxis can not provide any assurance as to whether it will be
successful in overcoming the U.S. Patent and Trademark Office's denial.
A catastrophic loss at our data center could cause significant interruptions.
The application solutions group's principal computer equipment and
application systems are maintained in North Richland Hills, Texas. Although the
application solutions group maintains back-up systems in order to continue
operations, interruption or loss of our transaction processing capabilities,
even for a period of time, could result in a reduction in revenues. The consumer
services group and certain key business partners maintain critical computer
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operations at a single facility. In the event of a catastrophic loss at this
facility, resulting in destruction of our computer operations, we would
experience a significant interruption of our business until an alternative site
is established. Further, contractual limitations relating to those losses or
available insurance may be insufficient to compensate us for losses due to our
inability to provide services to our clients.
Our failure to meet certain performance standards described in our services
agreements could have a material adverse effect on our business.
Many of our service agreements contain performance standards and the
failure by us to meet these standards could result in the termination of these
agreements as well as financial penalties, which could have a negative effect on
our revenues. If our network infrastructure is unable to support the variety and
number of transactions and users anticipated, or if we are unable to maintain
performance standards, our business would be negatively effected.
The loss of one or more of the application solutions group's large clients would
have a detrimental effect on our financial condition.
We expect that a small number of clients, including UICI and its
subsidiaries, will continue to account for a substantial portion of the
application solutions group's total revenues for the foreseeable future. The
loss of one or more of these significant clients, or the failure of the
application solutions group to generate anticipated revenue from these clients,
could have a material adverse effect on our business, results of operations and
financial condition.
UICI, a major shareholder of HealthAxis, and its subsidiaries
constitute, in the aggregate, the application solutions group's largest client.
UICI and its subsidiaries accounted for approximately 60% of Insurdata's
revenues in 1999. A portion of the revenue from UICI in the past was for year
2000 services which were completed during 1999. However, UICI and its
subsidiaries are expected to remain HealthAxis' largest client for the
foreseeable future. To the extent UICI or its subsidiaries experience financial
difficulties, the financial performance of HealthAxis may be negatively
impacted. In addition, if UICI sells additional shares of its HAI stock, the
value of the HAI stock could be reduced.
Our operations outside of the United States may subject us to additional risks.
We conduct certain operations related to the conversion of insurance
claims information to electronic form in Jamaica through Satellite Image Systems
(Jamaica) Limited, a Jamaican subsidiary of HealthAxis Imaging Services, LLC,
which is a wholly owned subsidiary of HealthAxis. Foreign operations generally
involve greater risks than do operations based solely in the United States.
Foreign economies differ favorably or unfavorably from the United States'
economy in such respects as the level of inflation and debt, which may result in
fluctuations in the value of the country's currency and real property. In
addition, there may be less government regulation in various countries, and
difficulty in enforcing legal rights outside the United States. Additionally, in
some foreign countries, there is the possibility of expropriation or
confiscatory taxation, limitations on the removal of property or other assets,
political or social instability or diplomatic developments which could affect
the operations and assets of U.S. companies doing business in that country. Many
of these risks are more pronounced for activities in developing countries, such
as Jamaica. Our management has limited experience in the area of foreign
operations.
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Internet Related Risks
Our future revenues depend upon whether consumers will accept the Internet as a
medium for health insurance sales.
We have limited experience in the online insurance sales business.
Online purchases of health insurance policies is a relatively new development,
and it is unclear whether the market will accept the Internet as a medium for
insurance sales.
Our future success will depend in part on our ability to significantly
increase revenues, which will require the development and widespread acceptance
of the Internet as a medium for insurance sales. Consumers who are willing to
purchase relatively simple, low cost and low risk items such as compact discs,
flowers, books and groceries over the Internet may not be willing to purchase
complicated and higher cost items such as health and related insurance policies
in the same manner. Further, consumers who buy other items on the Internet may
prefer to discuss insurance decisions with an insurance agent in person instead
of buying insurance through the Internet. Finally, consumers may be unwilling to
divulge highly personal medical information through the Internet.
Our products may not be attractive to enough customers to generate significant
revenues.
Our products, application process, pricing and Internet based claims
processing may not be attractive to a sufficient number of users to generate
significant revenues to sustain profitable operations. In addition, we may be
unable to anticipate, monitor and successfully respond to rapidly changing
technology and consumer preferences so as to continually attract and retain a
sufficient number of customers. We may also be unable to develop and implement
competitively priced products that allow us to attract, retain and expand our
customer base.
We depend upon technology licensed from third parties for the success of our
operations.
We rely upon a variety of technology that we license from third
parties, including our database and Internet server software, which is used in
our website to perform key functions, and the application solutions group's
mainframe servers. These third party technology licenses may not continue to be
available to us on commercially reasonable terms. Our loss of or inability to
maintain or obtain upgrades to any of these technology licenses could result in
delays in completing our proprietary software enhancements and new development
until equivalent technology could be identified, licensed or developed, and
integrated.
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Insurance Industry Related Risks
Our success depends in part on our ability to develop new products which respond
to changes in the insurance industry.
Our success will depend in part upon our ability to develop and provide
new products that meet consumers' changing health insurance needs and changes in
government requirements. During recent years, the health insurance industry has
experienced substantial changes, primarily caused by healthcare legislation,
originally at the state level, and more recently at the federal level. The
introduction of managed care organizations has also affected the health
insurance industry. Additionally, over the past several years the rapid growth
of health maintenance organizations and preferred provider organizations and the
organization of healthcare providers in new ways such as physician hospital
organizations, has dramatically changed health insurance sales. Our future
success will depend, in part, on our ability to effectively enhance our current
products and claims processing capabilities and to develop new products in the
changing healthcare environment on a timely and cost-effective basis.
Insurance regulations may increase our costs to maintain compliance.
The insurance industry is one of the most highly regulated fields. As a
result, we are subject, both directly and indirectly, to various laws and
governmental regulations relating to our business. State laws also regulate
product marketing and advertising on the Internet. Compliance with future rules
and regulations could increase our operating costs. Our carrier partners in the
various states in which those products are offered must approve the insurance
products offered by us. The carrier partners are also subject to extensive
supervision and regulation at the state level. We could be adversely affected if
our carrier partners are unable to obtain approval for the products that we plan
to offer on our website or are otherwise adversely affected by actions taken by
state regulatory authorities against any carrier partner.
Under the Health Insurance Portability and Accountability Act of 1996,
the Secretary of Health and Human Services is required to adopt national
standards for health information transactions and the data elements used in
those transactions. In addition, the Secretary is required to adopt safeguards
to ensure the integrity and confidentiality of health information. Violation of
the standards is punishable by fines and, in the case of wrongful disclosure of
individually identifiable health information, imprisonment. Our proprietary
applications are designed to enable compliance with current insurance
regulations; however, these regulations could change or new regulations could be
adopted, which could require us to expend additional financial and managerial
resources in order to comply with any revised or new regulations. Any standards
adopted by federal or state governments could have a negative affect on the
means by which we process transactions or the availability to and use of claims
data by us in providing our services.
We also face regulatory risk because most of the laws and regulations
governing insurance agents contemplate or assume paper-based transactions and do
not currently address the delivery of required disclosures or other documents
through electronic communications. Additionally, many states have not yet
enacted laws or regulations which specifically allow for electronic signatures
instead of traditional signatures. Until these laws and regulations are revised
to clarify their applicability to electronic commerce, HealthAxis' offering of
insurance products and services through the Internet or other means of
electronic commerce will be subject to uncertainty as to compliance with these
laws and regulations. Our policies and procedures may not be deemed acceptable
by any regulatory body examining its activities in light of these potentially
different laws and regulations.
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Investment Related Risks
UICI may make decisions which some shareholders do not consider to be in their
best interest.
Upon completion of the reorganization of HealthAxis into a wholly owned
subsidiary of HAI, UICI will own 43.2% of HAI's outstanding common stock and
will have the ability to vote 21.1% of HAI's outstanding common stock. As a
result, UICI will have sufficient voting power to influence the outcome of all
corporate matters submitted to the vote of shareholders, including:
o the election of directors;
o changes in the size and composition of the Board of Directors;
o mergers;
o tender offers; and
o open-market purchase programs.
The open-market purchase programs could give shareholders of HAI the opportunity
to realize a premium over the then-prevailing market price for their shares. In
addition, the concentration of ownership in UICI could have the effect of
delaying or preventing a change in control of HAI and may affect the market
price of our common stock.
In connection with the merger of HealthAxis into a wholly owned
subsidiary of HAI, it is intended that UICI, HealthAxis, HealthAxis Acquisition
Corp, HAI and Michael Ashker, a director and the President and Chief Executive
Officer of HAI and HealthAxis and Alvin H. Clemens, the Chairman of HAI and
HealthAxis, will enter into a shareholders' agreement which will provide that
HAI and UICI will each select three nominees for election as directors and will
mutually select three additional nominees. All parties to the agreement will
agree to vote all HAI shares owned by them in favor of these nominees.
Two of HAI's officers and directors are also large shareholders and may
influence the outcome of matters requiring shareholder approval.
Alvin H. Clemens, the Chairman of HAI and HealthAxis is also HAI's
largest shareholder. As of December 31, 1999, Mr. Clemens owned, either directly
or indirectly, 2,499,500 shares (including options) or 18.2% of HAI common
stock. These share ownership numbers exclude shares for which Mr. Clemens
disclaims beneficial ownership and includes 683,534 shares that Mr. Clemens has
the right to acquire pursuant to exercisable options. In addition, in connection
with the sale of another subsidiary, HAI transferred 100,000 shares of Series A
preferred stock of HealthAxis acquired from the other subsidiary to AHC
Acquisition, Inc., a company owned by Mr. Clemens. Accordingly, Mr. Clemens
through his ownership interest in HAI and in AHC Acquisition, Inc. could
influence the outcome of any matter requiring shareholder approval of HAI, if
these matters were deemed by the shareholders of HAI to be in their best
interests.
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In addition, Michael Ashker, a director and the President and Chief
Executive Officer of HAI and HealthAxis Inc, beneficially owns 718,076 shares of
HAI's common stock, including options. In an amended Schedule 13D, dated
November 15, 1999, filed by Mr. Ashker, Lynx Capital Group, LLC, Van Kasper &
Company, Lynx Tech Fund, L.P., Lynx Healthtech Fund, LLC, Kenneth Brown, Deidre
Holt and Edward W. LeBaron, Jr., Mr. Ashker reported sole voting and dispositive
power with respect to 394,776 shares of HAI common stock and shared voting and
dispositive power with respect to 323,300 shares. Mr. Ashker was the sole
manager of Lynx Capital Group, LLC, which acts as an investment advisor to and
general partner of Lynx Tech Fund, L.P., which is an investment limited
partnership. Mr. LeBaron is currently serving on the Board of Directors of
HealthAxis and HAI. Mr. LeBaron reported sole voting and dispositive power with
respect to 38,571 shares of HAI common stock. Pursuant to a consulting agreement
between HAI and Lynx Capital Group, LLC, Lynx Capital Group, LLC was granted
currently exercisable warrants to purchase 400,000 shares of HAI's common stock.
Of this amount, Lynx Capital Group, LLC transferred warrants to purchase 300,000
shares of HealthAxis common stock to Mr. Ashker. Mr. Ashker has also been
granted options to purchase 991,000 shares of HealthAxis common stock at an
exercise price of $1.77, all of which are currently exercisable. Mr. Ashker was
also awarded options to purchase 145,000 shares of HealthAxis common stock at an
exercise price of $5.77 which are exercisable over a two year period commencing
in April, 1999 and options to purchase 55,000 shares of HealthAxis common stock,
at an exercise price of $12.00 which are exercisable over a two year period
commencing in November 1999, and options to purchase 100,000 shares of
HealthAxis common stock, at an exercise price of $15.00 which are exercisable
over a two year period commencing in February 2000.
In addition, Messrs. Ashker and Clemens, by virtue of their positions
as trustees of certain voting trusts, have shared voting power with the other
trustees over 25.4% of HealthAxis' outstanding capital stock. Accordingly,
through their share ownership and positions on the board of directors of HAI,
Messrs. Ashker and Clemens could influence the outcome of matters requiring HAI
or HealthAxis shareholder approval.
Potential conflicts of interest could arise because some people serve as
directors, officers or employees of either HAI or UICI and HealthAxis
Various conflicts of interest between HealthAxis and HAI could arise
because persons serving as directors, officers and employees of both HAI and
HealthAxis may have conflicting duties to each. Alvin H. Clemens, the Chairman
of HAI, also serves as HealthAxis' Chairman. Michael Ashker, the President,
Chief Executive Officer and director of HAI, is President and Chief Executive
Officer and a director of HealthAxis. An affiliate of Mr. Ashker is serving on
HealthAxis' board of directors and on HAI's board. Ownership interests of
HealthAxis' directors and officers in HAI common stock could also create, or
appear to create, potential conflicts of interest when these directors and
officers are faced with decisions that could have different implications for HAI
and for HealthAxis. This is also true with respect to Gregory T. Mutz, Chief
Executive Officer of UICI, and Patrick J. McLaughlin, who are directors of
HealthAxis and its largest shareholder, UICI. These individuals will become
directors of HAI in connection with the merger of HealthAxis into a wholly owned
subsidiary of HAI.
Potential conflicts of interest may arise between HealthAxis and UICI regarding
the products and services provided by HealthAxis
Conflicts of interest may arise between HealthAxis and UICI in a number
of areas relating to their past and ongoing relationships, including the nature,
quality and pricing of services rendered by HealthAxis to UICI and its
subsidiaries or by UICI and its subsidiaries to HealthAxis, sales or
distributions by UICI of all or any portion of its ownership interest in HAI, or
UICI's ability to effect the management and affairs of HealthAxis UICI and
HealthAxis may be able to resolve any potential conflict, however, if resolved,
HealthAxis may not receive a more favorable resolution than if it were dealing
with an unaffiliated party.
10
<PAGE>
None of the HealthAxis' intercompany agreements are subject to arm's-length
negotiations.
Because HealthAxis was a majority-owned subsidiary of HAI, none of the
intercompany agreements, including the registration rights agreement transferred
to AHC Acquisition Corp., a company owned by Alvin Clemens, the Chairman of HAI
and HealthAxis, resulted from arm's-length negotiations. These agreements may
include terms and conditions that may be more or less favorable to HealthAxis
than terms contained in similar agreements negotiated with third parties.
As a result of UICI's control of Insurdata Incorporated prior to the
merger of Insurdata Incorporated and HealthAxis, none of the terms of Insurdata
Incorporated's contracts with UICI and its subsidiaries, including the
outsourcing agreement entered into between Insurdata Incorporated and UICI, were
subject to arm's-length negotiations between the parties. As a result, these
agreements include terms and conditions that may be less favorable to HealthAxis
than terms contained in agreements negotiated with third parties.
HAI does not pay cash dividends and does not intend to pay cash dividends in the
future.
HAI has not paid a cash dividend on its common stock since its
inception in 1982 and is restricted from declaring and paying dividends by the
provisions of a guarantee agreement entered into in connection with a
reinsurance agreement between Reassurance Company of Hanover, HAI and a former
wholly-owned subsidiary, Provident Indemnity Life Insurance Company. HAI
currently intends to retain all earnings to finance the expansion of its
business and does not anticipate paying cash dividends in the foreseeable
future. In the future, HAI's ability to pay dividends will be dependent upon the
ability of its subsidiary, HealthAxis, to pay dividends to HAI. HealthAxis
currently intends to retain future earnings, if any, to fund the development and
growth of its business. Any future determination to pay cash dividends on its
common stock or preferred stock will be at the discretion of the board of
directors and will be dependent upon HealthAxis' financial condition, operating
results, capital requirements and other such factors as the board of directors
deems relevant. In the past, HAI paid cash dividends on its Series A preferred
stock at the rate of $0.0636363 per share, per quarter from 1993 to June 30,
1999.
Certain provisions of Pennsylvania law and provisions of HAI's amended and
restated articles of incorporation could have an anti-takeover effect and limit
the possibility of HAI shareholders disposing of their shares at a premium
price.
Certain provisions of Pennsylvania law and HAI's amended and restated
articles of incorporation could make it more difficult for a third party to
acquire, or could discourage a third party from attempting to acquire control of
the Company. These provisions could limit the price that certain investors might
be willing to pay in the future for shares of HAI common stock. HAI's board of
directors is not aware of any attempts to take control of HAI and has not
presented the proposed amended and restated articles of incorporation with the
intent that the increase in authorized shares be used as an anti-takeover
device. However, the increase in the authorized capital stock of HAI may prevent
or discourage a third party from acquiring control of HAI. These take-over
attempts or merger proposals often include an offer to acquire shares of the
target company at a higher price than generally available. HAI's board of
directors may issue these additional shares of common stock or preferred stock
without any additional shareholder approval. If the increase in the authorized
shares or the issuance of the authorized shares discourages take-over attempts,
shareholders may not have the opportunity to take advantage of these premium
prices.
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Forward Looking Statements
Some of the information in this proxy statement/prospectus may contain
"forward-looking statements." Forward-looking statements can be identified by
the use of forward-looking language such as "will likely result," "may," "are
expected to," "is anticipated," "estimate," "projected," "intends to" or other
similar words.
These forward-looking statements regarding our business and prospects
are based upon numerous assumptions about future conditions, which may
ultimately prove to be inaccurate. Actual events and results may materially
differ from anticipated results described in those statements. These
forward-looking statements involve risks and uncertainties that are described in
detail under "Risk Factors" and elsewhere in this prospectus:
Any one or a combination of these factors could have a material adverse
effect on our business, financial condition and results of operations. These
forward-looking statements represent our judgment as of the date of this proxy
statement/prospectus.
Recent Developments
On January 26, 2000, HAI and HealthAxis entered into an Agreement and
Plan of Reorganization and Agreement and Plan of Merger pursuant to which HAI
will acquire all of the outstanding shares of HealthAxis it does not currently
own through the merger of HealthAxis with a wholly-owned subsidiary of HAI. In
connection with this reorganization, on February 11, 2000, HAI filed a
Registration Statement on Form S-4 with the Securities and Exchange Commission
to seek shareholder approval of the reorganization and register the HAI common
stock to be issued to the HealthAxis shareholders.
The Company
HAI's operations are principally those of its subsidiary, HealthAxis.
HAI was formerly an insurance holding company and its insurance operations were
conducted through its wholly owned subsidiary, Provident Indemnity Life
Insurance Company, prior to the sale of this subsidiary in November 1999.
HealthAxis is a leading online insurance provider of fully integrated,
end-to-end solutions for health insurance distribution and administration which
utilize the Internet. HealthAxis serves both consumers and insurance companies
that underwrite policies, independent entities that administer claims processing
and payment, Blue Cross/Blue Shield plans and self-insured employers. These
entities are referred to as payers in this document. HealthAxis' consumer
services group is an online retailer of health insurance products and related
consumer services. HealthAxis' application solutions group offers a platform of
Internet based software applications and services to payers designed to enhance
the efficiency and effectiveness of the claims administration, benefits
enrollment, benefits maintenance and data capture activities involved in the
administration of health insurance. The application solutions group also
provides the administrative backbone for the consumer services group thereby
creating a full service, Internet-based insurance agency.
12
<PAGE>
Through its consumer-oriented website, www.healthaxis.com, HealthAxis
offers consumers access to educational materials, personal profiling tools,
instant quotes, and the ability to purchase health insurance entirely within the
online environment. The HealthAxis website guides a consumer through every step
in the health insurance purchase process, from education and price quotation
through enrollment and post sale service. HealthAxis believes that no other
insurance website currently matches HealthAxis' ability to cover all pre- and
post-sale activities completely online. HealthAxis believes that its
consumer-focused online distribution service enhances both the decision-making
and purchasing experience, by giving prospective customers relevant,
personalized and real-time information along with the convenience of shopping
online 24 hours a day, seven days a week. HealthAxis believes its website
provides a superior decision-making and purchasing experience to those currently
available through either the traditional distribution system or online
competitors.
HealthAxis does not underwrite insurance, but functions strictly as an
online insurance agency. By selling directly to consumers via the Internet,
HealthAxis can significantly reduce the cost of product distribution as compared
to the traditional agent-based distribution system. HealthAxis targets the
individual and small group health insurance markets through its website,
www.HealthAxis.com. (References in this document to consumers or customers refer
to individuals as well as small groups served by the website.) HealthAxis'
website is accessible directly, or through one of the Internet portals with
which HealthAxis entered into agreements. HealthAxis will target the large group
market with ancillary insurance products by cross-selling into the application
solutions group's client base of large group employers.
HealthAxis' consumer services group has entered into carrier partner
agreements with 12 insurance companies, including Aetna US HealthCare, Aegon,
UICI, US Life, WellPoint Health Network Inc. and Fortis Health. HealthAxis has
also entered into a national marketing alliance with the National Blue Cross and
Blue Shield Association. These insurance companies which have entered into
agreements with HealthAxis are referred to as carrier partners. These carrier
partners have agreed to distribute health insurance products online through the
HealthAxis website. HealthAxis' network of carrier partners provides products
that are available in all 50 states and the District of Columbia, including
major, individual and small group medical, dental, vision, life, prescription
drug and disability insurance. Individual medical from WellPoint, major medical
from Celtic and Ceres Group, small group medical from Aetna, dental/vision from
Security Life, short term medical and student medical plans from Fortis, and a
prescription drug benefit card plan offered by Aegon are currently available for
purchase on the HealthAxis website. HealthAxis intends to regularly add new
plans and new carriers to its website. HealthAxis' objective is to offer its
customers a choice of carriers in each market.
HealthAxis' application solutions group provides integrated proprietary
software applications that address the workflow and processing inefficiencies
embedded in the healthcare insurance industry. The software enables carriers,
independent entities that administer claims processing and payments and large
group employers to reduce costs and improve customer service through the use of
online benefits enrollment and administration services. These software
applications increase the efficiency of a client's operations by eliminating
paper-based processes and improving the client's ability to capture, process and
share data with plan members and other industry participants within the
healthcare system. These products, in conjunction with HealthAxis' online
distribution capabilities, create an Internet based insurance agency which
provides all the services of a traditional insurance agency without assuming any
underwriting risk.
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<PAGE>
The application solutions group offers the suite of proprietary
integrated workflow and business software applications described below:
Insur-Web is HealthAxis' technology that provides an Internet gateway
to the application solutions group's other proprietary business applications.
Insur-Web allows clients to provide direct access to their systems and data
within a secure environment thereby lowering transaction costs and shortening
cycle times for their constituent users. This application can also be used to
enable a payor's own legacy system to utilize the Internet.
Insur-Image is a seamless scanning optical character recognition and
data verification workflow system specifically engineered for claims processing
that enables payors to create a paperless environment.
Insur-Voice is a scaleable, flexible, interactive voice response system
that provides employees, providers and employers 24-hour access to information
thereby improving service while reducing customer service costs.
Insur-Enroll is an Internet and interactive voice response enabled
enrollment and eligibility function which provides 24-hour interactive
enrollment, eligibility and life event management and supports an unlimited
number of benefit plans including, health, dental, life, vision, accident and
disability, and medical and dependent care flexible spending accounts.
Insur-Admin is a comprehensive benefits administration system that
features enrollment, group and individual billing and premium collection and
reconciliation for third-party administrators, insurers, self-administered
groups, health plan network managers and healthcare purchasing cooperatives.
Insur-Claim is a comprehensive claims processing system for health,
dental, vision, short-term disability, executive reimbursement and medical and
dependent care flexible spending accounts and includes auto adjudication and
preferred provider organization repricing functions. A rules-based approach
allows Insur-Claim to be fully customized, which allows the system to handle
complex benefit structures and provider reimbursement arrangements.
In addition, the application solutions group offers the following
products and services:
Systems Integration and Technology Management Services which provide
clients with cost-effective design, development and implementation of technical
solutions for healthcare organizations and consist of four primary offerings:
information technology planning, multi-vendor system integration, application
software maintenance and workflow automation.
Imaging and Electronic Data Capture Services which provide outsourcing
services to efficiently convert paper healthcare claims into electronic
transactions. Additionally, HealthAxis provides mailroom services to sort
incoming healthcare claim forms prior to imaging.
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Web Based Image Storage and Retrieval which provides claims image
retrieval services via the Internet from a standard desktop personal computer
using a web browser.
The application solutions group's clients include large insurance
carriers, Blue Cross and Blue Shield organizations, independent entities that
administer claims processing and payment, self-funded employers, and other
industry participants. The application solutions group also offers systems
integration, technology management and data capture services to these same
customer client groups.
The application solutions group has over 20 years of experience
building software applications and developing systems for the healthcare payor
industry. The application solutions group's current client base represents
approximately 800,000 insured lives (excluding covered dependents) enrolled
under the proprietary software applications and approximately 2,000,000 claims
per month through the data capture services.
Use of Proceeds
All net proceeds from the sale of HAI common stock will go to the
shareholders selling common stock under this prospectus. We will not receive any
proceeds from the sale of the common stock sold by the selling shareholders,
except that we will receive the exercise price from the exercise of options and
warrants underlying the common stock registered. The proceeds from the exercise
of the options and warrants will be used for working capital and other general
corporate purposes.
15
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Selling Shareholders
The following table provides certain information regarding the
beneficial ownership of our common stock by the shareholders selling common
stock under this prospectus prior to and after the offering. Beneficial
ownership is determined under the rules of the SEC, and generally includes
voting or investment power with respect to securities.
<TABLE>
<CAPTION>
#-of-Shares #-of-Shares # of Shares Percent of Shares
Owned Prior to Being Offered Owned After Owned-After
Selling Shareholder the Offering for Sale the Offering the Offering
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Brown Simpson
Strategic Growth Fund, L.P. 131,744 131,744(1)(18) -- --
Brown Simpson
Strategic Growth Fund, Ltd. 592,850 592,850(2)(18) -- --
Brown Simpson-ORD
Investments LLC 98,808 98,808(3)(18) -- --
LB I Group Inc. 658,722 658,722(4)(18) -- --
Royal Bank of Canada 329,361 329,361(5)(18) -- --
Arden O. French, Jr. 45,090 45,090(6) -- --
Paul J. Klimczak 65,274 65,274(7) -- --
Judith D. Gordon 48,803 48,803(8) -- --
Roger McConnell 24,728 24,728(9) -- --
Charles D. Phillips 22,841 22,841(10) -- --
Calvin R. Sulak 40,147 40,147(11) -- --
Michael S. Nickols 25,328 25,328(12) -- --
Donald Snelling 45,831 45,831(13) -- --
America Online Inc. 300,000 300,000(14) -- --
Linda G. Robinson 9,000 9,000(15) -- --
Kenneth Lerer 9,000 9,000(16) -- --
Walter Montgomery 2,000 2,000(17) -- --
</TABLE>
16
<PAGE>
(1) Represents 115,520 shares of common stock which may be acquired upon
the conversion of the 2% Convertible Debentures dated September 14,
1999, with a conversion ratio of $20.34, subject to adjustment, per
share and 16,224 shares of common stock subject to a warrant dated
September 14, 1999 which has an exercise price of $20.34, subject to
adjustment.
(2) Represents 519,841 shares of common stock which may be acquired upon
the conversion of the 2% Convertible Debentures dated September 14,
1999, with a conversion ratio of $20.34, subject to adjustment, per
share and 73,009 shares of common stock subject to a warrant dated
September 14, 1999 which has an exercise price of $20.34, subject to
adjustment.
(3) Represents 86,640 shares of common stock which may be acquired upon the
conversion of the 2% Convertible Debentures dated September 14, 1999,
with a conversion ratio of $20.34, subject to adjustment, per share and
12,168 shares of common stock subject to a warrant dated September 14,
1999 which has an exercise price of $20.34, subject to adjustment.
(4) Represents 577,601 shares of common stock which may be acquired upon
the conversion of the 2% Convertible Debentures dated September 14,
1999, with a conversion ratio of $20.34, subject to adjustment, per
share and 81,121 shares of common stock subject to a warrant dated
September 14, 1999 which has an exercise price of $20.34, subject to
adjustment.
(5) Represents 288,801 shares of common stock which may be acquired upon
the conversion of the 2% Convertible Debentures dated September 14,
1999, with a conversion ratio of $20.34, subject to adjustment, per
share and 40,560 shares of common stock subject to a warrant dated
September 14, 1999 which has an exercise price of $20.34, subject to
adjustment.
(6) Mr. French is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 45,090 shares
of common stock issuable upon the conversion of options for 31,450
shares at an exercise price of $5.00, 2,975 shares at an exercise price
of $10.00 and 10,665 shares at an exercise price of $14.625 per share.
(7) Mr. Klimczak is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 65,274 shares
of common stock issuable upon the conversion of options for 31,167
shares at an exercise price of $5.00, 17,000 shares at an exercise
price of $10.00 and 17,107 shares at an exercise price of $14.625 per
share.
(8) Ms. Gordon is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 48,803 shares
of common stock issuable upon the conversion of options for 24,650
shares at an exercise price of $5.00, 2,500 shares at an exercise price
of $4.75, 10,000 shares at an exercise price of $7.00, 2,975 shares at
an exercise price of $10.00, and 8,678 shares at an exercise price of
$14.625 per share.
(9) Mr. McConnell is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 24,728 shares
of common stock issuable upon the conversion of options for 16,150
shares at an exercise price of $5.00, 2,975 shares at an exercise price
of $10.00 and 5,603 shares at an exercise price of $14.625 per share.
17
<PAGE>
(10) Mr. Phillips is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 22,841 shares
of common stock issuable upon the conversion of options for 319 shares
at an exercise price of $4.75, 13,600 shares at an exercise price of
$5.00, 2,975 shares at an exercise price of $10.00 and 5,947 shares at
an exercise price of $14.625 per share.
(11) Mr. Sulak is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 40,147 shares
of common stock issuable upon the conversion of options for 16,150
shares at an exercise price of $5.00, 14,450 shares at an exercise
price of $10.00 and 9,547 shares at an exercise price of $14.625 per
share.
(12) Mr. Nickols is a former insurance agent of Provident Indemnity Life
Insurance Company, a former subsidiary of HAI. Represents 25,328 shares
of common stock issuable upon the conversion of options for 16,150
shares at an exercise price of $5.00, 2,975 shares at an exercise price
of $10.00 and 6,203 shares at an exercise price of $14.625 per share.
(13) Represents 45,831 shares of common stock issuable upon conversion of
options assigned to Mr. Snelling including: 56 shares at an exercise
price of $4.75, 26,350 shares at an exercise price of $5.00, 8,175
shares at an exercise price of $10.00 and 11,250 shares at an exercise
price of $14.625.
(14) Represents 300,000 shares of common stock which may be acquired upon
exercise of a warrant dated November 13, 1998 with an exercise price of
$4.48.
(15) Represents 9,000 shares of common stock which may be acquired upon
exercise of a warrant dated as of September 16, 1998 with an exercise
price of $3.28 per share.
(16) Represents 9,000 shares of common stock which may be acquired upon
exercise of a warrant dated as of September 16, 1998 with an exercise
price of $3.28 per share.
(17) Represents 2,000 shares of common stock which may be acquired upon
exercise of a warrant dated as of September 16, 1998 with an exercise
price of $3.28 per share.
(18) In connection with this purchase of our convertible debentures, we
entered into a registration rights agreement which requires us to
register 110% of the number of shares of common stock which the
debentures could be currently converted into plus interest thereon paid
in the form of stock as well as 110% of the number of shares issuable
upon the exercise of the warrants. For purposes of this calculation and
for determining the amount of securities to be registered in connection
with the conversion of the debentures and warrants, we utilized the
conversion and/or exercise price of $20.34.
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Plan of Distribution
The shareholders selling common stock under this prospectus, or their
pledgees or transferees, may offer their shares of our common stock at various
times through dealers or brokers or other agents or directly to one or more
purchasers in one or more of the following transactions:
o on the Nasdaq National Market or other exchange on which the common stock
may be listed for trading;
o in the over-the-counter market;
o in privately negotiated transactions;
o in brokerage transactions;
o put or call option transactions;
o in short sales; or
o in a combination of any of the above transactions.
The shareholders selling common stock under this prospectus may sell
their shares:
o at market prices prevailing at the time of sale;
o at prices related to those prevailing market prices; or
o at negotiated prices.
These selling shareholders may use brokers, dealers or other agents to
sell their shares. If this happens, the brokers, dealers or other agents may
receive discounts, concessions or commissions from the shareholders, or they may
receive commissions from purchasers of common stock for whom they acted as
agents. The discounts, concessions or commissions as to a particular broker,
dealer or other agent may be in excess of those customary in the type of
transaction involved.
The selling shareholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, broker-dealers or other financial institutions may engage in short
sales of the common stock or of securities convertible into or exchangeable for
the common stock in the course of hedging positions they assume with the selling
stockholders. The selling stockholders may also enter into options or other
transactions with broker-dealers or other financial institutions which require
the delivery to those broker-dealers or other financial institutions of the
common stock offered by this prospectus, which common stock the broker-dealers
or other financial institutions may resell pursuant to this prospectus (as
amended or supplemented to reflect the transaction).
This prospectus also may be used, with our consent, by donees or
pledgees of the shareholders selling common stock under this prospectus, or by
other persons acquiring common stock from these shareholders and who wish to
offer and sell that common stock under circumstances requiring or making
desirable its use. To the extent required, we will file, during any period in
which offers or sales are being made, one or more supplements to this prospectus
to set forth:
o the names of donees or pledgees of the shareholders;
o the number of shares of common stock involved;
o the price at which those shares are sold;
o the commissions paid or discounts or concessions allowed, where
applicable; and
o any other material information with respect to the plan of distribution
not previously disclosed.
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Upon a selling shareholder notifying HAI that any material arrangement
has been entered into with a broker-dealer for the sale of common stock through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing:
o the name of each selling stockholder and of the participating
broker-dealer;
o the number of shares involved; C the initial price at which the shares
were sold;
o the commissions paid or discounts or concessions allowed to the
broker-dealer(s), where applicable;
o that the broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus; and
o other facts material to the transactions.
Additionally, upon a selling shareholder notifying HAI that a donee or
a pledgee intends to sell more than 1,000 shares, HAI may file a supplement to
this prospectus.
Neither HAI nor the shareholders selling common stock under this
prospectus can presently estimate the amount of this compensation. We know of no
existing arrangements between any shareholder and any other shareholder, broker,
dealer or other agent relating to the sale or distribution of the common stock.
Under applicable rules and regulations under the Securities Exchange Act, any
person engaged in a distribution of any of the common stock may not
simultaneously engage in market activities with respect to the common stock for
the applicable period under Regulation M prior to the commencement of that
distribution.
The shareholders selling common stock under this prospectus will be
subject to applicable provisions of the Securities Exchange Act and its rules
and regulations, including without limitation Rule 10b-5 and Regulation M, which
may limit the timing of purchases and sales of any of the common stock by those
shareholders. All of this may affect the marketability of the common stock.
We will pay substantially all of the expenses incident to this offering
other than commissions, concessions and discounts of brokers, dealers or other
agents or the legal fees of the selling shareholders' counsel. Each shareholder
selling common stock under this prospectus may indemnify any broker, dealer, or
other agent that participates in transactions involving sales of the common
stock against certain liabilities, including liabilities arising under the
Securities Act. We have agreed to indemnify certain of the selling shareholders
and may agree to indemnify any statutory "underwriters" and controlling persons
of those "underwriters" against certain liabilities, including certain
liabilities under the Securities Act. In order to comply with certain states'
securities laws, if applicable, the common stock will be sold in those
jurisdictions only through registered or licensed brokers or dealers.
20
<PAGE>
Description of Securities
Upon shareholder approval and filing with the Commonwealth of
Pennsylvania of the amended and restated articles of incorporation, the
description of the securities of HAI shall be as follows:
Description of HAI Capital Stock. The authorized capital stock of HAI
will consist of 1,900,000,000 shares of common stock $.10 par value, and
100,000,000 shares of preferred stock, $1.00 par value.
HAI Common Stock. As of March 20, 2000, there were approximately
13,087,618 shares of HAI common stock outstanding held of record by
approximately 3,200 shareholders. HAI common stock is listed and traded on the
NASDAQ National Market under the symbol "HAXS." Holders of HAI common stock are
entitled to one vote per share on all matters to be voted upon by the
shareholders. The shareholders may not cumulate votes in connection with the
election of directors. The HAI articles of incorporation provide that a director
may only be removed from office for cause and by the vote of at least 65% of the
votes entitled to be cast at an annual or regular election. The holders of HAI
common stock are entitled to receive ratably dividends, if any, declared from
time to time by the HAI board of directors out of funds legally available for
dividends. In the event of a liquidation, dissolution or winding up of HAI, the
holders of HAI common stock are entitled to share ratably in all assets
remaining after payment of liabilities. The HAI common stock has no preemptive
or conversion rights or other subscription rights. There are no redemption or
sinking fund provisions applicable to the HAI common stock. All outstanding
shares of HAI common stock are fully paid and non-assessable.
HAI Preferred Stock. HAI has 100,000,000 shares of HAI preferred stock
authorized and no shares are outstanding. The HAI board of directors has the
authority to issue the shares of HAI preferred stock in one or more series and
to fix the rights, preferences, privileges and restrictions granted to or
imposed upon any unissued and undesignated shares of HAI preferred stock and to
fix the number of shares constituting any series and the designations of such
series, without any further vote or action by the shareholders. Although it
presently has no intention to do so, the HAI board of directors, without
shareholder approval, can issue HAI preferred stock with voting and conversion
rights which could adversely affect the voting power or other rights of the
holders of HAI common stock. The issuance of HAI preferred stock may have the
effect of delaying, deferring or preventing a change in control of HAI.
HAI Transfer Agent and Registrar. The transfer agent and registrar for
the HAI common stock is ChaseMellon Shareholder Services LLP, 450 West 33rd St.,
10th Floor, New York, NY 10001 and its telephone number is (212) 273-8016.
Indemnification. As of October 6, 1999, we entered into a registration
rights agreement with certain selling shareholders that were previously our
insurance agents. In the registration rights agreement, we agreed to indemnify
these selling shareholders against all losses, claims, damages, liabilities and
expenses caused by any untrue statement of material fact, alleged untrue
statement of material fact or omission of a material fact required to be stated
to make the statement not misleading contained in any registration statement,
prospectus, or any amendment of the registration statement or prospectus.
However, we are not obligated to indemnify these selling shareholders if the
material misstatement or omission were caused by or contained in any information
furnished in writing to us by these selling shareholders expressly for use in
the registration statement, prospectus or amendment of the registration
statement or prospectus. Additionally, these selling shareholders have agreed to
indemnify us against all losses, claims, damages, liabilities and expenses
caused by any untrue statement of material fact, alleged untrue statement of
material fact or omission of a material fact required to be stated to make the
statement not misleading that was contained in any information furnished in
writing to us by these selling shareholders expressly for use in the
registration statement, prospectus or amendment of the registration statement or
prospectus.
21
<PAGE>
On September 14, 1999, we entered into a registration rights agreement
with certain selling shareholders including Brown Simpson Strategic Growth Fund,
L.P., Brown Simpson Strategic Growth Fund, Ltd., and Brown Simpson-ORD
Investments LLC, LB I Group Inc. and Royal Bank of Canada who concurrently
purchased our securities. In the registration rights agreement, we agreed to
indemnify these selling shareholders against all losses, claims, damages,
liabilities and costs relating to any untrue statement of material fact, alleged
untrue statement of material fact or omission of a material fact required to be
stated to make any statement not misleading contained in any registration
statement, prospectus, or any amendment of the registration statement or
prospectus. We also agreed to indemnify these selling shareholders for any
violation of any law, including state and federal securities laws. However, we
are not obligated to indemnify these selling shareholders if the material
misstatement or omission upon which we reasonably relied were caused by or
contained in any information furnished in writing to us by these selling
shareholders expressly for use in the registration statement, prospectus or
amendment of the registration statement or prospectus.
Additionally, these selling shareholders have agreed to indemnify us
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement of material fact, alleged untrue statement of material fact or
omission of a material fact required to be stated to make the statement not
misleading upon which we reasonably relied and which was contained in any
information furnished in writing to us by these selling shareholders expressly
for use in the registration statement, prospectus or amendment of the
registration statement or prospectus. These selling shareholders will not have
to indemnify us against any misstatement or omission regarding the selling
shareholders' proposed method of distribution unless the misstatement or
omission was reviewed and approved in writing by these selling shareholders.
These selling shareholders are not required to indemnify us for the cost of
settling any proceeding unless the settlement was previously approved, in
writing, by these selling shareholders. Additionally, the liability of these
selling shareholders for any indemnification of the selling shareholder may not
exceed the net proceeds received by these selling shareholders upon the sale of
securities that giving rise to the indemnification obligation.
On November 13, 1998, we entered into a registration rights agreement
with America Online Inc. pursuant to which we agreed to indemnify this selling
shareholder against any losses, claims, damages or liabilities relating to any
untrue statement of material fact or omission of material fact necessary to make
the statements not misleading. We are not required to indemnify the selling
shareholder for any liabilities for any statement made in reliance upon written
information furnished to the Company by the selling shareholder for the purpose
of preparing the registration statement. The selling shareholder agreed to
indemnify us against all liabilities caused by any untrue statement or omission
of material fact upon which we reasonably relied and that was contained in any
information furnished in writing to us by this selling shareholder expressly for
use in the registration statement.
22
<PAGE>
Experts
The consolidated financial statements of HealthAxis Inc and
Subsidiaries as of December 31, 1999 and 1998 and for each of the three years in
the period ended December 31, 1999 incorporated by reference in this
Registration Statement on Form S-3 have been audited by BDO Seidman, LLP,
independent certified public accountants, to the extent and for the periods set
forth in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements of Insurdata Incorporated at
December 31, 1998 and 1999 for each of the three years in the period ended
December 31, 1999 included in HAI's Form 8-K dated March 31, 2000, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
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.
Legal Matters
Butera, Beausang, Cohen & Brennan, King of Prussia, Pennsylvania, will
give its opinion as to the validity of the shares of common stock offered by the
shareholders selling common stock under this prospectus.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act. You may read
and copy any reports, statements and other information we file with the SEC at
the SEC's public reference room at 450 Fifth Street, NW, Washington, D.C., 20549
and at the SEC's regional offices in Illinois and New York. You may obtain
information on the operation of the public reference rooms by calling the SEC at
1-800-SEC-0330. Our SEC filings are also available on the SEC's Internet site
(http://www.sec.gov). You may also inspect our SEC filings and other information
concerning HealthAxis Inc. at the offices of the Nasdaq National Market, 1735 K
Street, NW, Washington, D.C. 20006-1500.
We have filed a registration statement on Form S-3 to register the
shares of common stock offered under this prospectus. This prospectus is a part
of the registration statement on Form S-3 and constitutes our prospectus as
allowed by SEC rule. This prospectus does not contain all the information you
can find in the registration statement on Form S-3 or the exhibits to the
registration statement on Form S-3.
The SEC also allows us to "incorporate by reference" the information we
file with the SEC, which means we can disclose information to you by referring
you to another document filed separately with the SEC. Information incorporated
by reference is deemed to be part of this prospectus. Later information filed by
us with the SEC updates and supersedes this prospectus.
23
<PAGE>
This prospectus incorporates important business and financial
information about HealthAxis Inc. that is not included in or delivered with this
prospectus. Copies of any of that information are available without charge to
any person to whom this prospectus is delivered, upon written or oral request.
Written requests for those documents should be directed to the Secretary,
HealthAxis Inc., 2500 DeKalb Pike, East Norriton, PA 19401, and telephone
requests may be directed to Mr. Francis L. Gillan, III at (610) 279-2500.
We incorporate by reference the documents listed below which we
previously filed with the SEC and all amendments to such documents:
1. Our annual report on Form 10-K for the year ended December 31, 1999,
which we filed on March 30, 2000.
2. Our current report on Form 8-K reporting the sale of Provident
American Life and Health Insurance Company to Central Reserve Life
Insurance Company/Reinsurance of group medical and life insurance
business which we filed on January 15, 1999.
3. Our current report on Form 8-K/A updating information contained in
periodic reports filed during 1998 and reporting additional
transactions which occurred after September 30, 1998, which we filed
on January 19, 1999.
4. Our current report on Form 8-K reporting HealthAxis' private
placement of $8.8 million of Series C Preferred Stock to a group of
accredited investors, which we filed on April 30, 1999, and
amendment on Form 8-K/A, which we filed on May 14, 1999.
5. Our current report on Form 8-K reporting HealthAxis' private
placement of $6.2 million of common stock to a group of accredited
investors, which we filed on May 14, 1999.
6. Our current report on Form 8-K reporting several transactions
including the resolved disputes between HAI and HealthAxis, and
HealthPlan Services, Inc. and HealthPlan Services Corporation, which
we filed on June 22, 1999, and amendment on Form 8-K/A, filed on
June 29, 1999.
7. Our current report on Form 8-K reporting the private placement of
333,334 shares of Series D Preferred Stock of HealthAxis for an
aggregate purchase price of $4 million to an accredited investor,
which we filed on July 26, 1999.
8. Our current report on Form 8-K reporting the Stock Purchase
Agreement to sell all outstanding shares of common stock of
Provident Indemnity Life Insurance Company to AHC Acquisition, Inc.,
which we filed on August 27, 1999.
9. Our current report on Form 8-K reporting a $27.5 million private
placement of 2% convertible notes, which we filed on September 22,
1999.
24
<PAGE>
10. Our current report on Form 8-K reporting the private placement of
3,846,003 shares of common stock by HealthAxis to accredited
investors and the signing of the merger agreement between
HealthAxis and Insurdata and their parent corporations, which we
filed on December 8, 1999.
11. Our current report on Form 8-K reporting the sale of Provident
Indemnity Life Insurance Company to AHC Acquisition, Inc., which we
filed on December 9, 1999.
12. Our current report on Form 8-K reporting the consummation of the
merger of Insurdata Incorporated with and into HealthAxis which we
filed on January 21, 2000, and amendment on Form 8-K/A, filed on
February 17, 2000.
13. Our current report on Form 8-K reporting the execution of the
reorganization and merger agreement between HAI, HealthAxis and a
wholly owned subsidiary of HAI and the amendment to HAI's amended
and restated Articles of Incorporation changing the name of the
company from Provident American Corporation to HealthAxis Inc.,
which we filed on February 1, 2000.
14. Our current report on Form 8-K containing the audited financial
statements of Insurdata Incorporated which we filed on March 31,
2000.
All documents we file with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act after the date of this prospectus until
this offering is completed will be deemed to be incorporated by reference in
this prospectus and to be a part of this prospectus from the date that document
is filed.
25
<PAGE>
================================================================================
2,449,527 Shares
HEALTHAXIS INC.
Common Stock
--------------
PROSPECTUS
--------------
The date of this Prospectus is _________, 2000
================================================================================
<PAGE>
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the estimated expenses in connection
with the issuance and distribution of the securities being registered, all of
which are being borne by the Registrant.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee........................ $ 10,787 *
-----------
Accounting Fees and Expenses............................................... 25,000**
-----------
Legal Fees and Expenses.................................................... 20,000**
-----------
Printing and Engraving Expenses............................................ 5,000**
-----------
Blue Sky Fees and Expenses................................................. 0 **
-----------
Total.................................................... $ 60,787**
===========
</TABLE>
- ------------------------
* Actual
** Estimated
Item 15. Indemnification of Directors and Officers.
Sections 1741-1743 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL"), the law of the Commonwealth in which the
Registrant is organized, requires a corporation, subject to limitations, to
indemnify its officers and directors against expenses, including attorneys'
fees, judgments, fines and certain settlements, actually and reasonably incurred
by them in any suit or proceeding to which they are parties, as long as they
acted in good faith and in a manner they reasonably believed to be in, or not
opposed to, the best interests of the corporation, and with respect to a
criminal action or proceeding, as long as they had no reasonable cause to
believe their conduct to be unlawful. The Registrant's By-laws provide that the
Registrant shall indemnify the Registrant's officers and directors against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement, actually and reasonably incurred by them in any action or
proceeding, whether criminal, civil, administrative or investigative, to which
they are a party, except in any case where the act or failure to act giving rise
to the claim for indemnification is determined by a court to have constituted
willful misconduct or recklessness.
The By-laws of the Registrant also contain certain provisions,
permitted by the BCL, which eliminate the personal liability of directors of the
Registrant to others, including the Registrant and the Registrant's
shareholders, for money damages relating to any action taken or omitted to be
taken by the director, unless the director breached or failed to perform his
duties in good faith, in a manner he reasonably believed to be in the best
interests of the Registrant and with such care, including reasonable inquiry,
skill and diligence, as a person or ordinary prudence would use under similar
circumstances, and such failure constituted self-dealing, willful misconduct or
recklessness. In effect, the By-laws eliminate the liability of the Registrant's
directors for negligent and grossly negligent business decisions. Such
elimination of directors' monetary liability limits the ability of the
Registrant and the Registrant's shareholders to bring claims against directors
of the Registrant.
II-1
<PAGE>
The Registrant maintains an insurance policy that insures the
Registrant's officers and directors against losses arising from claims brought
against them for any negligent act, error, omission, breach of duty,
misstatement or other act while acting in their capacities as officers or
directors. The policy includes certain standard coverage exclusions and
deductibles.
Item 16. Exhibits.
5.1 Opinion of Butera, Beausang, Cohen & Brennan PC.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Butera, Beausang, Cohen & Brennan PC (included in Exhibit 5.1).
24.1 Power of Attorney of certain signatories (included on the signature page).
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in this
Registration Statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
II-2
<PAGE>
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the registration statement is on Form
S-3, Form S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed with or furnished to the SEC by the Registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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) Insofar as indemnification for liabilities arising under the
Securities Act 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 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 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of East Norriton, Commonwealth of Pennsylvania on
March 30, 2000.
HEALTHAXIS INC.
By: /s/ Michael Ashker
-------------------------------------
Michael Ashker, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons on March
30, 2000 in the capacities and on the dates indicated. Each person whose
signature appears below hereby authorizes Alvin H. Clemens and Michael Ashker
and each of them, as Attorney-in-Fact, to sign on his behalf individually and in
each capacity stated below, and to file any amendments, including post-effective
amendments, to this registration statement.
<TABLE>
<CAPTION>
Name Title Date
- ---- ----- ----
<S> <C> <C>
/s/ Michael Ashker President and Chief Executive Officer March 30, 2000
- --------------------------- (principal executive officer)
Michael Ashker
/s/ Francis L. Gillan, III Chief Financial Officer and Treasurer March 30, 2000
- --------------------------- (principal financial and accounting officer)
Francis L. Gillan, III
/s/ Anthony R. Verdi Chief Operating Officer March 30, 2000
- ---------------------------
Anthony R. Verdi
/s/ Alvin H. Clemens Chairman and Director March 30, 2000
- ---------------------------
Alvin H. Clemens
/s/ Harold M. Davis Director March 30, 2000
- ---------------------------
Harold M. Davis
/s/ Henry G. Hager Director March 30, 2000
- ---------------------------
Henry G. Hager
/s/ George W. Karr, Jr. Director March 30, 2000
- ---------------------------
George W. Karr, Jr.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ Edward W. LeBaron, Jr. Director March 30, 2000
- ---------------------------
Edward W. LeBaron, Jr.
/s/ Theophile J. Mignatti, Jr. Director March 30, 2000
- -------------------------------
Theophile J. Mignatti, Jr.
/s/ P. Glenn Moyer Director March 30, 2000
- ---------------------------
P. Glenn Moyer
</TABLE>
<PAGE>
Exhibit Index
Number
5.1 Opinion of Butera, Beausang, Cohen and Brennan PC.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Ernst & Young LLP.
23.3 Consent of Butera, Beausang, Cohen and Brennan PC (included in
Exhibit 5.1).
24.1 Power of Attorney of certain signatories (included on the signature
page).
<PAGE>
EXHIBIT 5.1
BUTERA, BEAUSANG, COHEN AND BRENNAN PC
March 30, 2000
HealthAxis Inc.
2500 DeKalb Pike
East Norriton, PA 19401
RE: HealthAxis Inc.-Registration Statement on Form S-3
--------------------------------------------------
Gentlemen:
We have acted as general counsel to HealthAxis Inc. (the "Company") in
connection with the Registration Statement on Form S-3 (the "Registration
Statement") filed by the Company with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, relating to the offer and
sale of up to 2,449,527 shares of common stock, par value $.10 per share (the
"Common Stock"), by the certain Selling Shareholders ("Selling Shareholders")
set forth on the Registration Statement. This opinion is furnished pursuant to
the requirements of Item 601(b)(5) of Regulation S-K.
In rendering this opinion, we have examined only the following
documents: (i) the Company's articles of incorporation and bylaws, (ii)
resolutions adopted by the Board of Directors of the Company related to the
issuance of shares being registered hereby, and (iii) the Registration
Statement. We have not performed any independent investigation other than the
document examination described. Our opinion is therefore qualified in all
respects by the scope of that document examination. We have assumed and relied,
as to questions of fact and mixed questions of law and fact, on the truth,
completeness, authenticity and due authorization of all certificates, documents,
and records examined and the genuineness of all signatures. This opinion is
limited to the laws of the Commonwealth of Pennsylvania.
Based upon and subject to the foregoing, we are of the opinion that the
outstanding shares of Common Stock offered by the Selling Shareholders are
legally issued, fully paid and non-assessable.
This opinion is given as of the date hereof. We assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur.
This opinion is strictly limited to the matters stated herein and no
other or more extensive opinion is intended, implied or to be inferred beyond
the matters expressly stated herein.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement.
Sincerely,
/s/ Butera Beausang Cohen & Brennan PC
Butera, Beausang, Cohen and Brennan PC
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
which constitutes a part of this Registration Statement on Form S-3 of our
report dated March 16, 2000, relating to the consolidated financial statements
of HealthAxis Inc. and Subsidiaries appearing in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999 filed with the Securities and
Exchange Commission. We also consent to the reference to us under the caption
"Experts" in the Registration Statement.
/s/BDO Seidman, LLP
- --------------------------
BDO Seidman, LLP
Philadelphia, Pennsylvania
March 30, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement on Form S-3 and related Prospectus of HealthAxis Inc.
for the registration of 2,449,527 shares of its common stock, and to the
incorporation by reference therein of our report dated March 28, 2000, with
respect to the consolidated financial statements of Insurdata Incorporated
included in the current report on Form 8-K of HealthAxis Inc. dated March 31,
2000 filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Dallas, Texas
March 28, 2000
