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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25,1999
REGISTRATION NO. 333-70819
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
RAMSAY YOUTH SERVICES, INC.
formerly known as Ramsay Health Care, Inc.
(Exact name of Registrant as specified in its charter)
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<S> <C>
DELAWARE 63-0857352
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization)) Identification Number)
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COLUMBUS CENTER
ONE ALHAMBRA PLAZA
SUITE 750
CORAL GABLES, FLORIDA 33134
(305) 569-6993
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
LUIS E. LAMELA
CHIEF EXECUTIVE OFFICER
RAMSAY YOUTH SERVICES, INC.
COLUMBUS CENTER
ONE ALHAMBRA PLAZA
SUITE 750
CORAL GABLES, FLORIDA 33134
(305) 569-6993
(Name,address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
COPIES OF ALL COMMUNICATIONS, INCLUDING
COMMUNICATIONS SENT TO AGENT FOR
SERVICE, SHOULD BE SENT TO:
Bradley P. Cost, Esq.
Haythe & Curley
237 Park Avenue
New York, New York 10017
(212) 880-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plan, please check the following
box. [ ]
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If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act , please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [X]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
Proposed maximum Proposed maximum Amount of
Title of each class of Amount to be offering price aggregate offering registration
securities to be registered registered(1) per share(1) price(1) fee (2)
<S> <C> <C> <C> <C>
Common Stock $.01 par value............ 1,070,371 $6.09375 $6,522,573 $1,813.28
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act, based upon the
average of the high and low sale price of the registrant's Common Stock
on the Nasdaq Stock Market on January 14, 1999. The shares and the
price per share have been adjusted to reflect the one-for-three reverse
stock split which became effective on March 15, 1999.
(2) Previously paid.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT WITH THE SECURITIES
AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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SUBJECT TO COMPLETION, DATED JUNE 11, 1999
1,070,371 SHARES OF COMMON STOCK
RAMSAY YOUTH SERVICES, INC.
Ramsay Youth Services, Inc., formerly known as Ramsay Health Care,
Inc., provides and manages treatment and educational programs for troubled
children and adolescents. Several of our stockholders are offering and selling
a total of 1,070,371 shares of our common stock under this prospectus. The
selling stockholders may sell their shares at market prices prevailing at the
time of sale, at prices related to the prevailing market prices or at
negotiated prices.
The common stock is listed on The Nasdaq Stock Market under the
symbol "RYOU." On April 7, 1999, the closing sale price of the common stock as
reported on The Nasdaq Stock Market was $7.50 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF FACTORS
THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN THE COMMON STOCK BEING SOLD UNDER
THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is June 25, 1999
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TABLE OF CONTENTS
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Page
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Risk Factors................................................................................................3
The Company................................................................................................10
Recent Transactions in Common Stock........................................................................11
Use of Proceeds............................................................................................12
Selling Securityholders....................................................................................12
Plan of Distribution.......................................................................................14
Description of Common Stock................................................................................15
Incorporation of Information by Reference..................................................................16
Legal Matters..............................................................................................17
Experts....................................................................................................17
Available Information......................................................................................17
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RISK FACTORS
You should be aware of various risks before you invest in our common
stock, including those risks described below. You should carefully consider
these risk factors together with all of the other information included in this
prospectus before you decide to purchase shares of our common stock.
IF WE LOSE THE SERVICES OF MR. LAMELA, MR. CIBRAN, OR MR. CABRERA, THEN OUR
BUSINESS AND RESULTS OF OPERATIONS WOULD SUFFER
The successful operation of our business depends on the services of our
key members of management. Luis E. Lamela is the President and Chief Executive
Officer of Ramsay. Bert G. Cibran is the Chief Operating Officer of Ramsay.
Marcio Cabrera is an Executive Vice President and the Chief Financial Officer of
Ramsay. If we lost the full-time services of these or other key managers, it
could have a material adverse effect on our business and results of operations,
and we cannot predict whether we would be able to find replacements with the
necessary skills or experience. Ramsay has employment agreements with each of
the above employees. Mr. Lamela's employment agreement expires in December 1999
and has annual renewals thereafter. Mr. Cibran's employment agreement expires in
August 1999 and has annual renewals thereafter. Mr. Cabrera's employment
agreement expires in June 2000 and has annual renewals thereafter.
IF THERE IS AN AWARD OF CLAIMS OR DAMAGES IN EXCESS OF OUR PROFESSIONAL
LIABILITY COVERAGE, OUR BUSINESS AND RESULTS OF OPERATIONS COULD SUFFER
We, along with other physicians, hospitals and healthcare providers,
have been subject to an increasing number of legal claims in recent years. Legal
claims against Ramsay have increased by $1.8 million over the last five years.
We maintain professional liability insurance coverage with maximum coverage of
$25,000,000, subject to a deductible of $250,000 per claim. Although we believe
that our insurance is sufficient for our needs, a significant award of claims or
damages in excess of our insured coverage would adversely affect our financial
condition and results of operations.
IF WE ARE REQUIRED TO REPAY LOUISIANA MEDICAID DISPROPORTIONATE SHARE PAYMENTS
OF $5,000,000, OUR BUSINESS AND RESULTS OF OPERATIONS WOULD SUFFER
During fiscal years 1994 and 1995, our Three Rivers facility received
Medicaid payments in an amount which the State of Louisiana believes was more
than we earned. We believe that Medicaid correctly reimbursed us and that the
State of Louisiana should reassess their determination.
Also, during fiscal years 1994 and 1995, various private psychiatric
facilities in Louisiana, including our Three Rivers and Bayou Oaks facilities,
received additional payments from the State due to their classification in
Louisiana as teaching hospitals. The State of Louisiana again believes that the
State made improper payments to these facilities, including ours. Based on our
understanding of the rules and regulations in place at the time these
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payments were made, we believe that the payments received as a result of the
teaching classification were appropriate.
The State of Louisiana has asked us to pay them approximately
$5,000,000 in connection with the aforementioned disputes. We expect this matter
to be settled for a much smaller amount. It is possible that we will not be able
to agree with the State of Louisiana on a settlement on terms or conditions
which we think are fair. If we cannot reach a settlement of these claims with
the State of Louisiana, Ramsay may have to proceed with litigation which is
likely to be costly and time consuming. We cannot predict the outcome of these
matters at this time.
IF WE ARE REQUIRED TO MAKE CONTINGENT OR INDEMNITY PAYMENTS TO THE PURCHASERS OF
RAMSAY'S BUSINESS, OUR BUSINESS AND RESULTS OF OPERATIONS WOULD SUFFER
As a result of our change in strategic direction, in June 1998 and
September 1998 we sold businesses and assets which we decided were not essential
to our objectives. The documentation effecting these sales contains various
adjustments in the purchase prices for the businesses and assets that we sold
and various agreements on our part to indemnify the buyers against risks and
contingencies. The following contingent payments may be required:
- On September 28, 1998, we completed the sale of our management
contract services division and behavioral health care
facilities in Conway, South Carolina, Houma, Louisiana, Mesa,
Arizona and DeSoto, Texas. Under the terms of the sale
agreement, the purchase price is subject to an adjustment
based on the change in working capital. The buyer has claimed
that an adjustment of working capital of up to $1,200,000 is
required. Ramsay has disputed the claim and provided the
purchaser with supporting documentation which shows that no
purchase price adjustment is due as a result of changes in
working capital. Although we are currently working with the
purchaser on a resolution to this matter, we cannot predict
the outcome of the resolution at this time.
- On June 2, 1998, we completed the sale of our wholly owned
subsidiary, FPM Behavioral Health, Inc. Under the terms of the
sale agreement, the purchase price is subject to an adjustment
if FPM Behavioral Health, Inc.'s business from a specific
contract decreases on the measurement date of July 1, 1999.
The total amount of the adjustment, if any, is computed based
on a formula outlined in the purchase agreement and is limited
to a maximum of $2,000,000. The purchaser is required to give
Ramsay notice of any purchase price adjustment by July 15,
1999. We are unable to estimate the amount of the purchase
price adjustment, if any, which would be required under this
sale agreement.
IF ROTECH SUCCEEDS IN ITS DEMAND FOR INDEMNIFICATION FROM RAMSAY, RAMSAY MAY
HAVE TO MAKE A SUBSTANTIAL CASH PAYMENT TO ROTECH
Prior to our merger with Ramsay Managed Care, Inc. on June 10, 1997,
Ramsay Managed Care sold its HMO subsidiary, Apex Healthcare, Inc., which, as a
licensed HMO in Louisiana, Alabama and Mississippi, managed and provided prepaid
healthcare services to its
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members. On September 29, 1997, Ramsay Managed Care received a demand for
indemnification by the purchaser, RoTech Medical Corporation.
RoTech's complaint contains two causes of action, one for contractual
indemnity and one for breach of contract, and it sets forth seven alleged
breaches by Ramsay Managed Care pertaining to misrepresentations about the
financial condition of Ramsay Managed Care. The purchase agreement requires
Ramsay to indemnify RoTech for damages arising out of a breach of, or
misrepresentation in, the agreement, including attorneys' fees and costs. The
complaint seeks damages totalling approximately $5.8 million, an amount in
excess of the purchase price that RoTech paid for Apex. Ramsay served an answer,
affirmative defenses and counterclaims in the amount of $2 million on December
15, 1997. RoTech answered the counterclaims on January 8, 1998.
Ramsay believes that it has defenses to the complaint, although several
of the claims present potential risks to Ramsay. The most significant of these
are RoTech's claims with respect to the disallowance of various assets of Apex's
subsidiaries as admitted assets by the Louisiana and Alabama Departments of
Insurance, which claims total over $2 million. While Ramsay has defenses to
these claims, there is a risk that RoTech could convince a jury that
misrepresentations were made, or that disclosures were inadequate. In addition,
RoTech's claim with respect to understated accounts payable and overstated
assets, which totals approximately $440,000, would be difficult to defend if
RoTech has credible back-up documentation supporting the claim. The aggregate
damages sought with respect to these claims total approximately $2.5 million.
Moreover, of course, even if Ramsay is successful in reducing these damages, or
even eliminating the claims, there could be significant legal expenses
associated with the defense of this case.
Although we intend to contest vigorously any position which we consider
adverse, we cannot predict the outcome of these matters at this time.
THE FAILURE OF RAMSAY AND ITS SUPPLIERS OR OTHER THIRD PARTY BUSINESSES TO BE
YEAR 2000 COMPLIANT COULD HAVE AN ADVERSE EFFECT ON OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Many existing computer programs were designed and developed without
considering the upcoming change in the century, which could lead to the failure
of computer applications or create erroneous results by or at the year 2000.
This issue is referred to as the "Year 2000 Issue." The Year 2000 Issue is a
broad business issue, whose impact extends beyond traditional computer hardware
and software to possible failure of automated plant systems and instrumentation,
as well as to business third parties. Also, there can be no guarantee that third
parties of business important to us will successfully reprogram or replace, and
test, all of their own computer hardware, software and process control systems
to ensure the systems are Year 2000 compliant. Failure by us, suppliers or other
third party businesses important to us, to become Year 2000 compliant on a
timely basis could have a material adverse effect on our financial position and
results of operations. We are unable to quantify the effects on our business as
a result of Year 2000 compliance issues.
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THE ISSUANCE OF ADDITIONAL COMMON STOCK TO FINANCE ACQUISITIONS COULD DECREASE
THE VALUE OF THE SHARES OF COMMON STOCK OUTSTANDING
Ramsay intends to pursue growth of its business through acquisitions
and to finance these acquisitions partially through the issuance of additional
common stock. The issuance of additional shares of common stock in acquisition
transactions could decrease the value of the shares of common stock outstanding.
IF THE LOW TRADING VOLUME OF RAMSAY'S COMMON STOCK CONTINUES, PURCHASERS OF OUR
COMMON STOCK MAY BE UNABLE TO SELL THEIR SHARES AT THE TIME OR PRICE DESIRED
The trading volume for our common stock, as reported on The Nasdaq
Stock Market, averaged 29,383 shares per week during the three month period
ended December 31, 1998. As a result, purchasers of our common stock may be
unable to sell the common stock at the time or at the price desired. While
Ramsay is not aware of any shareholders that are currently having difficulty
selling their shares due to low trading volume, the trading volume of the common
stock is lower than many other similarly situated companies listed on the Nasdaq
Stock Market.
IF WE ARE NOT SUCCESSFUL EXPANDING WITHIN AND MEETING THE NEW DEMANDS OF THE
AT-RISK YOUTH INDUSTRY, OUR BUSINESS AND RESULTS OF OPERATIONS WOULD SUFFER
In February 1998, we announced a change in our strategic direction in
order to focus on becoming a leader in providing and managing treatment and
educational programs for troubled youths and adolescents. Since that time, we
have pared down operations through the sale of businesses and assets, including
our behavioral managed care business and a number of inpatient psychiatric
hospital facilities, which we decided were not essential to our objectives in
the youth services field. As a result of our changes in strategic direction and
the related sales of assets, we no longer provide a full range of behavioral
health services, but have concentrated existing operations on the at-risk youth
service industry. Currently, we are a significantly smaller company focused on a
narrower market.
Our business strategy is to take maximum advantage of existing
operations through focusing on, and expanding within, the at-risk youth
industry. Our aim is to achieve this expansion by establishing or acquiring
additional residential treatment centers and group homes, or companies which own
these types of facilities, and establishing or acquiring companies which provide
educational services. We may not be successful in expanding within this
industry, and our business may not be profitable once we have expanded within
it. Also, the at-risk youth industry will subject us to new management demands
and expose us to differing areas of liability. For example, providing services
solely for at-risk youth will likely require heightened supervision of the
children and young adults under Ramsay's care. Even a momentary lapse in
appropriate supervision could expose Ramsay to liability.
IF WE ARE UNABLE TO COMPLETE BUSINESS ACQUISITIONS, RAMSAY'S GROWTH MAY BE
NEGATIVELY AFFECTED
One way we may expand in the at-risk youth industry is to acquire
companies already engaged in the provision of treatment and educational services
for troubled youth. This will
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subject us to a number of risks, including the possible increase in our
indebtedness, the possible inability to integrate the operations of the acquired
business with ours, the diversion of our management's attention from their other
business activities and the potential inability to retain key managers and
employees of any acquired business. In addition, we cannot predict whether we
will actually make acquisitions of complimentary businesses or how many
businesses we will actually acquire. Failure to complete acquisitions may
negatively affect Ramsay's growth. Finally, our credit facility restricts the
amount we can borrow in order to make acquisitions and requires consent from our
lender before we can make an acquisition. Based on the terms of our credit
facility, our lenders can give or withhold consent at their sole and absolute
discretion and may require us to provide additional collateral security.
Ramsay's credit facility consists of:
- a term loan of $8,000,000
- a revolving credit facility equal to the lesser of $8,000,000
or the borrowing base of Ramsay's receivables
- an acquisition loan commitment of up to $6,000,000
The acquisition loan commitment begins on March 1, 1999 and expires
October 29, 1999. acquisition loan requests cannot be less than $500,000.
Amounts repaid with respect to the acquisition loans may not be reborrowed.
IF WE CANNOT COMPLY WITH CHANGING FEDERAL, STATE AND LOCAL REGULATIONS RELATING
TO PATIENT REFERRALS THE GOVERNMENT COULD FINE US, SUSPEND OUR OPERATIONS,
EXCLUDE US FROM PARTICIPATION IN GOVERNMENT REIMBURSEMENT PROGRAMS OR REVOKE OUR
LICENSES
Various Federal, state and local laws regulate our businesses and
frequently change. These laws regulate many aspects of our business, including
licensure, billing, financial and payment relationships, referrals, direct
employment of licensed healthcare professionals, conduct of operations, the
non-profit status of hospitals and other entities with whom we do business, and
certification under Medicare and Medicaid. We expect to comply with applicable
regulatory requirements, although there can be no assurance that we will. If we
cannot comply with these, or other regulations, the government could fine us,
temporarily suspend our operations, exclude us from participation in government
reimbursement or payment programs or revoke our licenses. We cannot predict how
these laws or regulations will change or how a change might effect our
operations.
Existing Federal laws governing Medicare, as well as some state laws,
regulate various aspects of the relationship between providers like us, and
their referral sources, including physicians, hospitals and other health care
providers. The Social Security Act and several of its healthcare laws, prohibit
providers and others from receiving compensation for either making a referral
for or ordering a Medicare-covered service or item. These laws also prohibit
physicians, subject to several exceptions, from making referrals to several
entities, including hospitals, in which they will benefit financially. Violation
of these laws is punishable by civil and criminal penalties and exclusion from
the Medicare program. In addition, some states have passed similar
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legislation which prohibits the referral of patients who pay directly for their
own care. We believe that we are currently in compliance with these laws,
although it is possible that we are not as these laws are often complicated and
vague.
IF THE COST OF PROVIDING SERVICES TO OUR PATIENTS EXCEEDS THE AMOUNT OF
REIMBURSEMENT WE RECEIVE FROM THIRD-PARTY PAYORS, OUR FINANCIAL CONDITION AND
RESULTS OF OPERATIONS WOULD SUFFER
We receive our operating revenues mostly from third-party reimbursement
and payment programs, including commercial insurance programs (approximately
14%), government insurance programs like Medicare and Medicaid and other
governmental payment and aid programs (approximately 81%). It is possible that
payments under these provisions may not cover all of the costs of the services
provided. Also, changes in the reimbursement and payment policies of these
programs may adversely affect our financial condition and results of operations.
Our business has been and will continue to be affected by the actions
and policies of payors for these services. Payors are continually trying to
revise payment procedures in their favor. For example, payors try to monitor
spending in order to keep costs down through several methods, including
prescreening patients before they receive care and continually monitoring the
patients while they are receiving care. It is possible that these actions could
adversely affect our financial condition and results of operations.
IF INVESTORS PURCHASE OUR COMMON STOCK, IT IS UNLIKELY THAT THEY WILL RECEIVE
CASH DIVIDENDS AND THE MARKET PRICE OF OUR STOCK MAY NOT INCREASE
We have never declared any cash dividends on our common stock. In
addition, under the terms of our credit facility, we are not allowed to do so in
the future. We expect to use our future earnings to support the continued growth
of our business, not to return it to our stockholders in the form of a dividend.
Therefore, if our business does not continue to grow and the market price of our
stock does not increase, investors may not realize a return on their investment.
A decision to declare a cash dividend on our common stock is exclusively that of
our board of directors, and then, only if our credit facility allows it.
ANY ANNOUNCEMENTS REGARDING REFORM MEASURES, GOVERNMENT PROGRAM SPENDING OR
FLUCTUATIONS IN OUR EARNINGS COULD CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO
FLUCTUATE
We believe that several factors may affect the market price of our
common stock. For example, announcements regarding healthcare and educational
reform measures and other providers, reductions in projected government
healthcare and educational spending, and variations in our financial results
could cause the market price of our common stock to increase or decrease. Any
negative announcements regarding reform measures or program spending or about
our earnings could decrease the market price of our common stock. As a result,
the market for our common stock may have price fluctuations unrelated to our
operating performance. Trading volume fluctuations could occur as a result of
any reduction in the price of our common stock.
Some of the information in this prospectus may contain forward-looking
statements. You can identify these statements by the use of forward-looking
terminology like "may," "will,"
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"expect," "anticipate," "estimate," "continue" or other similar words. These
statements discuss future expectations, contain projections of results of
operations or of financial condition or state other "forward-looking"
information. When considering these forward-looking statements, you should keep
in mind the risk factors and other cautionary statements in this prospectus. The
risk factors noted in this section and other factors noted throughout this
prospectus could cause our actual results to differ materially from those
contained in any forward-looking statement.
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THE COMPANY
GENERAL
Ramsay Youth Services, Inc. is a leading provider and manager of
diversified treatment and educational programs for at-risk and troubled youth in
residential and non-residential settings nationwide.
On February 19, 1998, Ramsay announced a change in strategic direction
in order to focus on becoming a leader in the at-risk youth industry. To that
end, in February 1998, management identified for divestiture those businesses
and facilities which were not essential to its strategic objectives in the youth
services field. In June 1998, Ramsay sold its behavioral managed care business
and its Greenbrier facility for an aggregate amount of $21.6 million and in
September 1998, we completed the sales of a number of inpatient psychiatric
hospitals for $29.6 million. We applied the net proceeds from these sales to
reduce $41.5 million of indebtedness and to redeem $2.5 million of Series 1997
preferred stock, all held by an unaffiliated financial institution. The
remaining business represents Ramsay's youth service operations and is comprised
of seven youth facilities with 713 beds and six group homes with 66 beds. Ramsay
also provides a range of outpatient services and day treatment programs tailored
for the at-risk and troubled youth population.
Throughout its youth facilities and group homes, Ramsay offers
specialized services to those adolescents affected with behavioral disorders,
psychoses, emotional disorders, as well as sexual and juvenile offenders. Within
these environments, clinical and program teams incorporate therapeutic,
educational and vocational services with cognitive, behavioral and social
rehabilitation programs. These highly structured programs assist troubled youth
in learning how to change ineffective or violent behavior and cope with the
difficulties and stresses of life. Ramsay's specialized services and programs
are geared toward the following populations:
- juvenile offenders
- adolescent females
- children and adolescents with emotional and behavioral
disorders
- sexual offenders
- substance abusers
- youth with developmental disabilities.
In response to state, community and agencies' needs to secure
appropriate placements for special needs youth, Ramsay offers residential
treatment facilities, group homes, special education programs and
community-based services. The primary objective of our programs is to provide
the optimal opportunity for habitation and integration of at-risk and troubled
youth into their communities as responsible individuals and productive citizens.
On January 13, 1999, Ramsay's board of directors approved a
one-for-three reverse stock split which became effective on March 15, 1999. As a
result, all common share and per share amounts included in this document have
been restated to show the effects of this reverse stock split.
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FORWARD-LOOKING STATEMENTS
In connection with the "safe-harbor" provisions of the Private
Securities Litigation Reform Act of 1995, we note that this prospectus,
including the documents incorporated by reference, contains forward-looking
statements about Ramsay. Ramsay is setting forth in this prospectus cautionary
statements identifying important factors that may cause our actual results to
differ materially from those set forth in any forward-looking statements or
information made by or on behalf of or concerning Ramsay. Some of the most
significant factors include the following:
- accelerating changes occurring in the at-risk youth industry,
including competition from consolidating and integrated
provider systems and limitations on reimbursement rates
- federal and state governmental budgetary constraints which
could have the effect of limiting the amount of funds
available to support governmental programs
- statutory, regulatory and administrative changes or
interpretations of existing statutory and regulatory
provisions affecting the conduct of Ramsay's business and
affecting current and prior reimbursement for Ramsay's
services
- Ramsay's inability to successfully implement its new strategic
direction of providing treatment and education programs for
at-risk and troubled youth
- the other matters set forth under the caption "RISK FACTORS"
above.
RECENT TRANSACTIONS IN COMMON STOCK
On October 30, 1998, Ramsay completed the private placement of an
aggregate of 1,037,038 shares of common stock to its Chief Executive Officer,
Paul Ramsay Holdings Pty. Limited, a corporate affiliate of Paul J. Ramsay, the
Chairman of the Board of Ramsay and its principal stockholder, and other
unrelated persons, all at a price per share of $3 3/8. The price per share
represented the closing bid price of the common stock on The Nasdaq Stock Market
on October 26, 1998, which was the date of the various subscription agreements.
These shares are included in the shares of common stock covered by this
prospectus.
In addition, on October 30, 1998, Ramsay issued 177,778 shares of
common stock to Ramsay Holdings, in exchange for $600,000 of principal amount of
junior subordinated indebtedness that Ramsay owed to Ramsay Holdings. As part of
the exchange agreement entered into between Ramsay and Ramsay Holdings to affect
the foregoing exchange, Ramsay agreed to issue additional shares of common stock
to Ramsay Holdings in exchange for $4 million of Ramsay's Class B preferred
stock, Series 1997-A, together with all accrued and unpaid dividends, and an
additional $400,000 of principal amount of junior subordinated indebtedness owed
by Ramsay to Ramsay Holdings. This latter exchange was effected on December 1,
1998 at a price per share of $3 3/8. The price per share represented the closing
bid price of the common stock on The Nasdaq Stock Market on October 26, 1998
which was the date of the exchange agreement. The transaction was effected after
the expiration of the waiting
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period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. In the
latter exchange, we issued 1,428,740 additional shares of common stock to Ramsay
Holdings.
On December 8, 1998, Ramsay completed the acquisition of The Rader
Group, Inc. for $1 million in cash and earn-out payments payable in the future
if earning targets are achieved. In addition, one of Ramsay's subsidiaries
entered into an employment agreement with Bill T. Rader. As part of the
employment arrangement, Mr. Rader received 33,333 shares of common stock, which
shares are included in the shares of common stock this prospectus covers.
On December 16, 1998, Ramsay entered into an agreement with Ramsay
Holdings, Ramsay Holdings HSA Limited and Paul Ramsay Hospitals Pty. Limited to:
- Convert Ramsay's Class B preferred stock, Series C and Class B
preferred stock, Series 1996, together with accrued and unpaid
dividends of $618,908, into an aggregate of 1,198,756 shares
of common stock.
- Exchange $6,883,553 of principal amount of junior subordinated
indebtedness owed by Ramsay, together with accrued and unpaid
interest of $123,219, for 1,384,054 shares of common stock.
This exchange was effected at a price per share of $5 1/16.
The price per share represented the closing bid price of the
common stock on The Nasdaq Stock Market on December 16, 1998,
which was the date of the exchange agreement.
USE OF PROCEEDS
Ramsay will not receive any of the proceeds from the sale of the shares
offered in this prospectus. However, we received $3,500,000 when we originally
sold 1,037,038 of the shares of the common stock covered by this prospectus.
This amount was used for several corporate purposes.
SELLING SECURITYHOLDERS
The following selling securityholders beneficially own as of January 1,
1999 and may offer under this prospectus the number of shares of common stock
set forth opposite their respective names. The shares offered under this
prospectus may be offered from time to time by the selling securityholders named
below, their nominees, transferees or their donees. The selling securityholders
are under no obligation to sell all or any portion of the shares pursuant to
this prospectus. In addition, because the selling securityholders are not
obligated to sell all or a portion of their shares pursuant to this prospectus,
Ramsay is unable to ascertain the number of shares of common stock that will be
beneficially owned by each selling securityholder following the termination of
the offering.
Some of the selling securityholders have a relationship with Ramsay.
Luis E. Lamela has been the Chief Executive Officer of Ramsay since January 1998
and a director of Ramsay since 1996. The figures in the following table for Paul
Ramsay Holdings Pty. Limited include all shares beneficially owned by Paul
Ramsay Holdings HSA Limited, a Barbados corporation, a wholly owned subsidiary
of Ramsay Holdings and a corporate affiliate of Mr. Ramsay, but do
12
<PAGE> 15
not include 798,246 shares of common stock beneficially owned by Paul Ramsay
Hospitals Pty. Limited, an Australian corporation and the parent corporation of
Ramsay Holdings. Haythe & Curley has served as counsel to Ramsay since 1987, and
Thomas M. Haythe, a member of that firm, has been a director of Ramsay since
1987. See "LEGAL MATTERS."
Ramsay will incur expenses in respect of this offering in an amount
estimated to be $50,000 in the aggregate. Except as otherwise provided in this
prospectus, no selling securityholder has held any position or office or had any
other material relationship with Ramsay within the past three years. The selling
securityholders will receive all of the proceeds from the sale of the shares
offered. Ramsay will not receive any proceeds from the sale of these shares. See
"USE OF PROCEEDS" and "PLAN OF DISTRIBUTION."
The information in the table below concerning the selling
securityholders is based on information provided to, or known by, Ramsay.
Information concerning the selling securityholders may change from time to time
after the date of this prospectus. See "RISK FACTORS," "PLAN OF Distribution"
and "DESCRIPTION OF CAPITAL STOCK."
<TABLE>
<CAPTION>
Shares of Shares of
Shares Of Common Stock Common Stock
Common Stock Acquirable Acquirable
Shares Of Common Offered Upon Upon
Stock Owned Prior Pursuant Exercise of Exercise of
Name of Selling Securityholder To Offering To Offering Options Warrants
- ------------------------------ ----------- ----------- ------- --------
<S> <C> <C> <C> <C>
Dauphin Capital Partners I, LP.................... 444,444 444,444 -- --
1921 West Joppa Road, Reston, MD 21204-1848
Luis E. Lamela.................................... 393,304 296,296 38,333 150,015
Paul Ramsay Holdings Pty. Limited................. 4,637,691 160,000 83,333 --
Moises Hernandez, M.D. ........................... 59,259 59,259 -- --
Bill T. Rader..................................... 33,333 33,333 -- --
Thomas Hodapp..................................... 29,630 29,630 -- --
Haythe & Curley................................... 29,630 29,630 -- --
Sanford R. Robertson.............................. 14,816 14,816 -- --
Aaron Beam........................................ 9,724 2,963 7,777 --
TOTAL........................................ 1,070,371
</TABLE>
13
<PAGE> 16
PLAN OF DISTRIBUTION
All of the shares offered under this prospectus are being offered on
behalf of the selling securityholders. The shares are comprised of 1,037,038
shares of common stock issued by Ramsay in a private placement in October 1998
and 33,333 shares of common stock issued by Ramsay in connection with employment
arrangements entered into in connection with an acquisition Ramsay completed in
December 1998. See "RECENT TRANSACTIONS IN COMMON STOCK."
The selling security holders may effect sales of the shares directly to
purchasers as principals or through one or more underwriters, brokers, dealers
or agents from time to time in one or more transactions, including block
transactions. Any sales of the shares may be effected through the Nasdaq Stock
Market, in private transactions or otherwise. The selling security holders may
sell the shares at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at negotiated prices. If the selling
securityholders effect sales through underwriters, brokers, dealers or agents,
these firms may receive compensation in the form of discounts, concessions or
commissions from the selling securityholders or the purchasers of the shares for
whom they may act as agent, principal or both. The selling security holders will
select those persons who act as broker-dealers or underwriters in connection
with the sale of the shares and may have other business relationships with, and
perform services for, Ramsay. Any selling securityholder, underwriter or
broker-dealer who participates in the sale of the shares may be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act. Any
commissions received by any underwriter or broker-dealer and any profit on any
sale of the shares as principal may be deemed to be underwriting discounts and
commissions under the Securities Act.
The anti-manipulation provisions of Rules 101 through 104 under the
Exchange Act of 1934 may apply to purchases and sales of shares of common stock
by the selling securityholders. In addition, there are restrictions on
market-making activities by persons engaged in the distribution of the common
stock.
Under the securities laws of various states, the shares may be sold in
those states only through registered or licensed brokers or dealers. In
addition, in various states the shares may not be able to be sold unless the
common stock has been registered or qualified for sale in the state or an
exemption from registration or qualification is available and is complied with.
Ramsay is required to pay expenses incident to the registration,
offering and sale of the shares pursuant to this offering. Ramsay has also
agreed to indemnify the selling securityholders, their partners, officers,
directors and each of their controlling persons, if any, against various
liabilities, including liabilities under the Securities Act. Ramsay estimates
that its expenses in connection with the offering will be approximately $50,000
in the aggregate.
Ramsay has advised the selling securityholders that if a particular
offer of shares is to be made on terms constituting a material change from the
information set forth above, then to the extent required, a prospectus
supplement must be distributed setting forth the terms and related information
must be used.
14
<PAGE> 17
DESCRIPTION OF COMMON STOCK
Ramsay's authorized capital stock consists of 30,000,000 shares of
common stock, $.01 par value, 800,000 shares of Class A preferred stock, $1.00
par value, and 2,000,000 shares of Class B preferred stock, $1.00 par value,
issuable in series.
At January 1, 1999, Ramsay had issued and outstanding 8,885,692 shares
of common stock. Each outstanding share of common stock is entitled to one vote
on all matters submitted to a vote of stockholders. The common stock does not
have cumulative voting rights. Presently outstanding shares of common stock are
fully paid and non-assessable. In the event of any liquidation, dissolution or
winding-up of the affairs of Ramsay, the holders of common stock will be
entitled to share ratably in its assets remaining after provision for payment of
creditors and after the liquidation preference of any Class B preferred stock
outstanding at the time.
Subject to the rights of the holders of the Class B preferred stock, no
shares of which are issued or outstanding on the date hereof, the holders of the
common stock are entitled to receive dividends when and if declared by the board
of directors out of funds legally available for that purpose. Ramsay's ability
to pay dividends is restricted under the terms of the loan agreements to which
Ramsay is a party.
The transfer agent for the common stock is First Union National Bank of
North Carolina.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Ramsay's certificate of incorporation, as amended, includes provisions
to eliminate the personal liability of Ramsay's directors to the fullest extent
permitted by Delaware law. Under current law, exculpation generally extends to
breaches of fiduciary duty, except for the following:
- breaches of a person's duty of loyalty
- acts or omissions not in good faith or which involve
intentional misconduct
- those instances where an improper personal benefit was
received
- the declaration of dividends in violation of applicable law.
Ramsay's by-laws provide that Ramsay shall indemnify to the fullest
extent permitted by Delaware law any person who is, or is threatened to be, made
a party to any action because he or she is or was a director or officer of
Ramsay.
It is the position of the Securities and Exchange Commission that to
the extent indemnification for liabilities arising under the Securities Act is
allowed for any director or officer of Ramsay under Delaware law, its
certificate of incorporation or by-laws as a means of indemnifying any of them
against those liabilities, that indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
15
<PAGE> 18
INCORPORATION OF INFORMATION BY REFERENCE
Ramsay is entitled to incorporate documents filed with the Securities
and Exchange Commission into this prospectus simply by referencing those
documents in this prospectus. That means the information in those documents will
be deemed to have been disclosed in this prospectus as if it was fully set forth
in this prospectus and, by virtue of receiving this prospectus, you will be
deemed to have had access to that information.
The following documents filed by Ramsay with the Securities and
Exchange Commission as required by the Exchange Act are incorporated by
reference into this prospectus and made a part of this prospectus as of their
respective dates:
1. Ramsay's transition report on Form 10-K for the six months
ended December 31, 1998, filed with the Securities and
Exchange Commission on March 29, 1999.
2. Ramsay's report on Form 10-Q for the quarter ended March 31,
1999, filed with the Securities and Exchange Commission on May
12, 1999.
All documents Ramsay files under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act after the date of this prospectus and before the termination of
the offering shall be considered incorporated by reference into this prospectus.
These documents shall be considered a part of this prospectus from their
respective filing dates. Statements contained in this prospectus shall be
considered modified or superseded for purposes of this prospectus to the extent
set forth below. Statements contained in a document incorporated or considered
to be incorporated by reference in this prospectus shall also be considered
modified or superseded for purposes of this prospectus to the extent set forth
below. Both of these types of statements shall be modified or superseded to the
extent that a statement contained in this prospectus, or in any subsequently
filed document, which also is or considered to be incorporated by reference in
this prospectus, modifies or supersedes the statement. Any statement so modified
or superseded shall not constitute a part of this prospectus, except as so
modified or superseded.
Ramsay will provide, without charge, to each person to whom a copy of
this prospectus is delivered, upon the request of that person, a copy of any or
all of the documents incorporated by reference, excluding the exhibits to the
documents. Requests for copies should be directed to Ramsay Youth Services,
Inc., Columbus Center, One Alhambra Plaza, Suite 750, Coral Gables, Florida
33134, Attention: Secretary.
16
<PAGE> 19
LEGAL MATTERS
The law firm of Haythe & Curley, New York, New York will pass upon the
validity of the shares of common stock offered under this prospectus. Haythe &
Curley is also one of the selling securityholders and Thomas M. Haythe, a member
of that firm, is a director of Ramsay. See "SELLING SECURITYHOLDERS."
EXPERTS
Ernst & Young LLP, independent certified public accountants, have
audited our consolidated financial statements included in our Transition Report
on form 10-K for the six month period ended December 31, 1998, as set forth in
their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements are
incorporated by reference in reliance on Ernst & Young LLP's report, given on
their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
Ramsay has filed with the Securities and Exchange Commission under the
Securities Act a registration statement on Form S-3. This prospectus, which
constitutes a part of the registration statement, does not contain all of the
information set forth in the registration statement, various items are contained
in exhibits and schedules as permitted by the rules and regulations of the
Securities and Exchange Commission.
Ramsay is subject to the informational requirements of the Exchange Act
and, as a result, files periodic reports, proxy statements and other information
with the Securities and Exchange Commission. Reports and other information filed
by Ramsay may be inspected and copied at the public reference facilities
maintained by the Securities and Exchange Commission at its principal offices
located at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at the following regional offices of the Securities and Exchange
Commission: Seven World Trade Center, 13th Floor, New York, New York 10048, and
500 West Madison Street, Suite 1400, Chicago, Illinois 60601. Copies of reports
and other information filed by Ramsay may be obtained by mail from the Public
Reference Section of the Securities and Exchange Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Securities
and Exchange Commission maintains a Web site at http://www.sec.gov containing
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission, including Ramsay.
Material filed by Ramsay can also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION OR
REPRESENTATIONS PROVIDED IN THIS PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO
PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE
SECURITIES 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 OF THE DOCUMENT.
17
<PAGE> 20
- --------------------------------------------------------------------------------
1,070,371 SHARES
COMMON STOCK
RAMSAY YOUTH SERVICES, INC.
--------------------------------------
PROSPECTUS
--------------------------------------
June 25, 1999
- --------------------------------------------------------------------------------
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be incurred and borne by
Ramsay in connection with the sale of the shares offered in this prospectus. All
amounts shown are estimates, except for the Securities and Exchange Commission
and Nasdaq Stock Market filing fees.
<TABLE>
<S> <C>
Securities and Exchange Commission filing fee................................. $ 1,813
Nasdaq Stock Market additional share listing fee.............................. $ 906
Legal fees and expenses....................................................... $25,000
Accounting fees and expenses.................................................. $10,000
Miscellaneous................................................................. $12,281
-------
Total fees and expenses.................................................. $50,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, among other
things, and subject to various conditions, authorizes Ramsay to indemnify its
officers and directors against various liabilities and expenses incurred by
these officers and directors in connection with the claims made against them as
a result of their being an officer or director. Ramsay's By-Laws provide that
Ramsay shall indemnify any person who is or was a director or officer of Ramsay
and is a party or is threatened to be made a party to any action or proceeding
to the fullest extent permitted by Delaware law.
Article IV, Section 4.1 of Ramsay's By-laws provides, in part, as
follows:
Each person who was or is a party or is threatened to be made a party
or is involved in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative, or investigative, other
than an action by or in the right of the corporation, by reason of the fact that
he is or was a director or officer of the corporation, or is or was serving at
the request of the corporation as a director, officer or fiduciary of another
corporation, partnership, joint venture, trust of other enterprise, shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
subsequently be amended, against all expenses, liability and loss, including
attorneys' fees, judgments, fines and amounts paid in settlement, actually and
reasonably incurred by him in connection with the action, suit or proceeding if
he acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. In the case of any amendment to the Delaware General Corporation
Law, the indemnity applies only to the extent that the amendment permits the
corporation to provide broader indemnification rights than the Law permitted
the corporation to provide prior to the amendment.
II-1
<PAGE> 22
ITEM 16. EXHIBITS.
The following is a list of exhibits filed as a part of this
registration statement:
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
-------------- -----------------------
<S> <C>
5.1 Opinion of Haythe & Curley (regarding the validity of the shares of
Common Stock).
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Power of Attorney (included on page II-3).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) Ramsay undertakes the following:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement
to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to information in this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment that contains a form
of prospectus shall be considered a new registration statement relating
to the securities offered in that prospectus, and the offering of the
securities at that time shall be considered 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.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of Ramsay's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act that is incorporated by
reference in this registration statement shall be considered a new
registration statement relating to the securities offered in this
prospectus, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of Ramsay pursuant to the foregoing provisions, or otherwise, Ramsay has been
advised that in the opinion of the Securities and Exchange Commission the
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against liabilities, other than the payment by Ramsay of expenses incurred or
paid by a director, officer or controlling person of Ramsay in the successful
defense of any action, suit or proceeding, is asserted by a director, officer or
controlling person in connection with the securities being registered, Ramsay
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 the indemnification by it is against the public policy as
expressed in the Securities Act and will be governed by the final adjudication
of the issue.
II-2
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act, Ramsay Youth
Services certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Coral Gables, State of Florida, on June 25, 1999.
RAMSAY YOUTH SERVICES, INC.
By: /s/ Luis E. Lamela
-----------------------------------------
Luis E. Lamela
Chief Executive Officer and
Principal Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Date Signature/Title
---- ---------------
<S> <C>
Dated: June 25, 1999 /s/ Luis E. Lamela
----------------------------------------------
Luis E. Lamela
Chief Executive Officer,
Principal Executive Officer and
Director
Dated: June 25, 1999 /s/ Marcio Cabrera
----------------------------------------------
Marcio Cabrera
Principal Financial Officer
and Principal Accounting Officer
Dated: June 25, 1999 /s/ Paul J. Ramsay*
----------------------------------------------
Paul J. Ramsay
Chairman of the Board and Director
Dated: June 25, 1999 /s/ Aaron Beam, Jr.*
----------------------------------------------
Aaron Beam, Jr.
Director
Dated: June 25, 1999 /s/ Peter J. Evans*
----------------------------------------------
Peter J. Evans
Director
</TABLE>
II-3
<PAGE> 24
<TABLE>
<S> <C>
Dated: June 25, 1999 /s/ Thomas M. Haythe*
----------------------------------------------
Thomas M. Haythe
Director
Dated: June 25, 1999 /s/ Steven J. Shulman*
----------------------------------------------
Steven J. Shulman
Director
Dated: June 25, 1999 /s/ Michael S. Siddle*
----------------------------------------------
Michael S. Siddle
Director
</TABLE>
*By Luis E. Lamela, attorney-in-fact
/s/ Luis E. Lamela
- -------------------------------------
Luis E. Lamela
II-4
<PAGE> 25
INDEX TO EXHIBITS FILED WITH
FORM S-3 REGISTRATION STATEMENT
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
-------------- -----------------------
<S> <C>
5.1* Opinion of Haythe & Curley (regarding the validity of the shares of
Common Stock).
23.1 Consent of Ernst & Young LLP, Independent Auditors.
24.1* Power of Attorney (included on page II-3).
</TABLE>
- ----------
* Previously filed.
<PAGE> 1
Exhibit 23.1
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 3 to the Registration Statement (Form S-3 No. 333-70819) and
related Prospectus of Ramsey Youth Services, Inc. for the registration of
1,070,371 shares of its common stock and to the incorporation by reference
therein of our report dated March 15, 1999, with respect to the consolidated
financial statements of Ramsay Youth Services, Inc. included in its Transition
Report (Form 10-K) for the six month period ended December 31, 1998, filed with
the Securities and Exchange Commission.
Ernst & Young LLP
June 25, 1999
Miami, Florida
