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As filed with the Securities and Exchange Commission on January 11, 2001
SEC File No. _____
Registration No. 333- 16049
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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INTERWEST HOME MEDICAL, INC.
(Exact name of Registrant as specified in its charter)
Utah 87-0462042
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
235 East 6100 South
Salt Lake City, Utah 84107-7349
(Address of principal executive offices)
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INTERWEST HOME MEDICAL, INC.
2000 STOCK INCENTIVE PLAN;
1999 SPECIFIC GRANTS OF OPTIONS
TO OFFICERS AND DIRECTORS; and
1997 SPECIFIC GRANTS OF OPTIONS TO NON-EMPLOYEE DIRECTORS
(Full title of plans)
James E. Robinson
Interwest Home Medical, Inc.
235 East 6100 South
Salt Lake City, UT 84107
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(Name and address of agent for service)
(801) 261-5100
(Telephone number of agent for service)
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with copies to:
A.O. Headman, Jr., Esq.
Cohne Rappaport & Segal, PC.
525 East 100 South, Fifth Floor
Salt Lake City, Utah 841021
(801) 532-2666
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum
Title of Securities Amount to Offering Price Aggregate Offering Amount of
to be Registered be Registered Per Unit Price Registration Fee
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 600,000 (1) $3.12.(2) $1,883,500 $497.24
(No Par Value)
Common Stock 120,000 (3) $4.00 $ 480,000 $126.72
(No Par Value)
Common Stock 340,000 (4) $3.00 $1,020,000 $270.30
(No Par Value)
==================================================================================================
TOTAL $3,383,500 $894.26
==================================================================================================
</TABLE>
(Footnotes on following page)
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Pursuant to Rule 416, this Registration Statement also covers such
indeterminable number of additional shares as may become issuable pursuant to
terms designed to prevent dilution resulting from stock splits, stock dividends
or similar events.
(1) Represents shares of common stock reserved for issuance pursuant to
options granted or available for grant under the Registrant's 2000 Stock
Incentive Plan. The Registrant has heretofore granted its employees options to
purchase 220,000 of shares under this Plan, none of which have been exercised.
(2) Estimated solely for the purpose of calculating the registration fee
for 600,000 shares under the Interwest Home Medical, Inc. 2000 Stock Incentive
Plan on the basis of (i) the average exercise price for the 220,000 shares
underlying options which have been granted - ($3.16 per share); and (ii) for the
remaining 380,000 shares on the basis of average of the high and low prices
reported for shares of Interwest Home Medical, Inc. common stock on January 2
,2001, as reported by NASDAQ's Small Cap Market in accordance with Rule 457 (h)
promulgated under the Securities Act of 1933, as amended (the "Act")
(3) Represents common stock reserved for issuance pursuant to options
granted to the Registrant's non-employee directors on April 1, 1997 which allow
each non-employee director to purchase 40,000 shares of the registrant's common
stock at $4.00 per share. None of such options have been exercised.
(4) Represents 120,000 shares of common stock reserved for issuance
pursuant to options granted to the Registrant's non-employee directors on
December 13, 1999 which allow each non-employee director to purchase 40,000
shares of the registrant's common stock at $3.00 per share. Also represents
12,000 shares and 120,000 shares of common stock reserved for issuance pursuant
to options granted on December 13, 1999 to James E. Robinson, the Registrant's
Chief Executive Officer exercisable at $3.00 and $3.30 per share respectively.
Also represents 88,000 shares of common stock reserved for issuance pursuant to
an option granted on December 13, 1999 to Que H. Christensen, the Registrant's
Chief Operating Officer exercisable at $3.00 . None of such options have been
exercised.
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EXPLANATORY NOTE
Pursuant to Rule 428(b) (1) under the Securities Act of 1933, as amended
(the "Securities Act"), an Information Statement will be distributed to holders
of options granted under (i) the Interwest Home Medical, Inc. 2000 Stock
Incentive Plan; (ii) specific grants of options to officers and non-employee
directors on December 13, 1999; and (iii) specific grants of options to
non-employee directors on April 1, 1997. The Information Statements and the
documents incorporated by reference in this Registration Statement pursuant to
Item 3 of Part II of this Form S-8, taken together, constitute a prospectus that
meets the requirements of the Securities Act.
-------------------------------
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information.
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information.
Not required to be filed with this Registration Statement
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. Incorporation of Documents By Reference.
The following documents filed by Interwest Home Medical, Inc. with the
Securities and Exchange Commission as of their respective dates are incorporated
by reference in this registration statement:
(a) Registrant's Annual Report on Form 10-K for the fiscal year
ending September 30, 2000, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended.
(b) All other reports, if any, filed by the Registrant pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 since the
end of the fiscal year ended September, 1995.
(c) The description of Registrant's common stock contained in the
Registration Statement on Form 10 filed with the Commission in December,
1983, including any amendments or reports filed for the purpose of
updating such description.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c)
14 and 15(d) of the Securities Exchange Act of 1934 after the date of this
registration statement which indicates that all securities offered
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hereunder have been sold, or which deregisters all securities then remaining
unsold under this registration statement, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents.
From time to time, the Registrant may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and development
activities and similar matters. The Private Securities Litigation Reform Act of
1995 provides a safe harbor for forward-looking statements. In order to comply
with the terms of the safe harbor, the Registrant notes that a variety of
factors could cause the Registrant's actual results and experience to differ
materially from the anticipated results or other expectations expressed in any
of the Registrant's forward-looking statements. The risks and uncertainties that
may affect the operations, performance, development and results of the
Registrant's business include, but are not limited to, the following: (i) the
failure to obtain additional capital for acquisitions and expansion; (ii)
adverse changes in federal and state laws, rules and regulations relating to the
home health care industry, to government reimbursement policies, to private
industry reimbursement policies and to other matters affecting the Registrant's
industry and business; and (iii) continued consolidation by the Registrant's
local, regional and national competitors resulting in increased competition. All
subsequent written and oral forward-looking statements attributable to the
Registrant are expressly qualified in their entirety by the Cautionary
Statements. The Registrant disclaims, however, any intent or obligation to
update its forward-looking statements.
High Leverage. As of September 30, 1999 and 2000, the Registrant had
total stockholder's equity of $11.2 and $12.7 million and total indebtedness of
$21.1 and $21 million. Accordingly, our balance sheet is highly leveraged. This,
in turn, has important consequences to the Registrant. Our ability to obtain
additional financing may be impaired. Additionally, a substantial portion of our
cash flows from operations may be dedicated to the payment of principal and
interest on our indebtedness, thereby reducing the funds available for
operations. The Registrant's leverage will substantially increase our
vulnerability to changes in the industry or adverse changes in our business.
Changing Regulatory Environment. The Registrant's business is subject to
extensive federal, state and local regulation. Political, economic and
regulatory influences are subjecting the health care industry in the United
States to fundamental change.
Changes in System of Medicare Reimbursement. The Balanced Budget Act
("BBA") provided for a 25% reduction in home oxygen reimbursement from Medicare
effective January 1, 1998 and a further reduction of 5% effective January 1,
1999. Compounding these reductions was a freeze on consumer price index updates
for the next five years. Approximately 15% of our net revenues were derived from
reimbursement of oxygen services prior to this reduction in reimbursement. The
reduction in oxygen reimbursement during fiscal 1998 and 1999 had an adverse
impact on our net revenues and results of operations. Additionally, payments
will be frozen for durable medical equipment, excluding orthotic and prosthetic
equipment, and payments for certain reimbursable drugs and biologicals will be
reduced. However, the Balanced Budget Refinement Act ("BBRA") enacted in
November 1999 lifts the freeze imposed in the BBA and provides a modest annual
CPI increase of 0.3% for 2001 and 0.6% for 2002.
Slow Reimbursements. At September 30, 1998, 1999 and 2000, approximately
36%, 32% and 38% of our net revenues were derived from managed care and other
non-governmental third party payors. The increase in the length of time required
to collect receivables owed by managed care and other non-governmental third
party payors is an industry-wide issue. A continuation of the lengthening of the
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amount of time required to collect accounts receivables from managed care
organizations or other payors or our inability to decrease days net sales
outstanding could have a material adverse effect on our financial condition or
results of operations. During fiscal 1998, 1999 and 2000 we terminated
relationships with certain managed care organizations and continues to review
our managed care contracts.
Management conducted an extensive analysis of our outstanding receivable
balances beginning in the late third and continuing through the fourth quarter
of fiscal 2000, and we eventually determined that a $2.8 million one-time
adjustment was necessary. We have implemented enhancements to our billing and
collection processes and systems technology to improve receivables management.
Further, our analysis led us to adopt, beginning October 1, 2000, a modified
policy for the recording of bad debt expenses. There can be no assurance that
our days net sales outstanding will not continue to increase if these payors
continue to delay or deny payments to the Registrant for its services.
Pricing Pressures. Medicare, Medicaid and other payors, including managed
care organizations and traditional indemnity insurers, are attempting to control
and limit increases in health care costs and, in some cases, are decreasing
reimbursement rates. While the Registrant's net revenues from managed care and
other non-governmental payors have increased and are expected to continue to
increase, payments per service from managed care organizations typically have
been lower than Medicare fee schedules and reimbursement from other payors,
resulting in reduced profitability on such services. Other payor and employer
groups, including Medicare, are exerting pricing pressure on home health care
providers, resulting in reduced profitability. Such pricing pressures could have
a material adverse effect on our financial condition or results of operations.
During fiscal 1998, 1999 and 2000 we terminated relationships with certain
managed care organizations as we continue to review our managed care contracts.
Risks Related to Goodwill. At September 30, 1999 and 2000, unamortized
goodwill resulting from acquisitions was approximately $4.4 and $4.6 million, or
approximately 13.7% and 13.8% of total assets, respectively. Goodwill is the
excess of cost over the fair value of the net assets of businesses acquired.
There can be no assurance that the Registrant will ever realize the value of
such goodwill. This goodwill is being amortized on a straight-line basis over 5
to 40 years. We will continue to evaluate on a regular basis whether events or
circumstances have occurred that indicate all or a portion of the carrying
amount of goodwill may no longer be recoverable, in which case an additional
charge to earnings would become necessary. Although at September 30, 1999 and
2000, the net unamortized balance of goodwill is not considered to be impaired
under generally accepted accounting principles, any such future determination
requiring the write-off of a significant portion of unamortized goodwill could
have a material adverse effect on our financial condition or results of
operations.
Risks Associated with Acquisitions. While the Registrant completed four
acquisitions between fiscal 1999 and 2000, the rate of acquisitions we pursue in
the future will depend on a variety of factors, including, legislative and
regulatory developments, regulations and policies concerning reimbursement,
including reimbursement for Medicare, attractiveness of pricing and availability
of acquisition capital at acceptable prices. We intend to concentrate primarily
upon internal growth. Management believes that as a result of Medicare
legislative and regulatory changes and managed care and other competitive
pressures, the home health care industry will continue to consolidate.
The Registrant has encountered collection difficulties from acquired
Accounts Receivable due to: (i) failure to document initial service
authorizations or continued service authorizations in required time frames, (ii)
inability to retain or adequately replace billing representatives with
knowledgeable personnel due
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to the complex billing requirements encountered in the industry, and (iii)
difficulties in converting data from acquired companies to our accounting and
billing system. Consequently, we intend to restrict acquisition of Accounts
Receivable in the future.
When evaluating acquisitions, we focus primarily on growth within our
existing geographic markets, which we believe is generally more profitable than
adding additional operating centers in new markets. See "Strategy." In
attempting to make acquisitions, we compete with other providers, some of which
have greater financial resources than the Registrant. In addition, since the
consideration for acquired businesses may involve cash, notes or the issuance of
shares of common stock, options or warrants, existing stockholders may
experience dilution in the value of their shares of common stock in connection
with such acquisitions. There can be no assurance that we in the future will be
able to negotiate, finance or integrate acquisitions without experiencing
adverse consequences that could have a material adverse effect on the
Registrant's financial condition or results of operations. Acquisitions involve
numerous short and long-term risks, including loss of referral sources,
diversion of management's attention, failure to retain key personnel, loss of
net revenues of the acquired companies, inability to integrate acquisitions
(particularly management information systems) without material disruptions and
unexpected expenses, the possibility of the acquired businesses becoming subject
to regulatory sanctions, potential undisclosed liabilities and the continuing
value of acquired intangible assets. There can be no assurance that any given
acquisition will be consummated, or if consummated, will not materially
adversely affect the Registrant's financial condition or results of operations.
Additionally, because of matters discussed herein that may be beyond our
control, there can be no assurance that suitable acquisitions will continue to
be identified or that acquisitions can be consummated on acceptable terms.
Competition. The home medical equipment services industry is highly
competitive and includes national, regional and local providers. The Registrant
competes with a large number of companies in all areas in which its operations
are located. Our competitors include major national and regional companies,
hospital-owned companies, and numerous local providers. Some current and
potential competitors have or may obtain significantly greater financial and
marketing resources than the Registrant. Accordingly, other companies, including
managed care organizations, hospitals, long-term care providers and health care
providers that currently are not serving the home health care market, may become
competitors. As a result, we could encounter increased competition in the future
that may limit our ability to maintain or increase our market share or otherwise
materially adversely affect our financial condition or results of operations.
Regulatory Compliance. The Registrant is subject to extensive regulation
which govern financial and other arrangements between healthcare providers at
both the federal and state level. At the federal level, such laws include (i)
the Anti-Kickback Statute, which generally prohibits the offer, payment,
solicitation or receipt of any remuneration in return for the referral of
Medicare and Medicaid patients or the purchasing, leasing, ordering or arranging
for any good, facility services or items for which payment can be made under
Medicare and Medicaid, federal and state health care programs, (ii) the Federal
False Claims Act, which prohibits the submission for payment to the federal
government of fraudulent claims, and (iii) "Stark legislation," which generally
prohibits, with limited exceptions, the referrals of patients by a physician to
providers of "designated health services" under the Medicare and Medicaid
programs, including durable medical equipment, where the physician has a
financial relationship with the provider. Violations of these provisions may
result in civil and criminal penalties, loss of licensure and exclusion from
participation in the Medicare and Medicaid programs. Many states have also
adopted statutes and regulations which prohibit provider referrals to an entity
in which the provider has a financial interest, remuneration or fee-splitting
arrangements between health care providers for patient referrals and other types
of financial arrangements with health care providers.
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The federal government, private insurers and various state enforcement
agencies have increased their scrutiny of provider business practices and
claims, particularly in the areas of home health care services and products in
an effort to identify and prosecute parties engaged in fraudulent and abusive
practices. In May 1995, the Clinton Administration instituted Operation Restore
Trust ("ORT"), a health care fraud and abuse initiative focusing on nursing
homes, home health care agencies and durable medical equipment companies. ORT,
which initially focused on companies located in California, Florida, Illinois,
New York and Texas, the states with the largest Medicare populations, has been
expanded to all fifty states. See "Government Regulation." While the Registrant
believes that it is in material compliance with such laws, there can be no
assurance that the practices of the Registrant, if reviewed, would be found to
be in full compliance with such laws or interpretations of such laws.
While the Registrant believes that it is in material compliance with the
fraud and abuse and self-referral laws, there can be no assurance that our
practices, if reviewed, would be found to be in full compliance with such
requirements, as such requirements ultimately may be interpreted. Although we do
not believe we have violated any fraud and abuse laws, there can be no assurance
that future related legislation, either health care or budgetary, related
regulatory changes or interpretations of such regulations, will not have a
material adverse effect on the future operations of The Registrant.
Claims Audits. Durable Medical Equipment Regional Carriers ("DMERC") are
private organizations that contract to serve as the government's agents for the
processing of claims for items and services provided under Part B of the
Medicare program. The DMERC's and Medicaid agencies also periodically conduct
prepayment and post-payment reviews and other audits of claims submitted.
Medicare and Medicaid agents are under increasing pressure to scrutinize
healthcare claims more closely. Such reviews and/or claims audits of our claims
and related documentation could result in denials of claims for payment
submitted by the Registrant or in government demands for significant refunds or
recoupments of amounts paid by the government for claims which, upon subsequent
investigation, are determined by the DMERC's to be inadequately supported by the
required documentation.
From time to time the Registrant is subject to routine pre-payment and
post-payment reviews and other audits of claims submitted. We cooperate with
regulatory authorities in order to resolve issues and refer requests to our
Compliance Director and defense counsel as appropriate. While we believe that we
are in material compliance with claims regulations and cannot estimate any
amount for potential claims recoupment there can be no assurance that claims
audits leading to refunds or recoupments will not have a material adverse effect
on the future operations of the Registrant.
ITEM 4. Description of Securities
Not applicable; the class of securities to be offered is registered under
Section 12 of the Securities Exchange Act of 1934, as amended.
ITEM 5. Interests of Named Experts and Counsel
None.
ITEM 6. Indemnification of Directors and Officers.
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As permitted by sections 841 of the Revised Business Corporations Act of
the State of Utah, the Registrant's Articles of Incorporation eliminate a
director's personal liability for monetary damages to the Registrant and its
shareholders arising from a breach of alleged breach of a director's fiduciary
duty except for (i) liability under section 842 of the Revised Business
Corporation Act; (ii) liability for the amount of a financial benefit received
by a director to which he is not entitled; (iii) liability for any intentional
infliction of harm on the corporation or the shareholders; and (iv) liability
for an intentional violation of criminal law. The effect of this provision in
the Certificate of Incorporation is to eliminate the rights of the Registrant
and its shareholders (through shareholders' derivative suits on behalf of the
Registrant) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from negligent or
grossly negligent behavior) except in the situation described above.
The Registrant's Articles of Incorporation and Bylaws provide for
indemnification of officers, directors and employees, and the Registrant has
entered into an indemnification agreement with each officer and director of the
Registrant (an "Indemnitee"). Under the Bylaws and such indemnification
agreements, the Registrant must indemnify an Indemnitee to the fullest extent
permitted by Utah law for losses and expenses incurred in connection with
actions in which the Indemnitee is involved by reason of having been a director
or employee of the Registrant. The Registrant is also obligated to advance
expenses an Indemnitee may incur in connection with such actions before any
resolution of the action, and the Indemnitee may sue to enforce his or her right
to indemnification or advancement of expenses.
There is no litigation pending, and neither the Registrant nor any of its
directors know of any threatened litigation, which might result in a claim for
indemnification by any director or officer.
ITEM 7. Exemption From Registration Claimed.
Not Applicable.
ITEM 8. Exhibits.
The following exhibits are filed as part of this Registration Statement:
Exhibit
Number Description
-------------------------------------------------------------------------
4.1 2000 Stock Incentive Plan (attached)
4.2 James E Robinson - Stock Option Agreement, 12/13/99
4.3. Que H. Christensen - Stock Option Agreement, 12/13/99
4.4 James U. Jenson - Stock Option Agreement, 12/13/99
4.5 Jeffrey F. Poore - Stock Option Agreement, 12/13/99
4.6 Jerald L. Nelson - Stock Option Agreement, 12/13/99
4.7 James U. Jenson - Stock Option Agreement, 4/1/97
4.8 Jeffrey F. Poore - Stock Option Agreement, 4/1/97
4.9 Jerald L. Nelson - Stock Option Agreement, 4/1/97
5.1 Opinion Regarding Legality and Consent
23.1 Consent of Tanner + Co.
25.1 Power of Attorney-Located on Signature Page
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ITEM 9. Undertakings.
(a) Rule 415.The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this 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 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 of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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 a director, officer or controlling person in
connection
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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 of whether such indemnification
by it is against public policy as expressed in the Act and shall be governed by
the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on FORM S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake, State of Utah, on the 6th day of November,
1996.
Interwest Home Medical, Inc.
Date: January 8, 2001 By/s/ James E. Robinson
-------------------------------------
James E. Robinson
Chief Executive Officer
Date: January 8, 2001 By/s/ Bret A. Hardy
--------------------------------------
Bret A. Hardy
Controller
Principal Financial Officer
In accordance with the Securities Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature Capacity Date
---------- -------------- ----------------
/s/ James E. Robinson CEO/Director January 8, 2001
--------------------------
James E. Robinson
/s/ James U. Jensen Director January 9, 2001
--------------------------
James U. Jensen
/s/ Dr. Jeffrey F. Poore Director January 8, 2001
--------------------------
Dr. Jeffrey F. Poore
/s/ Jerald L. Nelson Director January 9, 2001
--------------------------
Jerald L. Nelson
11
