<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CORE, INC.
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(Exact name of registrant as specified in its charter)
Massachusetts 04-2828817
----------------------- ------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
18881 Von Karman Avenue, Suite 1750, Irvine, CA 92715
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(Address of principal executive offices) (Zip Code)
CORE MANAGEMENT, INC. EMPLOYEE STOCK OPTION PLAN
AND OTHER STOCK OPTIONS
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(Full title of the plans)
George C. Carpenter IV
Chairman of the Board and Chief Executive Officer
CORE, INC.
18881 Von Karman Avenue, Suite 1750
Irvine, California 92715
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(Name and address of agent for service)
(714) 442-2100
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(Telephone number, including area code, of agent for service)
_______________
Copies of communications to:
Stephen M. Kane, Esq.
Rich, May, Bilodeau & Flaherty, P.C.
294 Washington Street
Boston, Massachusetts 02108
(617) 482-1360
_______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Securities Amount to be Proposed maximum Proposed maximum Amount of
to be registered registered offering price per share (1) aggregated offering price (1) registration fee
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<S> <C> <C> <C> <C>
Common Stock, par 50,104 $8.625 $432,147 $130.96
value $0.10 per share
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(h) and (c) based on the last reported sale price on
the NASDAQ National Market on November 25, 1996.
*THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE IMMEDIATELY UPON FILING WITH
THE SECURITIES AND EXCHANGE COMMISSION IN ACCORDANCE WITH RULES 456 AND 462
PROMULGATED UNDER THE SECURITIES ACT OF 1933.*
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION
10(A) PROSPECTUS
ITEM 1. PLAN INFORMATION.
ITEM 2. REGISTRATION INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.
This Registration Statement on Form S-8 covers 50,104 shares of the
Company's Common Stock issued under options granted to employees and consultants
of CORE Management, Inc. ("CMI") and assumed by the Company in connection with
its March 1995 merger involving CMI. A Reoffer Prospectus with respect to such
50,104 shares is Exhibit 99.1 to this Registration Statement.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange Commission
are incorporated herein by reference:
(a) The Company's latest annual report filed pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the latest prospectus filed by the Company pursuant to Rule 424(b)
under the Securities Act of 1933, as amended (the "Securities Act"), that
contains audited financial statements for the Company's latest fiscal year
for which such statements have been filed;
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the Exchange
Act since the end of the fiscal year covered by the registrant document
referred to in (a) above; and
(c) The description of the Company's Common Stock, par value $0.10, contained
in the Company's Registration Statement filed under Section 12 of the
Exchange Act, including any amendment or report filed for the purpose of
updating such description.
In addition, all documents subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of
a post-effective amendment to this Registration Statement on Form S-8 which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of the filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
The Company's Common Stock, par value $0.10 per share, is registered under
Section 12 of the Exchange Act.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
The validity of the securities offered hereby will be passed upon for the
Company by Rich, May, Bilodeau & Flaherty, P.C., 294 Washington Street, Boston,
Massachusetts 02108. Neither Rich, May, Bilodeau & Flaherty, P.C. nor any member
of such firm had, or is to receive in connection with the offering, a
substantial interest, direct or indirect, in the Company or its subsidiary.
Stephen M. Kane, Esq., a member of such firm, is the Assistant Clerk of the
Company.
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<PAGE>
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Organization, as amended, contain provisions
limiting the liability of directors to the fullest extent permitted by
Massachusetts law as currently or hereinafter in effect. Massachusetts law
currently permits the elimination of personal liability of a director for
monetary damages for breach of fiduciary duty as a director notwithstanding any
provision of law imposing such liability, except for (i) breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) unauthorized distributions to stockholders or loans to
insiders, or (iv) any transaction from which the director derived an improper
personal benefit.
The Company's Articles of Organization also provide for the indemnification
of officers and directors of the Company, to the extent legally permissible,
against all liabilities and expenses (including judgments, fines, penalties and
attorneys' fees and, under certain circumstances, all amounts paid in compromise
and settlement) reasonably incurred by such officer or director in connection
with any action, suit or proceeding in which any such director or officer is a
defendant or with which he or she may be threatened or otherwise involved, by
reason of his or her being or having been a director or officer of the Company,
except in relation to matters as to which such director or officer shall be
finally adjudged, other than by consent, in such action, suit or proceeding not
to have acted in the best interests of the corporation.
The Company has entered into separate indemnification agreements with each
of its directors and executive officers providing for indemnification of such
persons to the extent permitted by law.
Additionally, the Company has purchased a directors and officers insurance
policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The options of Company Common Stock referred to in this Registration
Statement on Form S-8 were not registered under the Securities Act, in reliance
on the exemption set forth in Section 4(2) of the Securities Act for
transactions by an issuer not involving any public offering. Such options are
subject to option agreements which include provisions stating that the optionee
must comply with applicable federal and state securities laws in connection with
the resale of any shares of Company Common Stock received upon exercise of the
option.
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<PAGE>
ITEM 8. EXHIBITS.
4.1 Restated Articles of Organization of the Company, dated November 22,
1991, as further amended by Articles of Amendment, dated March 24,
1995, and as further amended by Articles of Amendment, dated July
28, 1995, filed as Exhibit 3.1 to the Company's Quarterly Report on
Form 10-Q, filed November 14, 1995, and incorporated herein by
reference.
4.2 By-Laws of the Company, as amended, filed as Exhibit 3.2 to the
Company's Annual Report on Form 10-K, filed March 30, 1993, and
incorporated herein by reference.
4.3 Specimen of the Company's Common Stock Certificate, filed as Exhibit
4.1 to the Company's Annual Report on Form 10-K, filed April 1,
1996, and incorporated herein by reference.
4.4 Core Management, Inc. Employee Stock Option Plan. Filed as exhibit
no. 10.65 to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed January 10, 1994, and
incorporated herein by reference.
*5.1 Opinion of Rich, May, Bilodeau & Flaherty, P.C.
*23.1 Consent of Ernst & Young LLP.
*23.2 Consent of Rich, May, Bilodeau & Flaherty, P.C. (contained in the
opinion filed as Exhibit 5.1 hereto).
*99.1 Reoffer Prospectus, dated November 25, 1996, with respect to 50,104
shares of the Company's Common Stock.
___________________
*filed herewith
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes 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.
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
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in this 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.
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<PAGE>
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 Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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<PAGE>
SIGNATURES
The Registrant. 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 Irvine, California, on this 25th day of
November, 1996.
CORE, INC.
By:/s/ George C. Carpenter IV
------------------------------------------
George C. Carpenter IV
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
Each person whose signature appears below hereby constitutes and appoints
George C. Carpenter, Craig C. Horton and William E. Nixon, and each of them, as
his or her attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, (i) to sign any and all amendments (including post-effective
amendments) to this Registration Statement, (ii) to file any of the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and conforming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<S> <C> <C>
/s/ George C. Carpenter IV Chairman of the Board of November 25, 1996
- -----------------------------
George C. Carpenter IV Directors and Chief Executive Officer
/s/ William E. Nixon Chief Financial Officer, Treasurer November 25, 1996
- -----------------------------
William E. Nixon and Executive Vice President
/s/ Craig C. Horton President and Director November 25, 1996
- -----------------------------
Craig C. Horton
/s/ Leslie Alexandre Director November 25, 1996
- -----------------------------
Leslie Alexandre
/s/ Stephen C. Caulfield Director November 25, 1996
- -----------------------------
Stephen C. Caulfield
/s/ Richard H. Egdahl, M.D. Director November 25, 1996
- -----------------------------
Richard H. Egdahl, M.D.
/s/ John Pappajohn Director November 25, 1996
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John Pappajohn
</TABLE>
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<PAGE>
EXHIBIT 5.1
Rich, May, Bilodeau & Flaherty, P.C.
The Old South Building
294 Washington Street
Boston, MA 02108-4675
Telephone (617) 482-1360
Fax (617) 556-3889
November 27, 1996
CORE, INC.
18881 Von Karman Avenue
Suite 1750
Irvine, CA 92715
Re: Shares Registered on Form S-8
-----------------------------
Ladies and Gentlemen:
We have been retained as counsel to CORE, INC., a Massachusetts corporation
(the "Company"), in connection with the preparation for the Company's
Registration Statement on Form S-8 for the registration of an aggregate of
50,104 shares of the Company's Common Stock, which have been issued pursuant to
stock options (the "Shares").
We have examined originals, or certified, conformed or reproduction copies,
of all such records, agreements, instruments and documents as we have deemed
relevant or necessary as the basis for the opinion hereinafter expressed. In
all such examinations, we have assumed the genuineness of all signatures on
original or certified copies and the conformity to original or certified copies
of all copies submitted to us as conformed or reproduction copies. As to
various questions of fact relevant to our opinion, we have relied upon
statements or certificates of public officials, officers or representatives of
the Company and others.
Based upon the foregoing, we are of the opinion that the Shares have been
validly issued and fully paid and are non-assessable.
We hereby consent to the filing of this opinion as an Exhibit to said
Registration Statement on Form S-8.
We are members of the bar of the Commonwealth of Massachusetts and do not
hold ourselves out as being competent to opine as to matters of law governed by
other states. Accordingly, our opinion is limited to the laws of the
Commonwealth of Massachusetts and the laws of the federal government of the
untied States of America.
Very truly yours,
/s/ Rich, May, Bilodeau & Flaherty, P.C.
RICH, MAY, BILODEAU & FLAHERTY, P.C.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Core Management, Inc. Employee Stock Option Plan and
Other Stock Options, of our report dated February 14, 1996 (except for Note 16,
as to which the date is July 24, 1996), with respect to the consolidated
financial statements and schedules of CORE, INC. included in the Registration
Statement (Form S-1 No. 333-03639) and related prospectus of CORE, INC. for the
registration of 50,104 shares of its common stock, filed with Securities and
Exchange Commission.
Ernst & Young LLP
Boston, Massachusetts
November 26, 1996
<PAGE>
EXHIBIT 99.1
REOFFER PROSPECTUS
50,104 SHARES
CORE, INC.
COMMON STOCK
This Prospectus covers 50,104 shares of common stock, par value $0.10 per
share (the "Common Stock"), of CORE, INC. (the "Company"), which have been
issued pursuant to the exercise of certain stock option agreements. The shares
offered by this Prospectus are for the account of the individuals listed in the
Selling Stockholders section below (the "Selling Stockholders").
The Company will not receive any of the proceeds from sales of Common Stock
by the Selling Stockholders.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
_______________________
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.
_________________________
November 25, 1996
<PAGE>
THE COMPANY
CORE, INC. ("CORE" or the "Company") is a national provider of managed
disability and health care benefits management services to Fortune 500 companies
and other self-insured employers, third-party administrators and insurance
carriers. The Company's services include managed disability services using
CORE's proprietary WorkAbility(R) disability management software, specialty
physician and behavioral health review services and health care benefits
utilization review and case management services. The Company's services are
designed to assist its clients monitor and control disability and health care
benefits costs without compromising the quality of health care services provided
to the patient.
The Company was incorporated in Massachusetts in April 1984 under the name
Peer Review Analysis, Inc. ("PRA") to provide physician review services to
commercial insurance companies and self-insured employers. PRA became a
publicly-held entity in December 1991 with the completion of an initial public
offering.
In March 1995, PRA completed its merger (the "CMI/PRA Merger") involving
Core Management, Inc., a Delaware corporation ("CMI"). CMI offers a broad range
of disability management, health care utilization review and analysis and
consulting services, and CMI's Integrated Behavioral Health Division ("IBH")
specializes in utilization review of and case management services with respect
to mental health and substance abuse cases. CMI was incorporated in 1990 to
acquire the health and disability cost management services business (including
the WorkAbility(R) programs) of Health Data Institute, Inc., a subsidiary of
Baxter International, Inc. IBH became a subsidiary of CMI in a March 1993
acquisition. The CMI/PRA Merger was treated as a pooling of interests for
accounting purposes.
As a result of the CMI/PRA Merger, the Company has been able to combine
CMI's WorkAbility(R) and other disability management services with the
physician-intensive utilization management services of Peer Review Analysis to
provide a more complete product to clients.
In July 1995, the Company changed its name, from Peer Review Analysis,
Inc., to CORE, INC. On October 2, 1995, CORE acquired all the capital stock of
Cost Review Services, Inc., a workers' compensation bill audit firm.
The Company's executive offices are located at 18881 Von Karman Avenue,
Suite 1750, Irvine, California 92715, and its telephone number at that address
is (714) 442-2100.
WorkAbility(R) is a registered trademark of the Company.
RISK FACTORS
An investment in the shares being offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus, in
evaluating an investment in the shares of Common Stock offered hereby. In
particular, prospective investors are cautioned that this Prospectus contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and that actual results could differ materially
from those contemplated by such statements. Such statements reflect
management's current views, are based on many assumptions and are subject to
risks and uncertainties. The factors listed below represent certain important
factors the Company believes could cause such results to differ. These factors
are not intended to represent a complete list of the general or specific risks
that may affect the Company. It should be recognized that other risks may be
significant, presently or in the future, and the risks set forth below may
affect the Company to a greater extent than indicated.
HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY
The Company has recorded net losses of $253,000 for 1991, $2,014,000 for
1992, $3,376,000 for 1993, $4,699,000 for 1994 and $79,000 for 1995. The
Company's losses have resulted in an accumulated deficit of approximately $10.8
million at December 31, 1995. There can be no assurance that the Company will
become profitable, or if profitable, that profitability will be maintained on a
quarterly or annual basis. Moreover, if profitability is achieved, the level of
profitability cannot be accurately predicted.
RECENT ACQUISITIONS; RISKS OF INTEGRATION; NEW BUSINESS LINES
<PAGE>
The Company's operations have expanded significantly as a result of the
March 1995 merger with Core Management, Inc. ("CMI") and October 1995
acquisition of Cost Review Services, Inc. ("CRS"). In addition, the Company
intends to continue to pursue the growth of its business through the acquisition
of other businesses complementary to its existing businesses.
The merger with CMI and the acquisition of CRS have resulted in the Company
becoming much larger, more complex and more operationally and geographically
diverse, presenting challenges for the Company's management and potentially
detracting attention of management from the day-to-day operations of CORE.
These challenges will increase by reason of other possible future acquisitions.
In light of this recent and potential future growth, the success of the
Company's efforts to integrate acquired operations and streamline overlapping
business and administrative functions will be crucial in order for the Company
to be profitable. The various systems and procedures of the Company's
operations will have to be coordinated and integrated with those of previously
acquired companies as well as any other businesses which may be acquired in the
future. There can be no assurance that the process of integrating the
businesses acquired through the CMI merger and CRS acquisition and to be
acquired through possible future acquisitions will be successful. Furthermore,
the successful integration of acquired operations may require significant
expenditures and involve substantial unanticipated costs.
TERMINATION OF AMHEALTH ACQUISITION AGREEMENT
On May 10, 1996, CORE entered into an Asset Purchase Agreement (the
"AmHealth Agreement") to acquire substantially all of the assets and operations
(excluding accounts receivable) of AmHealth, Inc. ("AmHealth"), a management
services organization that manages occupational health clinics and on-site
industrial medical facilities in California. On July 24, 1996, the Company
terminated the AmHealth Agreement. On July 30, 1996, AmHealth notified CORE
that AmHealth disputes the validity of CORE's grounds for terminating the
AmHealth Agreement. In addition, AmHealth asserted a contractual right to
terminate the agreement and CORE's consequent obligation to credit AmHealth's
obligation under the AmHealth Loan described below in the amount of $500,000.
Although the Company believes that it was entitled under the terms of the
AmHealth Agreement to effect such termination, there can be no assurance that
AmHealth will not institute a legal proceeding to challenge the Company's right
to effect such termination. Any such legal proceeding could involve significant
legal expenses and an award for damages. AmHealth has suffered recurring
losses, has defaulted on its debt obligations and has a net capital deficiency
which raises substantial doubt about its ability to continue as a going concern.
In connection with the termination of the AmHealth Agreement, the Company
incurred during the three months ending September 30, 1996 a one-time charge to
earnings of approximately $1.0 million related to transaction costs. In
addition, during the first quarter of 1996 the Company made a $1.0 million loan
(the "AmHealth Loan") to AmHealth. Because there is substantial doubt about
AmHealth's ability to repay the AmHealth Loan, the Company wrote-off the
AmHealth Loan during the three months ending September 30, 1996 which resulted
in an additional non-recurring change to earnings of $1.0 million.
RELIANCE ON WORKABILITY(R) PROGRAMS
The Company's strategy involves focusing its growth efforts on, and
consequently committing significant management, marketing and other resources to
expanding, its managed disability services, and in particular its WorkAbility(R)
disability management program. However, revenue derived from this area of
operations represented only 26% of the Company's total revenue for the year
ended December 31, 1995. There can be no assurance that the Company's focus on
its managed disability services will ultimately be profitable for the Company.
The Company's managed disability services are dependent upon the
WorkAbility(R) computer software. The Company's success in deriving revenue
from its WorkAbility(R) software is dependent upon its maintaining the
proprietary and confidential nature of this software. The Company relies on a
combination of database size, trade secret, copyright, trademark and contractual
protections to establish and protect its proprietary rights to the
WorkAbility(R) software. There can be no assurance, however, that the
precautions taken by the Company will be adequate to prevent misappropriation or
re-creation of the Company's database. In addition, these protections and
precautions will not prevent development by independent third parties of
competitive technology or products, and some companies have developed products
which, to some extent, perform functions similar to those performed by the
WorkAbility(R) software.
DEPENDENCE ON KEY CLIENTS
3
<PAGE>
The Company has contracts with several key clients which account for a
substantial portion of its revenues. During the years ended December 31, 1994
and 1995, the Company's five largest clients represented 36.5% and 30.1%,
respectively, of total revenue, and its ten largest clients represented 45.0%
and 51.0%, respectively, of total revenue. Although the Company has entered
into written contracts with clients, the majority of its contracts, including
those with its major clients, permit cancellation by the client upon 60 to 90
days' notice, while certain other of the Company's contracts permit immediate
cancellation under certain circumstances. Additionally, with a few exceptions,
the Company's contracts with its customers do not require minimum payments or
purchase of minimum levels of services. The failure to renew, or the exercise
of cancellation rights contained in, the Company's contracts with its clients,
or a significant reduction in the volume of services requested by the Company's
clients, could have a material adverse effect on the Company.
RISKS RELATED TO GROWTH STRATEGY
The Company's strategy is to continue its internal growth and, as strategic
opportunities arise in the managed disability services market, to pursue
acquisitions of, or relationships with, other companies in related lines of
business. As a result, the Company is subject to certain growth-related risks,
including the risks that it will be unable to retain personnel or acquire other
resources necessary to service such growth adequately. Expenses arising from
the Company's efforts to increase its market penetration may have a negative
impact on operating results. In addition, there can be no assurance that any
suitable opportunities for strategic acquisitions or relationships will arise
or, if they do arise, that the transactions contemplated thereby could be
completed.
EXPOSURE TO PROFESSIONAL LIABILITY
The Company, through its managed care services, makes recommendations
regarding benefit plan coverage and work absence periods based upon judgments of
the appropriateness of proposed medical treatment plans and length of absence,
and consequently claims could be made against the Company in the event of
adverse medical consequences. The Company could also become subject to claims
for the costs of services denied and claims, such as malpractice, arising from
the errors or omissions of health care professionals. A successful claim
against the Company could have a material adverse effect on the Company's
financial position and results of operations. Furthermore, claims against the
Company, regardless of their merit or eventual outcome, may involve substantial
defense costs. There can be no assurance that procedures implemented by the
Company to limit its liability have been or will be effective or that the
Company will not become subject to litigation that may adversely affect its
financial position or results of operations. The Company maintains professional
liability insurance and such other coverages as the Company believes are
reasonable in light of the Company's experience to date. However, there can be
no assurance that such insurance will be sufficient to protect the Company from
liability which might adversely affect the Company's business, operating results
or financial condition or will continue to be available to the Company at
reasonable cost or at all.
GOVERNMENT REGULATION; REIMBURSEMENT; HEALTH CARE REFORM
The health care industry is subject to extensive federal and state
regulation relating to licensure, conduct of operations and prices for services.
A number of states, including several of those in which the Company transacts
business, have extensive licensing and other regulatory requirements applicable
to the Company's business, including utilization review, physician practice
management and workers' compensation. These requirements include compliance
with federal and state prohibitions on the offer or receipt of remuneration for
the referral of patents or other items or services. Additionally, the Company's
clients, including insurance companies, are subject to regulations which
indirectly affect the Company. Regulation in the health care field is
constantly evolving. The Company is unable to predict what additional
government regulations, if any, directly or indirectly affecting its business
may be promulgated. Although the Company believes that it is currently in
compliance with applicable statutes and regulations in those states in which it
is subject to regulation, the Company's business could be adversely affected by
a revocation of or failure to obtain required licenses and governmental
approvals, a failure to comply with applicable statutes or regulations or
significant changes in regulations applicable to its clients.
In addition to existing government health care regulation, there have been
numerous initiatives at the federal and state levels for comprehensive reforms
affecting the payment for and availability of health care services. The Company
believes that such initiatives will continue during the foreseeable future. The
Company is unable to predict what, if any, reform initiatives may be adopted, or
what effect, if any, their adoption may have on the
4
<PAGE>
Company.
RELIANCE ON DATA PROCESSING CAPABILITIES
The Company's business in general, and its WorkAbility(R) disability
management program in particular, is dependent upon the ability to continuously
store, retrieve, process and manage data. Interruption of data processing
capabilities for any extended length of time, loss of stored data, programming
errors or other computer problems could have a material adverse effect on the
business of the Company.
COMPETITION
The markets in which the Company is engaged are highly competitive. In
addition to other utilization management and disability management companies,
the Company competes with insurance companies, third party administrators,
health maintenance organizations and preferred provider organizations ("PPOs").
Many of the Company's competitors are larger and have greater financial and
other resources than the Company. There can be no assurance that competitive
factors in the Company's markets will not have an adverse effect on the Company.
DEPENDENCE ON KEY PERSONNEL
The Company's success will depend to a significant extent upon the skills
of a number of key employees, including Mr. George C. Carpenter IV, the
Company's Chairman of the Board and Chief Executive Officer, Craig C. Horton,
the Company's President and Chief Operating Officer and William E. Nixon, the
Company's Chief Financial Officer, Treasurer and Clerk. The Company does not
have employment agreements with all of its executive officers. In addition, the
Company's success will depend to an extent on its ability to recruit
credentialed physicians for the Company's peer review activities. The future
loss of the services of one or more key persons or the inability to continue to
recruit qualified physicians could adversely affect the Company.
CONTROL BY OFFICERS AND DIRECTORS
The Company's executive officers and directors beneficially own (including
presently exercisable options) more than 20% of the Common Stock. As a result,
the executive officers and directors of the Company acting together would be
able to exert considerable influence over the election of the Company's
directors and the outcome of most corporate actions requiring stockholder
approval. Such concentration of ownership may have the effect of delaying or
preventing a change in control of the Company, which could adversely affect the
market price for the Common Stock.
ANTI-TAKEOVER CONSIDERATIONS
Certain provisions of the Company's certificate of incorporation and by-
laws and Massachusetts law could discourage potential acquisition proposals,
delay or prevent a change in control of the Company and, consequently, limit the
price that investors might be willing to pay in the future for shares of Common
Stock. These provisions include a classified board of directors and the ability
to issue, without further stockholder approval, shares of preferred stock with
rights and privileges senior to the Common Stock. The Company is also subject
to Chapters 110F and 110D of the Massachusetts General Laws, which, in general,
prohibit a corporation with sufficient ties to Massachusetts from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person becomes an
interested stockholder, subject to certain exceptions.
POTENTIAL VOLATILITY OF STOCK PRICE
The market prices for the Common Stock and the securities of certain other
companies in the health care industry have had a history of significant
volatility. The trading price of the Common Stock could continue to be subject
to significant fluctuations due to uncertainties regarding the consolidation of
the businesses of the Company, announcements or actions by competitors,
developments involving the Company's relationships with key clients, government
regulation, developments involving the AmHealth Acquisition, fluctuations in
quarterly results and other factors. These broad market fluctuations, as well
as general economic conditions and the financial performance of the Company, may
adversely affect the market price of the Common Stock.
5
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of the Common Stock in the public
market could adversely affect prevailing market prices and could impair the
Company's ability to raise additional capital through the sale of its equity
securities. The Company is unable to make any prediction as to the effect, if
any, that future sales of Common Stock or the availability of Common Stock for
sale may have on the market price of the Common Stock prevailing from time to
time.
SELLING STOCKHOLDERS
The following is a list of the Selling Stockholders and the amount of
shares which are to be sold:
<TABLE>
<CAPTION>
Selling Stock Number of Shares
- ------------- ----------------
<S> <C>
William Butler 6,700
Walter Kaczor 6,700
Kenneth Masters 7,040
J.C. Sargeant 4,486
John Snyder 10,720
Dermott Whalen 13,458
------
Total 50,104
</TABLE>
PLAN OF DISTRIBUTION
The shares of Common Stock covered by the Prospectus may be offered or sold
from time to time by the Selling Stockholders, or by pledgees, donees,
transferees or other successors in interest. The shares will be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act. Such
sales may be made in block trades, pursuant to purchases by a broker or a dealer
as principal, in private transactions, in negotiated transactions or otherwise,
at prices and at terms then prevailing or at negotiated prices. The Company will
not receive any of the proceeds from sales by the Selling Stockholders.
Any broker or dealer involved in the offer or sale of the shares included
herein may receive brokerage commissions or discounts. To the knowledge of the
Company, there is currently no agreement with any broker or dealer respecting
such transactions. Upon sale of such shares, the Selling Stockholders or anyone
effecting sales on behalf of the Selling Stockholders may be deemed an
underwriter, as that term is defined in the Securities Act. To the Company's
knowledge, each Selling Stockholder does not believe that he or she is an
underwriter within the meaning of the Securities Act. All expenses of the
registration of the Common Stock covered by this Prospectus are to be borne by
the Company.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Restated Articles of Organization contain provisions limiting
the liability of directors to the fullest extent permitted by Massachusetts law
as currently or hereinafter in effect. Massachusetts law currently permits the
elimination of personal liability of a director for monetary damages for breach
of fiduciary duty as a director notwithstanding any provision of law imposing
such liability, except for (i) breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unauthorized distributions to stockholders or loans to insiders, or (iv) any
transactions from which the director derived an improper personal benefit.
The Company's Restated Articles of Organization also provide for the
indemnification of officers and directors of the Company, to the extent legally
permissible, against all liabilities and expenses (including judgments, fines,
penalties and attorneys' fees and under certain circumstances, all amounts paid
in compromise and settlement) reasonably incurred by such officer or director in
connection with any action, suit or proceeding in which any such director or
officer is a defendant or with which he or she may be threatened or otherwise
involved, by reason of his or her being or having been a director or officer of
the Company, except in relation to matters as to which such
6
<PAGE>
director or officer shall be finally adjudged, other than by consent, in such
action, suit or proceeding, not to have acted in the best interests of the
Company.
The Company has entered into separate indemnification agreements with each
of its directors and executive officers providing for indemnification of such
persons to the extent permitted by law.
Additionally, the Company has purchased a directors and officers insurance
policy which, subject to a $250,000 deductible for certain claims, provides
$5,000,000 of coverage.
Pursuant to the Company's March 1996 merger with Core Management, Inc.
("CMI"), the Company agreed not to amend its Restated Articles of Organization
or By-Laws to reduce or limit the right of indemnity afforded to present and
former directors and officers of the Company and CMI or otherwise hinder the
rights of indemnity to such persons for a period of four years following such
merger. The Company and CMI also each agreed to indemnify to the fullest extent
possible under their respective charters and by-laws present and former
directors, officers, employees and agents of the Company and CMI and to maintain
all insurance policies in effect on December 19, 1994 (the date of the
Reorganization Agreement between the Company and CMI).
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed 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.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered hereby
has been passed upon for the Company by Rich, May, Bilodeau & Flaherty, P.C.,
Boston, Massachusetts.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995, included in this Prospectus by reference from the Company's Annual Report
on Form 10-K have been audited by Ernst & Young LLP, independent auditors, as
set forth in their report thereon which is incorporated herein by reference, and
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K filed on March 29, 1996, as
amended by the Company's 10-K/A filed on April 27, 1996, containing audited
financial statements for the Company's latest fiscal year.
(b) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the annual report,
referred to in (a) above.
(c) The description of the Common Stock which is contained in Form 8-A
filed pursuant to the Exchange Act, including any amendment or report filed for
the purpose of updating such description.
(d) The Company's Prospectus, dated August 5, 1996, filed by the Company
with the Commission pursuant to Rule 424(b) of the Securities Act of 1933, as
amended.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Exchange Act prior to termination of this
offering, are hereby incorporated by reference into this Prospectus.
7
<PAGE>
Any statement contained in a document incorporated, or deemed to be
incorporated, by reference herein or contained in this Prospectus 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 which 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 hereby undertakes to provide without charge to each person to
whom a Prospectus is delivered, upon written request of such person, a copy of
any and all of the documents that have been incorporated by reference in this
Prospectus (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
such documents). Such requests may be directed to William E. Nixon, Executive
Vice President, CORE, INC., 18881 Von Karman Avenue, Suite 1750, Irvine, CA
92715.
AVAILABLE INFORMATION
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 statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at its principal office
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission: located at Seven World Trade Center, 13th
Floor, New York, New York, 10048 and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of all or any part of such material may be
obtained from the Public Reference Section of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 upon payment of
prescribed fees. The Company's Common Stock is listed on the Nasdaq Stock
Market's National Market, and material filed by the Company can be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-8 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
are omitted in accordance with the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed or incorporated by
reference as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference and the exhibits and the schedules
thereto. For further information pertaining to the Company and the Common Stock
offered hereby, reference is hereby made to the Registration Statement and the
exhibits and schedules thereto which may be inspected without charge and copies
thereof may be obtained at prescribed rates from, the Public Reference Branch of
the Commission at 450 Fifth Street, N.W. Washington, D.C. 20549.
The Company furnishes to its stockholders annual reports containing
consolidated financial statements audited by its independent auditors and makes
available copies of quarterly reports for the first three quarters of each
fiscal year containing unaudited financial information.
8
<PAGE>
================================================================================
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
____________________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company......................... 2
Risk Factors........................ 2
Selling Stockholder................. 6
Plan of Distribution................ 6
Legal Matters....................... 7
Experts............................. 7
Incorporation of Certain Documents
by Reference...................... 7
Available Information................ 8
</TABLE>
================================================================================
50,104 Shares
CORE, INC.
Common Stock
________________
REOFFER PROSPECTUS
NOVEMBER 25, 1996
________________
================================================================================
9
