<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 92612
---------------------------------------------------------------
(Address of principal executive offices)
(zip code)
CORE, INC. 1991 STOCK OPTION PLAN, AS AMENDED
CORE MANAGEMENT, INC. EMPLOYEE STOCK OPTION PLAN
AND OTHER STOCK OPTIONS
(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 92612
(Name and address of agent for service)
(714) 442-2100
(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, MA 02108
(617) 482-1360
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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
- ---------------- ---------- ---------------------------- ----------------------------- ----------------
<S>
Common Stock, par <C> <C> <C> <C>
value $0.10 per 1,362,949 $3.125-$9.25 $8,008,510 $2,362.51
share
- ---------------- ---------- ---------------------------- ----------------------------- ----------------
</TABLE>
- ----------
(1) Calculated in accordance with Rule 457(h) based on the price at which the
options for the shares registered hereby may be exercised.
*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 II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference.
CORE, INC. (the "Company") hereby incorporates by reference into this
Registration Statement the following documents:
(a) The Company's latest annual report filed with the Securities and Exchange
Commission 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 on Form S-1 filed May 13, 1996 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
Not applicable.
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 subsidiaries.
Stephen M. Kane, Esq., a member of such firm, is the Assistant Clerk of the
Company.
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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 officers or directors 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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Item 8. Exhibits
<TABLE>
<S> <C>
4.1 Restated Articles of Organization of the Registrant, dated November 22,
1991, as further amended by Articles of Amendment, dated March 24, 1995,
July 28, 1995 and October 28, 1996. Filed as exhibit no. 4.1 to
Registrant's Quarterly Report on Form 10-Q, filed November 13, 1996, and
incorporated herein by reference.
4.2 By-Laws of the Registrant, as amended. Filed as exhibit no. 3.2 to
Registrant's Annual Report on Form 10-K, filed March 30, 1993, and
incorporated herein by reference.
4.3 Specimen Common Stock certificate. Filed as exhibit no. 4.1 to
Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
4.4 Registrant's Amended and Restated 1991 Stock Option Plan. Filed as exhibit
no. 4.3 to the Registrant's Registration Statement on Form S-8
(Registration No. 333-15261), filed October 31, 1996, and incorporated
herein by reference.
4.5 Form of Stock Option Agreement for 19,500 shares to vest quarterly over
three years granted March 24, 1995, to non-employee directors, including
schedule of optionees. Filed as Exhibit No. 10.2 to Registrant's Quarterly
Report on Form 10-Q, filed November 14, 1995, and incorporated herein by
reference.
4.6 Form of Stock Option Agreement for 4,875 shares, granted March 24, 1995 to
non-employee directors, including schedule of optionees. Filed as Exhibit
No. 10.3 to Registrant's Quarterly Report on Form 10-Q, filed November 14,
1995, and incorporated herein by reference.
4.7 Form of Stock Option Agreement, granted April 27, 1995, to executive
officers, including schedule of executive officer optionees. Filed as
Exhibit No. 10.4 to Registrant's Quarterly Report on Form 10-Q, filed
November 14, 1995, and incorporated herein by reference.
4.8 Form of Stock Option Agreement for 12,375 shares of Registrant's common
stock granted November 8, 1995 to four non-employee directors. Filed as
exhibit no. 10.58 to the Registrant's Annual Report on Form 10-K, filed
April 1, 1996, and incorporated herein by reference.
4.9 Incentive Stock Option Agreement, dated December 8, 1995, between
Registrant and Fredric L. Sattler. Filed as exhibit no. 10.50 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
4.10 Form of Stock Option Agreement, granted March 29, 1996, to officers,
including schedule of officer optionees. Filed as exhibit no. 10.31 to
Registrant's Registration Statement on Form S-1 (Registration No.
333-03639), filed May 13, 1996, and incorporated herein by reference.
4.11 Form of Stock Option Agreement, granted March 29, 1996, for consulting
services, including schedule of optionees. Filed as exhibit no. 10.32 to
Registrant's Registration Statement on Form S-1 (Registration No.
333-03639), filed May 13, 1996, and incorporated herein by reference.
4.12 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.
4.13 Forms of Stock Option Agreement under Core Management, Inc. Employee Stock
Option Plan. Filed as exhibit no. 10.66 to the Registrant's Registration
Statement on Form S-4 (Registration No. 33-73906), filed January 10, 1994,
and incorporated herein by reference.
</TABLE>
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Item 8. Exhibits
<TABLE>
<S> <C>
4.14 Form of Non-Employee Director Stock Option Agreement of Core Management,
Inc. Filed as exhibit no. 10.67 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, independent auditors.
23.2* Consent of Rich, May, Bilodeau & Flaherty, P.C. (contained in the opinion
filed as Exhibit 5.1 hereto).
99.1* Reoffer Prospectus.
</TABLE>
- ---------------
* Filed herewith
Item 9. 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: to include any
material information with respect to the plan of distribution not
previously disclosed in this Registration Statement or any material
change to such information in this Registration Statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof; and
(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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
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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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 6th day of May,
1998.
CORE, INC.
By: /s/George C. Carpenter IV
----------------------------
George C. Carpenter IV
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
/s/George C. Carpenter IV Chairman of the Board of Directors May 6, 1998
- -------------------------- and Chief Executive Officer
George C. Carpenter IV (Principal Executive Officer)
/s/ William E. Nixon Chief Financial Officer, Executive May 6, 1998
- --------------------------- Vice President and Treasurer
William E. Nixon (Principal Financial Officer)
/s/ Craig C. Horton President and Director May 6, 1998
- ---------------------------
Craig C. Horton
/s/ Pamela Ochs-Piasecki Corporate Controller (Principal May 6, 1998
- --------------------------- Accounting Officer)
Pamela Ochs-Piasecki
/s/ Leslie Alexandre Director May 6, 1998
- ---------------------------
Leslie Alexandre
/s/ Stephen C. Caulfield Director May 6, 1998
- ---------------------------
Stephen C. Caulfield
/s/ Richard H. Egdahl, M.D. Director May 6, 1998
- ---------------------------
Richard H. Egdahl, M.D.
/s/ John Pappajohn Director May 6, 1998
- ---------------------------
John Pappajohn
6
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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
May 14, 1998
CORE, INC.
18881 Von Karman Avenue
Suite 1750
Irvine, CA 92612
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 of the Company's
Registration Statement on Form S-8 for the registration of an aggregate of
1,362,949 shares of the Company's Common Stock, which have been issued or are
issuable 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, when
issued, delivered and paid for in accordance with the terms of the respective
stock option agreement, will be validly issued, fully paid and 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
United States of America.
Very truly yours,
/s/ Rich, May, Bilodeau & Flaherty, P.C.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
(Form S-8) pertaining to the CORE, INC. 1991 Stock Option Plan, as amended, Core
Management, Inc. Employee Stock Option Plan and Other Stock Options of CORE,
INC., of our report dated February 19, 1998 (except for Note 15, as to which the
date is March 17, 1998), with respect to the consolidated financial statements
and schedule of CORE, INC. included in its annual report (Form 10-K) for the
year ended December 31, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 14, 1998
<PAGE>
Exhibit 99.1
REOFFER PROSPECTUS
882,750 SHARES
CORE, INC.
COMMON STOCK
This Prospectus covers 882,750 shares of common stock, par value $0.10
per share (the "Common Stock"), of CORE, INC. (the "Company"), which have been
issued or are issuable 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 COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
-----------------------
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.
-------------------------
May 14, 1998
<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 (which
consist of the Company's proprietary WorkAbility(R) program, analytic consulting
services, social security disability benefits advocacy, Medicare coordination of
benefits, bill audit services and job analysis and loss prevention services),
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.
CORE's managed disability services include monitoring the
appropriateness of disability durations under short and long-term disability
plans and workers' compensation programs in order to reduce unnecessary
absenteeism and its related costs of wage replacement, hiring and training
replacement personnel and lost productivity. These services are based on CORE's
WorkAbility program, a proprietary software program developed over a ten-year
period through the statistical analysis of disability utilization data. CORE's
WorkAbility managed disability program provides an objective, medically based
method for recommending and monitoring employee's return-to-work dates. The
WorkAbility program is designed to obtain and analyze relevant medical and
work-related information with the initial onset of the employee's absence and
thus assure that the employee, attending physician and employer all have
reasonable and consistent expectations as to the projected return-to-work date.
The Company's social security disability benefits advocacy program provides
assistance to disabled employees with obtaining their Social Security Disability
Insurance ("SSDI") benefits. CORE's Medicare program assists employees of
self-insured companies (mostly Fortune 500) with acquiring their Medicare
entitlement and securing claims for payments covered under the government funded
Medicare program.
CORE's independent physician review programs provide pre-certification,
concurrent and appellate physician review services for use with utilization
management programs of the Company's insurance company and self-insured
corporate clients. The Company believes its more than 300 Board certified
physician reviewers comprise the largest independent physician review service in
the country. CORE's behavioral health review program provides comparable review
service by psychiatric specialists in sub-specialties such as adult and child
psychiatry, alcoholism and chemical dependency. The Company also provides
utilization review services designed to evaluate the medical necessity and
appropriateness of health care services prescribed for participants in health
care and medical plans. In cases of high cost injuries or illness, CORE also
renders case management services for individual cases to assure that
cost-effective treatment alternatives are utilized.
The Company was incorporated in Massachusetts in April 1984 under the
name Peer Review Analysis, Inc. ("PRA") to provide physician-intensive
utilization management 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 of 1995, PRA completed its merger (the "CMI/PRA Merger")
involving Core Management, Inc., a Delaware corporation ("CMI"). CMI was
incorporated in 1990 to acquire the health and disability cost management
services business (including the WorkAbility program) of Health Data Institute,
Inc., a subsidiary of Baxter International, Inc. The CMI/PRA Merger was treated
as a pooling of interests for accounting purposes. In July 1995, the Company
changed its name from Peer Review Analysis, Inc. to CORE, INC. The description
herein of the business of the Company includes the operations of both PRA and
CMI from the inception of both companies.
On October 2, 1995, CORE acquired all the capital stock of Cost Review
Services, Inc., a workers' compensation bill audit firm. In June 1997, CORE
purchased certain of the assets of Social Security Disability Consultants and
Disability Services, Inc. (collectively, "SSDC"), a disability management
services firm which provides social security disability benefits advocacy and
Medicare coordination of benefits. In July 1997, the Company purchased the
assets and certain liabilities of Protocol Work Systems, Inc., a provider of job
analysis, employee physical abilities testing and other loss prevention services
to the workers' compensation market. In March 1998, the Company acquired the
operating assets of Transcend Case Management ("TCM"), a provider of workers'
compensation case management services.
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The Company's executive offices are located at 18881 Von Karman Avenue,
Suite 1750, Irvine, California 92612, and its telephone number at that address
is (714) 442-2100.
WorkAbility 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.
Recent Acquisitions; Risks of Integration; New Business Lines
The Company's operations have expanded significantly as a result of the
June 1997 acquisition of Social Security Disability Consultants and Disability
Services, Inc. (collectively, "SSDC"). 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 acquisition of SSDC has resulted in the Company becoming larger 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 maintain its profitability. 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 SSDC 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.
Reliance on Workability(R) Programs
The Company's managed disability services are based on the WorkAbility
program, a proprietary software program developed and maintained through the
statistical analysis of disability utilization data. The Company's success in
deriving revenue from its WorkAbility program 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 program. 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 program.
Dependence on Key Clients
The Company has contracts with several key clients, which account for a
substantial portion of its revenues. During the years ended December 31, 1996
and 1997, the Company's five largest clients represented 36% and 43%,
respectively, of total revenue, and its ten largest clients represented 53% and
58%, respectively, of total revenue. Although the Company has entered into
written contracts with clients, the majority of its
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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.
History of Losses; Uncertainty of Future Profitability
The Company has recorded net losses of $3,376,000 for 1993, $4,699,000
for 1994 and $79,000 for 1995. The Company has recorded net income of $144,000
for 1996 and $2,752,000 for 1997. An accumulated deficit of approximately $8
million remains at December 31, 1997. There can be no assurance that the Company
will maintain its' profitability on a quarterly or annual basis. Moreover, the
level of profitability cannot be accurately predicted.
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 that
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
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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 Company.
Reliance on Data Processing Capabilities
The Company's business in general, and its WorkAbility 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 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 outstanding options) more than 20% of the Company's 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 of 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.
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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 announcements or actions by competitors,
developments involving the Company's relationships with key clients, government
regulation, 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.
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
Information concerning a group of the Selling Stockholders, comprised
of officers and directors of the Company who hold options to purchase Common
Stock, some of which remain subject to future vesting, their ownership of Common
Stock and the amount of Common Stock which may be offered for each Selling
Stockholder's account, will be provided in a supplement to this Prospectus.
2,100 shares of Common Stock offered by this Prospectus are for the
account of certain employees and former employees of the Company and consultants
to the Company who own Common Stock pursuant to their respective previous
exercises of options to purchase Common Stock. In each case, such individual
owns less than 1,000 shares of Common Stock and may use this Prospectus for
reoffers and resales. In addition, 20,400 shares of Common Stock offered by this
Prospectus are for the account of Stephen Caulfield, a director of the Company
who purchased such shares pursuant to the terms of an option agreement by and
between him and the Company. Prior to the filing of this Prospectus, Mr.
Caulfield owned 49,401 shares of Common Stock and held options (some of which
remain subject to future vesting) to purchase an additional 87,875 shares of
Common Stock.
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
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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 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 that, subject to a $250,000 deductible for certain claims,
provides $5,000,000 of coverage.
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,
1996 and 1997 and for each of the three years in the period ended December 31,
1997, 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 April 1, 1998, as
amended by the Company's 10-K/As filed on April 8, 1998 and April 30, 1998,
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 the
Company's prospectus, described in item (d), below, 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.
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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
92612.
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. In addition, such material may also be accessed electronically
at the Commission's Internet home page (http://www.sec.gov). 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
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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.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
The Company 2
Risk Factors 3
Selling Stock holders 6
Plan of Distribution 6
Indemnification of Officers and Directors 6
Legal Matters 7
Experts 7
Incorporation of Certain Documents by Reference 7
Available Information 8
</TABLE>
882,750 Shares
CORE, INC.
Common Stock
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REOFFER PROSPECTUS
May 14, 1998
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