<PAGE> 1
As filed with the Securities and Exchange Commission on June 23, 1997
Registration No. 333-21927
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------
CAPSTONE PHARMACY SERVICES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 11-2310352
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
9901 EAST VALLEY
RANCH PARKWAY, SUITE 3001
IRVING, TEXAS 75063
(972) 401-1541
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
R. DIRK ALLISON, CHIEF EXECUTIVE OFFICER
CAPSTONE PHARMACY SERVICES, INC.
9901 EAST VALLEY
RANCH PARKWAY, SUITE 3001
IRVING, TEXAS 75063
(972) 401-1541
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
--------------
COPY TO:
MARK MANNER
HARWELL HOWARD HYNE GABBERT & MANNER, P.C.
1800 FIRST AMERICAN CENTER
NASHVILLE, TENNESSEE 37238
(615) 256-0500
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest investment 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. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
CAPSTONE PHARMACY SERVICES, INC.
14,143,109 Shares of Common Stock
This Prospectus relates to the resale by the holders thereof (the
"Selling Stockholders") of (i) up to 6,985,089 shares of Capstone Pharmacy
Services, Inc. (the "Company" or "Capstone") Common Stock, par value $.01 per
share (the "Common Stock"), that have been previously issued by Capstone in
private placements; (ii) of 4,821,294 shares issued by Capstone in
acquisitions; and (iii) of 2,336,726 shares underlying certain warrants (the
"Private Placement Warrants") previously issued by Capstone in private
placements.
None of the proceeds from the sale of the shares by the Selling
Stockholders will be received by the Company. The Company could receive gross
proceeds of up to $11,553,812 from the exercise of the Private Placement
Warrants. See "Use of Proceeds." The Company has paid all costs and fees
associated with the registration of the securities under the Federal and state
securities laws and the preparation and delivery of this Prospectus.
The Company's Common Stock is quoted on the Nasdaq Stock Market under the
symbol "DOSE." On June 18, 1997, the reported closing price of the Company's
Common Stock on the Nasdaq Stock Market was $11.69 per share.
The Company intends to have the Selling Stockholders sell their shares
through Lehman Brothers and Wheat, First Securities, Inc., as placement agents
(the "Agents"), under certain conditions. See "Plan of Distribution."
The Agents have agreed to use their best efforts to solicit offers to
purchase such shares of Common Stock at prevailing market prices or negotiated
prices. The Agents may reject any offer in whole or in part and the Company
reserves the right to cancel or modify the offer made hereby at any time without
notice.
For their efforts, the Agents will be entitled to a commission per share
based on the type of transaction, and the Company has agreed to indemnify the
Agents against certain liabilities under the Securities Act of 1933, as amended.
SEE "RISK FACTORS" APPEARING ON PAGES 3 THROUGH 5 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SECURITIES OFFERED HEREBY.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
.
The date of this prospectus is June 23, 1997.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
RISK FACTORS ................................................................ 3
THE COMPANY.................................................................. 7
RECENT DEVELOPMENTS.......................................................... 8
USE OF PROCEEDS..............................................................10
SELLING STOCKHOLDERS.........................................................11
PLAN OF DISTRIBUTION.........................................................13
LEGAL MATTERS................................................................13
AVAILABLE INFORMATION .......................................................14
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............................14
</TABLE>
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER AND THEREUNDER SHALL
UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
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RISK FACTORS
In evaluating the Company and its business, prospective investors should
carefully consider the following factors in addition to those discussed
elsewhere or incorporated by reference in this Prospectus. Information contained
or incorporated by reference in this Prospectus may contain "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may," "will," "expect," "anticipate," "estimate," or "continue," or the
negative thereof, or other variations thereon or comparable terminology. The
following matters constitute cautionary statements identifying important factors
with respect to any such forward-looking statements, including certain risks and
uncertainties, that could cause actual results to differ materially from those
reflected in any such forward-looking statements.
Prospective investors should carefully consider the factors set forth
under the caption "Risk Factors" in the Company's Registration Statement on
Form S-4 (Reg. No. 333-28517) filed on June 4, 1997, as amended from time to
time, to evaluate the proposed merger of Beverly Enterprises, Inc. ("Beverly")
with and into the Company. See "The Company -- Recent Developments."
NO ASSURANCE OF SUCCESSFUL INTEGRATION OF ACQUISITIONS. The Symphony
acquisition completed in August 1996 approximately doubled the number of beds
served by the Company, the number of Company employees and the Company's net
sales. The Company made six acquisitions in addition to the Symphony Acquisition
in 1996 and made six acquisitions in the first two quarters of 1997. The
integration of all of the acquisitions is critical to the Company's success.
Potential obstacles to successful integration include, but are not limited to:
cost containment; elimination of redundancies at the corporate and field level;
consolidation of financial and managerial reporting functions; coordination of
field managerial activities with corporate management; achievement of
purchasing efficiencies; expansion of the customer base of the combined entity;
roll-out of new products and services to acquired facilities; and addition and
integration of key personnel. There can be no assurance that any acquisition
will be integrated successfully into the Company's operations or will not have
a material adverse effect upon the Company's results of operations, financial
condition or prospects, especially in the fiscal quarters immediately following
the acquisitions. In addition, there can be no assurance that any acquisition
will achieve net sales and earnings that justify the Company's investment
therein or expenses related thereto.
MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL. In addition to growth
resulting from acquisitions, the Company has experienced internal growth that
has placed, and is likely to continue to place, significant pressure on its
management resources. The Company's successful implementation of its growth
strategy depends upon its ability to attract and retain qualified corporate,
financial, clinical, operating and regional management personnel. The loss of
the services of one or more of the Company's key executives could have a
material adverse effect on the Company. There can be no assurance that the
Company will be able to attract and retain sufficient numbers of qualified
personnel.
DEPENDENCE ON ACQUISITIONS FOR GROWTH. A significant component of the
Company's historical growth has come through acquisitions of institutional
pharmacy companies, and the success of the Company's growth strategy is
dependent on additional acquisitions. No assurance can be given that the Company
will be able to identify suitable acquisition candidates or to consummate
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acquisitions on terms acceptable to the Company. The Company will compete for
acquisition candidates with buyers who may have greater financial and other
resources than the Company and may be able to pay higher acquisition prices than
the Company. To the extent that the Company is unable to acquire institutional
pharmacy companies, or to integrate such acquisitions successfully, its ability
to expand its business would be reduced significantly.
GROWTH STRATEGY; NEED FOR ADDITIONAL FINANCING. In order to implement its
growth strategy, the Company will require substantial capital resources and will
need to incur, from time to time, additional bank indebtedness. The Company also
may need to issue, in public or private transactions, equity or debt securities,
the terms of which will depend on market and other conditions. There can be no
assurance that any such additional financing will be available on terms
acceptable to the Company if at all. As a result, the Company may not be able to
implement fully its growth strategy.
NASDAQ STOCK MARKET NET TANGIBLE ASSET CRITERIA. In order for the NASDAQ
Stock Market to continue to quote prices for the Company's Common Stock, the
Company must maintain a certain minimum level of net tangible assets. The
calculation of net tangible assets excludes the value of goodwill, which
typically represents a substantial part of the assets acquired by the Company,
insofar as most institutional pharmacy companies maintain relatively low levels
of fixed assets. Should the Company continue to acquire substantial goodwill
and/or increase its liabilities without increasing its stockholders' equity, it
may, from time to time, fail to comply with Nasdaq's net tangible asset
criteria. Such failure, if not remedied, or waived by Nasdaq, could result in
the Company's Common Stock no longer being quoted on the Nasdaq Stock Market.
Such a result could have a material adverse effect on the liquidity and price
of the Company's Common Stock. The Nasdaq Stock Market has proposed changes to
its net intangible asset criteria to relax the standard for larger companies
but there can be no assurance that such changes will be adopted or that the
changes as adopted will benefit the Company.
LIMITED HISTORY OF PROFITABILITY. The Company has incurred net losses in
its 1995, 1994 and 1993 fiscal years. For the years ended February 28, 1995 and
1994, losses from continuing operations were approximately $10.8 million and
$521,000, respectively, and for the ten months ended December 31, 1995, the
Company had a loss from continuing operations of approximately $645,000.
DEPENDENCE ON REIMBURSEMENT BY THIRD-PARTY PAYORS. The Company derives,
directly or indirectly, a majority of its net sales from government-sponsored
reimbursement programs. The Company's net sales and profitability are, and will
continue to be, affected by the efforts of all payors to contain or reduce the
costs of health care by lowering reimbursement rates, narrowing the scope of
covered services, increasing case management review of service, and negotiating
reduced contract pricing. Any changes in reimbursement levels under Medicare,
Medicaid, or private pay programs, including managed care contracts, could have
a significant adverse effect on the Company's net sales
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and profitability. Changes in the mix of patients among Medicare, Medicaid and
different types of private pay sources, may adversely affect the Company's net
sales and profitability.
HEALTH CARE REFORM. The health care industry is subject to changing
political, economic and regulatory influences that may affect the institutional
pharmacy industry. In recent years, several comprehensive national health care
reform proposals were introduced in the United States Congress. While none of
the proposals were adopted, health care reform may again be addressed by the
United States Congress. Several states also are considering health care reforms
through Medicaid managed care demonstration projects. Although these projects
generally exempt institutional pharmacy services and long-term care facilities,
no assurance can be given that these projects will not change the Medicaid
reimbursement system in certain states for long-term care, including pharmacy
services, from fee-for-service to negotiated or capitated rates. The Company
cannot predict which, if any, federal or state modifications or reform proposals
will be adopted, when they may be adopted or what their impact on the Company
may be if adopted. There can be no assurance that the adoption of certain
modifications or proposals will not have a material adverse effect on the
Company's results of operations, financial condition or future prospects.
ROLE OF MANAGED CARE. As managed care assumes an increasingly significant
role in the health care industry, Capstone's future success will, in part, be
dependent on obtaining and retaining managed care contracts. Competition for
such contracts is intense and, in most cases, will require Capstone to compete
based on breadth of services offered, pricing, ability to track and report
patient outcomes and cost data and provision of value-added pharmacy consulting
services, among other factors. There can be no assurance that the Company will
retain or continue to obtain such managed care contracts or that the managed
care contracts it obtains will be on terms as favorable to the Company as those
of its current contracts. In addition, reimbursement rates under managed care
contracts typically are significantly lower than those paid by other private
third-party payors.
COMPETITION. The long-term care pharmacy markets in which Capstone operates
are highly fragmented, and the majority of competition in such markets comes
from small to mid-size local operators whose primary advantage is market
familiarity. Capstone's competition in the correctional pharmacy market comes
primarily from other large providers. Management believes that the primary
competitive factor in its industry is breadth and quality of service. Additional
competitive factors include reputation, ease of doing business with the specific
providers, ability to develop and to maintain relationships with referral
sources and competitive pricing. Some of the Company's present and potential
competitors are larger than Capstone and have, or may obtain, greater financial
and marketing resources than Capstone.
GOVERNMENT REGULATION. Capstone is subject to extensive federal, state and
local regulation. Federal laws governing the Company's activities include
regulations covering the repackaging, storing and dispensing of drugs, Medicare
reimbursement and certification, and certain financial relationships with
physicians and other health care providers. Capstone is subject to state laws
governing Medicaid, professional training, pharmacy licensure, payment of
remuneration in
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exchange for patient referrals and the dispensing and storage of
pharmaceuticals. The pharmacies operated by the Company must comply with all
applicable laws, regulations and licensing standards. Many of Capstone's
employees must maintain certain licenses in order to provide services. The
long-term care facilities which contract for the Company's pharmacy services are
also subject to federal, state and local regulations and are required to be
licensed in the states in which they are located. The failure by these
institutions to comply with such regulations or to obtain or renew any required
licenses could result in the loss of the Company's ability to provide pharmacy
services to their residents. There can be no assurance that federal, state or
local governments will not change existing standards or impose additional
standards. Any failure to comply with existing or future standards could have a
material adverse effect upon Capstone's results of operations, financial
condition or prospects.
INFLUENCE OF PRINCIPAL STOCKHOLDER. The Company's principal stockholder,
Counsel, and its affiliates beneficially own approximately 23% of the
outstanding shares of the Common Stock of the Company. As a condition of
Counsel's initial investment in Capstone, the Company agreed contractually to
use its good faith efforts to have elected as directors up to four Counsel
nominees, subject to certain conditions. As a result of its equity ownership in
the Company and its nominees on the Company's Board of Directors, Counsel can
influence significantly the management and policies of the Company, including
the election of the Company's directors and the outcome of matters submitted to
stockholders of the Company for approval.
LIABILITY AND ADEQUACY OF INSURANCE. The provision of health care services
entails an inherent risk of liability. Capstone currently maintains product and
professional liability insurance intended to cover such claims in amounts which
it believes are consistent with industry standards. There can be no assurance
that claims in excess of the insurance coverage or claims not covered by
insurance will not arise. A successful claim in excess of its insurance coverage
could have a material adverse effect upon the Company's results of operations,
financial condition and future prospects. Claims, regardless of their merit or
eventual outcome, may also have a material adverse effect upon Capstone's
ability to attract customers, to maintain its insurance or to expand its
business. There can be no assurance that Capstone will be able to obtain
liability insurance coverage in the future on acceptable terms.
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THE COMPANY
Capstone is a leading provider of institutional pharmacy services to
long-term care facilities and correctional institutions throughout the United
States. Capstone acquired seven institutional pharmacy services businesses in
1996, including Symphony Pharmacy Services, Inc. ("Symphony"), a subsidiary of
Integrated Health Services, Inc. ("IHS"). In January 1997 the Company completed
three acquisitions in California, making it the largest independent provider in
that market. Capstone now services approximately 120,000 long-term care beds in
16 states. The Company also services over 110,000 inmates in correctional
facilities nationwide.
Capstone provides long-term care facilities with comprehensive
institutional pharmacy services that include the purchasing, repackaging and
dispensing of pharmaceuticals, infusion therapy, Medicare Part B services, and
pharmacy consulting services, all of which are supported by computerized record
keeping and third-party billing services. The Company serves its long-term care
clients primarily through regional pharmacies that are open 24 hours, seven days
a week. By establishing regional pharmacies that each have the capability to
serve in excess of 10,000 patients, management believes that the Company can
compete more effectively in metropolitan markets nationwide by providing a
broader range of services to its long-term care clients on a more
cost-effective basis than many of its competitors. Management further believes
that Capstone's expanded national presence enables it to compete more
effectively for larger customers who operate multiple facilities while
achieving purchasing efficiencies and other economies of scale. The Company has
established relationships with IHS and other large operators of long-term care
facilities not previously served by Capstone.
In the correctional business, where it currently is the largest non-captive
provider of pharmacy services in the United States, the Company provides
pharmaceuticals under capitated and other contracts to correctional
institutions that have privatized their inmate health care services. Management
believes the Company's experience in managing capitated correctional contracts,
which involves the utilization of closed formularies, generic substitution,
rigorous drug utilization review and proactive physician education, will
provide a significant competitive advantage as managed care becomes more
prevalent in the long-term care industry.
In connection with an investment by Counsel Corporation ("Counsel") in
December 1994, the Company installed a new management team, refocused its
operating strategy on its core institutional pharmacy business and initiated an
aggressive acquisition strategy. Capstone's strategy is to enhance its position
as a leading provider of institutional pharmacy services by: (i) acquiring
institutional
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pharmacy companies in metropolitan markets; (ii) achieving regional market
density in order to enhance its operating leverage; (iii) positioning itself as
the provider of choice to managed care payors in the markets in which it
operates; and (iv) emphasizing internal growth through the addition of new
clients and the expansion of ancillary services. Since December 31, 1994,
Capstone has increased its long-term care bed count from approximately 16,200 to
approximately 120,000 and the number of inmates served in correctional
institutions from approximately 65,000 to approximately 110,000.
RECENT DEVELOPMENTS
The Company and Beverly entered into an Agreement and Plan of Merger,
dated April 15, 1997 pursuant to which Beverly (after divesting itself
of all businesses other than its institutional pharmacy business conducted
through its wholly-owned subsidiary, Pharmacy Corporation of America) will
merge (the "Merger") with and into the Company. The Company will issue 50
million shares of Capstone Common Stock, assume approximately $275 million in
debt and assume options and other benefits covering an estimated approximate
1.1 million shares of Capstone Common Stock as consideration for the Merger. On
June 4, 1997, the Company filed a Registration Statement on Form S-4 (Reg. No.
333-28517) containing a Joint Proxy Statement/Prospectus related to the Merger
(the "Registration Statement"). The Registration Statement is incorporated by
reference into this Prospectus and the Company will supply a copy of it
upon request.
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USE OF PROCEEDS
11,806,383 of the shares of Common Stock offered hereby are currently owned
by the Selling Stockholders and are being registered for resale by such holders.
Accordingly, the Company will not receive any of the proceeds from any
transactions in these shares by the Selling Stockholders.
2,336,726 of the shares of Common Stock offered hereby can be obtained by
the Selling Stockholders upon exercise of Private Placement Warrants. The
Company will receive proceeds to the extent that such warrants are exercised
before their expiration, as follows:
<TABLE>
<CAPTION>
Description Number of Warrants Exercise Price Expiration Date
----------- ------------------ -------------- ---------------
<S> <C> <C> <C>
Private Placement Warrants 1,298,181 $ 4.50/share May 22, 1998
Private Placement Warrants 1,038,545 $ 5.50/share May 22, 1998
</TABLE>
As a result, the Company could receive gross proceeds of up to
$11,553,812 from the exercise of the Private Placement Warrants. The Company
intends to use these proceeds, if any, for general corporate purposes including
future acquisitions and reduction of outstanding debt. No specific uses of the
proceeds have been identified by the Company because there is no certainty that
any of the Warrants will be exercised.
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SELLING STOCKHOLDERS
The Selling Stockholders acquired or will acquire 9,321,815 shares of
Common Stock, including shares underlying the Private Placement Warrants, in
private placements that have closed since December 1994, and 4,821,294 shares in
connection with acquisitions made by the Company in January 1997. Registration
of these shares of Common Stock will enable the Selling Stockholders to sell
such shares from time to time on the Nasdaq Stock Market or in other
transactions. The table below sets forth certain information regarding the
beneficial ownership of the Common Stock by the Selling Stockholders as of
February 5, 1997.
<TABLE>
<CAPTION>
BENEFICIAL SHARES BENEFICIAL
OWNERSHIP PRIOR TO OFFERED OWNERSHIP AFTER THE
OFFERING HEREIN OFFERING(1)
-------- ------ -----------
STOCKHOLDER NUMBER PERCENT(2) AMOUNT PERCENT(2)
----------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Counsel Corporation(3) 8,356,815(4) 23.1 8,356,815 -0- -0-%
Integrated Health Services, 2,112,490(5) 6.2 2,112,490 -0- -0-
Inc.(5)
Denis A. and Sandra L. 1,354,402(7) 4.0 1,354,402 -0- -0-
Portaro(6)
Ronald W. Belville(8) 1,354,402(7) 4.0 1,354,402 -0- -0-
Mercury Asset Management 290,000 * 290,000 -0- -0-
PLC on behalf of
Discretionary Investment
Management Clients
Fonds de Solidarite 10,000 * 10,000 -0- -0-
Ville de Montreal 11,000 * 11,000 -0- -0-
Ville de Jonquiere 200 * 200 -0- -0-
Ville de Laval 3,600 * 3,600 -0- -0-
Savings & Investment Trust 5,200 * 5,200 -0- -0-
Selection Sante 25,000 * 25,000 -0- -0-
Framlington American Smaller Companies 90,000 * 90,000 -0- -0-
Gespal SA 15,000 * 15,000 -0- -0-
Framlington Health Fund 50,000 * 50,000 -0- -0-
Torbay Company(9) 300,000 * 300,000 -0- -0-
Jay Alan Smith 15,000 * 15,000 -0- -0-
Fern Hill Holdings 20,000 * 20,000 -0- -0-
The Apotex Foundation 130,000 * 130,000 -0- -0-
</TABLE>
- --------------------------------------
* Less than 1%.
(1) The amounts and percentages for beneficial ownership after the
Offering assumes that the Selling Stockholders sell all of the
shares being registered hereunder from time to time during the
effectiveness of the Registration Statement in which this
Prospectus is contained. The Selling Stockholders are not
required to sell any of their shares pursuant to this
Offering.
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(2) The percentages shown are based on 33,868,025 shares of Common
Stock outstanding on February 5, 1997, plus, as to each
individual and group listed, the number of shares of Common
Stock deemed to be owned by such holder pursuant to Rule 13d-3
under the Securities Exchange Act of 1934 (the "Exchange
Act"), which includes shares subject to stock options and
warrants held by such holder that are exercisable within 60
days of such date.
(3) Counsel Corporation is the Company's principal stockholder,
and, in connection with Counsel's initial investment in the
Company, the Company agreed contractually to use its good
faith efforts to have elected as directors up to four Counsel
nominees, subject to certain conditions.
(4) Includes 1,298,181 and 1,038,545 shares issuable upon exercise
of warrant at $4.50 per share and $5.50 per share,
respectively.
(5) Integrated Health Services, Inc. ("IHS") acquired its shares
in connection with the Symphony acquisition. IHS owns and
operates long-term care facilities containing approximately
47,000 beds serviced by the company pursuant to a preferred
provider agreement and the right to service additional beds
under certain conditions.
(6) Denis Portaro is the Company's Senior Vice President - Western
Division.
(7) Shares acquired in connection with the merger of Stockholder's
business with the Company.
(8) Stockholder is a Senior Vice President - Operations of the
Company.
(9) Stockholder is an affiliate of a participant in Company's
primary bank facility.
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PLAN OF DISTRIBUTION
The 2,336,726 shares of Common Stock issuable upon the exercise of the
Private Placement Warrants will be issued by the Company in direct transactions
with the holders of the rights to acquire such securities and such Common Stock
is expected to be available for public trading on the Nasdaq Stock Market upon
issuance. The Company will pay no commissions or discounts in connection with
such transactions.
The Selling Stockholders have advised the Company that they may elect
to offer for sale and to sell the shares of Common Stock registered herein from
time to time in one or more transactions through brokers on the Nasdaq Stock
Market, including block trades or ordinary broker's transactions, in private
transactions, through an underwritten public offering, through the writing of
options on the shares, or otherwise (including pursuant to Rule 144 and in
transactions with the Company as consideration for the exercise price of certain
warrants), at market prices prevailing at the time of sale, at prices related to
such prevailing prices or at prices and terms then obtainable, in block
transactions, negotiated transactions, or otherwise. The Company intends to
have each of the Selling Stockholders use, for any proposed sale of the shares
of Common stock registered herein that exceed the greater of 35,000 shares or
5% of such Selling Stockholder's total stock holdings in any five (5)
consecutive trading days, Lehman Brothers or Wheat, First Securities, Inc. to
act as placement agent (the "Placement Agent") in connection with arranging
offers and sales of such shares on a best efforts, all or none, basis.
Accordingly, sales prices and proceeds to the Selling Stockholders will depend
upon market fluctuations and the manner of sale.
Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Stockholders in connection with such
sales. No Selling Stockholder has an agreement with any particular broker,
including the Placement Agent, with respect to the price at which the Common
Stock will be sold or with respect to any commissions to be charged. The Selling
Stockholders will also pay the fees and expenses of any counsel retained by them
in connection with this Offering. Except for the payment of such legal fees and
expenses, brokerage commissions and charges, the Company will bear all expenses
in connection with registering the shares of Common Stock offered hereby.
To the extent required, the specific number of Shares to be sold, the
names of the Selling Stockholders, purchase price, public offering price, the
names of any agent, dealer or underwriter, and any applicable commission or
discount with respect to a particular offering will be set forth in an
accompanying Prospectus Supplement.
The Selling Stockholders and intermediaries through whom the shares
offered hereby are sold may be deemed to be "underwriters" within the meaning of
the Securities Act with respect to such securities. Selling Stockholders,
dealers and agents may be entitled, under agreements entered into the Company,
to indemnification against certain liabilities, including liabilities under the
Securities Act.
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<PAGE> 14
LEGAL MATTERS
Certain legal matters with respect to the legality of the shares of
Common Stock offered hereby will be passed upon for the Company by Harwell
Howard Hyne Gabbert & Manner. P.C., Nashville, Tennessee.
AVAILABLE INFORMATION
The Company's principal executive offices are located at 9901 East
Valley Ranch Parkway, Suite 3001, Irving, Texas 75063, phone number (972)
401-1541. The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
Copies of such reports and other information filed by the Company can be
obtained, at prescribed rates, from the Public Reference Section of the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549. In addition, such reports and other information can be inspected at
the Public Reference Section referred to above and at the Regional Offices of
the Commission at Northwest Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and 75 Park Place, 14th Floor, New York, New York
10007. Copies of such material can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission also maintains a web site on the
worldwide web portion of the Internet containing reports, proxy and information
statements and other information regarding issuers that file electronically at
http://www.sec.gov. The Common Stock is listed on the Nasdaq Stock Market, and
reports, proxy and information statements and other information concerning the
Company can be inspected and copied at the offices of the National Association
of Securities Dealers, Inc. located at 1735 K Street, N.W., Washington, D.C.
20006.
The Company has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933. This Prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1. The Company's Annual Report on Form 10-K/A for the year ended
December 31, 1996.
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997.
13
<PAGE> 15
3. The Company's Current Report on Form 8-K dated January 31, 1997.
4. The Company's Registration Statement on Form S-4 (Reg. No. 333-28517)
dated June 4, 1997, as amended from time to time.
5. The Company's Registration Statement on Form 8-A dated June 18, 1986,
as amended by Form 8-A/A, dated July 18, 1996.
All documents subsequently filed by the Company with the Commission
pursuant to Section 13(a), (c), 14 or 15(d) of the Exchange Act and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the request of such
person, a copy of any or all of the documents which are incorporated by
reference in this Prospectus, but not delivered herewith, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into the information that this Prospectus incorporates). Written or telephone
requests should be directed to Dirk Allison, President, Capstone Pharmacy
Services, Inc., 9901 East Valley Ranch Parkway, Suite 3001, Irving, Texas
75063, phone number (972) 401-1541.
14
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
Registration Fee........................................ $ 52,428
Listing Fee............................................. 0
* Blue Sky fees and expenses.............................. 1,000
* Accounting fees and expenses............................ 10,000
* Legal fees and expenses................................. 15,000
* Transfer Agent Fees..................................... 2,000
* Miscellaneous........................................... 5,000
---------
* Total..................................................... 85,428
</TABLE>
- ----------
*Estimated
INDEMNIFICATION
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Eleventh of the Certificate of Incorporation of the Registrant
sets forth the extent to which officers or directors of the Registrant may be
insured or indemnified against any liabilities which they may incur. The general
effect of such provision is that any person made a party to any action, suit or
proceeding by reason of the fact that he or she is or was a director or officer
of the Registrant will be indemnified by the Registrant against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with such action,
suit or proceeding, to the fullest extent permitted under the laws of the State
of Delaware. In addition, such provision provides that, in the Registrant's sole
discretion, the Registrant may indemnify employees or agents against such
expenses, judgments, fines and amounts paid in settlement.
SECTION 145 of the Delaware General Corporation Law ("DGCL") applies to
the Registrant and the relevant portion of the DGCL provides as follows:
II-1
<PAGE> 17
145 INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS; INSURANCE.
(a) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to 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, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such 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. The
termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person
did not act in good faith and in a manner which 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 reasonable cause
to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense
or settlement of such action or suit 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 except that no indemnification shall
be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless
and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or
such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections
(a) and (b) of this section, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
II-2
<PAGE> 18
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of this section. Such
determination shall be made (1) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable,
or, even if obtainable a quorum of disinterested directors so directs,
by independent legal counsel in a written opinion, or (3) by the
shareholders.
(e) Expenses (including attorneys' fees) incurred by an
officer or director in defending any civil, criminal, administrative or
investigative action, suit or proceeding may be paid by the corporation
in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that
he is not entitled to be indemnified by the corporation as authorized
in this section. Such expenses (including attorneys' fees) incurred by
other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other subsections of this section shall
not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the
corporation" shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers and employees or agents, so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same
II-3
<PAGE> 19
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other
enterprises" shall include employee benefit plans; references to
"fines" shall include any excise taxes assessed on a person with
respect to any employee benefit plan; and references to "serving at the
request of the corporation" shall include any service as a director,
officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee, or agent
with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this section.
(j) The indemnification and advancement of expenses provided
by, or granted pursuant to, this section shall, unless otherwise
provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
The Registrant maintains insurance for the benefit of the Registrant's
directors and officers and officers and directors of the Registrant's
subsidiaries insuring such persons against certain liabilities, including
liabilities arising under the securities laws.
ITEM 16. EXHIBITS
The exhibits filed as a part of this registration statement are listed
in the Exhibit Index immediately following the signature page.
ITEM 17. UNDERTAKINGS
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;
II-4
<PAGE> 20
(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 (1)(i) and (1)(ii) 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 by the registrant
pursuant to Section 13 or 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.
(4) 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 Report 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.
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, 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 Act and will be governed by the final adjudication of such
issue.
II-5
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this amendment to registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Baltimore,
State of Maryland, on the 20th day of June, 1997.
CAPSTONE PHARMACY SERVICES, INC.
By: /s/ R. Dirk Allison
--------------------------------------
R. Dirk Allison
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on the dates indicated by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ R. Dirk Allison President, Chief Executive Office June 20, 1997
- --------------------------------- and Director (Chief Executive Officer)
R. Dirk Allison
/s/ James D. Shelton Executive Vice President, Chief June 20, 1997
- --------------------------------- Financial Officer and Secretary
James D. Shelton (Chief Accounting Officer)
* Chairman June 20, 1997
- ---------------------------------
Allan C. Silber
</TABLE>
<PAGE> 22
<TABLE>
<S> <C> <C>
* Vice Chairman June 20, 1997
- ---------------------------------
Morris A. Perlis
* Director June 20, 1997
- ---------------------------------
Joseph Furlong, III
* Director June 20, 1997
- ---------------------------------
John Haronian
* Director June 20, 1997
- ---------------------------------
Albert Reichmann
* Director June 20, 1997
- ---------------------------------
Edward Sonshine
* Director June 20, 1997
- ---------------------------------
Dr. Gail Wilensky
* Director June 20, 1997
- ---------------------------------
John E. Zuccotti
*By: /s/ James D. Shelton
----------------------------
James D. Shelton
Attorney-in-fact
</TABLE>
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
<S> <C>
5 * Opinion of Harwell, Howard, Hyne, Gabbert & Manner, P.C.
23.1 Consent of Arthur Andersen LLP
23.5* Consent of Harwell Howard Hyne Gabbert & Manner (included in Exhibit 5)
24 * Power of Attorney (See signature page)
</TABLE>
- ------------------
* Previously filed
<PAGE> 1
Exhibit 23.1
[ARTHUR ANDERSEN LLP LETTERHEAD]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated March 14, 1997,
included in Capstone Pharmacy Services, Inc.'s Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Baltimore, Maryland,
June 19, 1997
