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As filed with the Securities and Exchange Commission on August 28, 1996
Registration No. 33-98528
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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PHYCOR, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 62-1344801
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
30 BURTON HILLS BOULEVARD, SUITE 400
NASHVILLE, TENNESSEE 37215
(615) 665-9066
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
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JOSEPH C. HUTTS
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
PHYCOR, INC.
30 BURTON HILLS BOULEVARD, SUITE 400
NASHVILLE, TENNESSEE 37215
(615) 665-9066
(Name address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
J. CHASE COLE, ESQ.
WALLER LANSDEN DORTCH & DAVIS, PLLC
NASHVILLE CITY CENTER
511 UNION STREET, SUITE 2100
NASHVILLE, TENNESSEE 37219-1760
(615) 244-6380
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the Effective Date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box: [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: [ ]
- --------------------
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ]
-----------------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box: [ ]
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EXPLANATORY NOTE
In accordance with Securities and Exchange Commission Rule 416, the
Prospectus included herein has been revised solely to increase the number of
shares offered thereby to reflect all stock dividends through the date of the
Prospectus.
<PAGE> 3
Prospectus
3,000,000 SHARES
PHYCOR, INC.
COMMON STOCK
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In accordance with the applicable rules of the Securities and Exchange
Commission, this Prospectus may be used in connection with separate offerings
of the Common Stock, no par value per share ("Common Stock"), of PhyCor, Inc.
(the "Company").
This Prospectus relates to the resale by the holders thereof (the
"Selling Shareholders") of up to 3,000,000 shares (the "Shares") of the
Company's Common Stock issued without registration under the Securities Act of
1933, as amended (the "Securities Act"), in transactions not involving public
offerings upon the conversion of subordinated convertible notes issued or to be
issued by the Company without registration under the Securities Act in
connection with the acquisition of the assets of single- and multi-specialty
medical clinics, the assets of individual physician practices and the assets of
related businesses, including, but not limited to, management services
organizations, consulting firms and other physician management companies. In
addition, this Prospectus also relates to the resale by certain Selling
Shareholders of Common Stock issued without registration under the Securities
Act in transactions not involving public offerings upon the exercise of options
granted by the Company prior to the adoption by the Company of its stock
incentive plans and warrants issued as consideration for (i) consulting or
other services provided or to be provided to the Company and (ii) the execution
of a management or service agreement with the Company or an affiliate. The
Common Stock may be resold by the Selling Shareholders in such amounts and on
such terms to be set forth in a supplement to this Prospectus (a "Supplement")
or a post-effective amendment (a "Post-Effective Amendment") to the
Registration Statement in which this Prospectus is included. The specific
terms upon which the Common Stock is being offered in connection with the
delivery of this Prospectus will be set forth in the Supplement or
Post-Effective Amendment, as applicable, and will include the specific number
of shares of Common Stock to be sold and other information concerning the
Selling Shareholder or Shareholders. The Company's Common Stock may not be
sold through this Prospectus without delivery of the applicable Supplement or
Post-Effective Amendment.
The Shares held by the Selling Shareholders may be offered from time
to time in transactions on the Nasdaq Stock Market's National Market System, in
negotiated transactions, through the writing of options on the Shares, or a
combination of such methods of sale, at prices related to such prevailing
market prices, or at negotiated prices. The Selling Shareholders may effect
such transactions by selling the Shares of Common Stock to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or the
purchasers of the Shares for which such broker-dealer may act as agent or to
whom they may sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
None of the proceeds from the sale of the Shares by the Selling
Shareholders will be received by the Company. The Company has agreed to bear
all expenses (other than underwriting discounts and selling commissions, and
fees and expenses of counsel and other advisors to the Selling Shareholders) in
connection with the registration of the Shares being offered by the Selling
Shareholders.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. SEE "RISK FACTORS" APPEARING ON
PAGES 3 THROUGH 6.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA-
TION TO THE CONTRARY IS A CRIMINAL OFFENSE.
AUGUST 28, 1996
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AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-3
declared effective on November 16, 1995 including amendments thereto, relating
to the Common Stock offered hereby (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission"). This Prospectus and any
accompanying Supplement do not contain all of the information set forth in the
Registration Statement and exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement or as previously filed with the
Commission and incorporated herein by reference. For further information with
respect to the Company and the Common Stock offered hereby, reference is made
to the Registration Statement, exhibits and schedules. A copy of the
Registration Statement may be inspected by anyone without charge at the
Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of all or any part thereof may be obtained
from the Commission upon payment of certain fees prescribed by the Commission.
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. The reports, proxy statements and other information may be
inspected and copied at the offices of the Commission as stated above or at its
regional offices located in the Northwestern Atrium Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center,
Suite 1300, New York, New York 10048. Copies of such material also can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common Stock
is listed on The Nasdaq Stock Market's National Market System and such reports,
proxy statements and other information concerning the Company can be inspected
and copied at the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C. 20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year
ended December 31, 1995;
(2) The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996;
(3) The Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1996; and
(4) The description of the Company's Common Stock
contained in the Company's Registration Statements on
Form 8-A, dated January 8, 1992 and March 8, 1994,
respectively.
All reports and other documents filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the
date of this Prospectus and prior to the termination of the offering registered
hereby shall be deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of the filing of such documents.
Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
(or in any other subsequently filed document which is also incorporated or
deemed to be incorporated by reference herein) modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus. Subject
to the foregoing, all information appearing herein is qualified in its entirety
by the information appearing in the documents incorporated herein by reference.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON
WRITTEN OR ORAL REQUEST, AT NO CHARGE, FROM THE COMPANY. REQUESTS SHOULD BE
DIRECTED TO PHYCOR, INC., 30 BURTON HILLS BOULEVARD, SUITE 400, NASHVILLE,
TENNESSEE 37215, ATTENTION: N. CAROLYN FOREHAND, VICE PRESIDENT AND GENERAL
COUNSEL (TELEPHONE NUMBER (615) 665-9066). IN ORDER TO ENSURE TIMELY DELIVERY
OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE FIVE BUSINESS DAYS PRIOR TO THE
DATE ON WHICH THE FINAL INVESTMENT DECISION MUST BE MADE.
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RISK FACTORS
In addition to the other information in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Shares offered hereby and any accompanying Prospectus Supplement or Post-
Effective Amendment, as applicable.
No Assurance of Continued Rapid Growth. The Company's
continued growth is dependent upon its ability to achieve significant
consolidation of multi-specialty medical clinics, to sustain and enhance the
profitability of those clinics and to develop and manage independent practice
associations ("IPAs"). The process of identifying suitable acquisition
candidates and proposing, negotiating and implementing an economically feasible
affiliation with a physician group or formation or management of a physician
network is lengthy and complex. Clinic and physician network operations
require intensive management in a dynamic marketplace increasingly subject to
cost containment pressures. There can be no assurance that PhyCor will be able
to sustain its historically rapid rate of growth. The success of PhyCor's
strategy to develop and manage IPAs is largely dependent upon its ability to
form networks of physicians, to obtain favorable payor contracts, to manage and
control costs and to realize economies of scale. Many of the agreements
entered into by physicians participating in PhyCor-managed IPAs are not
exclusive arrangements. The physicians, therefore, could join competing
networks or terminate their relationships with the IPAs. There can be no
assurance that PhyCor will continue to be successful in establishing new IPA
networks or maintaining relationships with affiliated physicians. See "The
Company-Physician Networks."
Additional Financings. The Company's multi-specialty medical
clinic acquisition and expansion program and its IPA development and management
plans require substantial capital resources. The operations of its existing
clinics require ongoing capital expenditures for renovation and expansion and
the addition of costly medical equipment and technology utilized in providing
ancillary services. The Company may also, in certain circumstances, acquire
real estate in connection with clinic acquisitions. The Company will require
additional financing for the development of additional IPAs and expansion and
management of its existing IPAs. The Company expects that its capital needs
over the next several years will exceed capital generated from operations. The
Company plans to incur indebtedness and to issue, from time to time, additional
debt or equity securities, including the issuance of Common Stock or
convertible notes in connection with the types of transactions identified on
the cover page of this Prospectus. The Company's bank credit facility requires
the lenders' consent for borrowings in connection with the acquisition of
certain clinic assets. There can be no assurance that sufficient financing
will be available or available on terms satisfactory to the Company.
Competition. The business of providing health care related
services is highly competitive. Many companies, including professionally
managed physician practice management companies, have been organized to pursue
the acquisition of medical clinics, manage such clinics, employ clinic
physicians or provide services to IPAs. Large hospitals, other multi-specialty
clinics and other health care companies, health maintenance organizations
("HMOs") and insurance companies are also involved in activities similar to
those of the Company. Some of these competitors have longer operating
histories and significantly greater resources than the Company. There can be
no assurance that the Company will be able to compete effectively, that
additional competitors will not enter the market, or that such competition will
not make it more difficult to acquire the assets of multi-specialty clinics on
terms beneficial to the Company. See "The Company - Physician Networks."
Risks Associated with Capitation; Reliance on Physician
Networks. Many of the payor contracts entered into on behalf of PhyCor-managed
IPAs are based on capitated fee arrangements. Under capitation arrangements,
health care providers bear the risk, subject to certain loss limits, that the
aggregate costs of providing medical services to the members will exceed the
premiums received. The management fees are based, in part, upon a share of
surplus, if any, of a capitated amount of revenue. Agreements with payors also
contain "shared risk" provisions under which the Company and the IPA can earn
additional compensation based on utilization of hospital services by members
and may be required to bear a portion of any loss in connection with such
"shared risk" provisions. Any such losses could have a material adverse effect
on the Company. The profitability of the managed IPAs is dependent upon the
ability of the providers to effectively manage the per patient costs of
providing medical services and the level of utilization of medical services.
The management fees are also based upon a percentage
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of revenue collected by the IPAs. Any loss of revenue by the IPAs as a result
of losing affiliated physicians, the termination of third party payor contracts
or otherwise could have a material adverse effect on management fees derived by
the Company from its management of IPAs. Through its service agreements, the
Company also shares in capitation risk assumed by its affiliated physician
groups.
Risks of Changes in Payment for Medical Services. The
profitability of the Company may be adversely affected by Medicare and Medicaid
regulations, cost containment decisions of third party payors and other payment
factors over which the Company has no control. The federal Medicare program
has undergone significant legislative and regulatory changes in the
reimbursement and fraud and abuse areas, including the adoption of the
resource-based relative value scale ("RBRVS") schedule for physician
compensation under Medicare, which may continue to have a negative impact on
the Company's revenue. Efforts to control the cost of health care services are
increasing. Many of the Company's physician groups are becoming affiliated
with provider networks, managed care organizations and other organized health
care systems, which often provide fixed fee schedules or capitation payment
arrangements that are lower than standard charges. Future profitability in the
changing health care environment, with differing methods of payment for medical
services, is likely to be affected significantly by management of health care
costs, pricing of services and agreements with payors. Because the Company
derives its revenues from the revenues generated by its affiliated physician
groups and from its managed IPAs, further reductions in payments to physicians
generally or other changes in payment for health care services could have an
adverse effect on the Company.
Additional Regulatory Risks. The health care industry and
physicians' medical practices are highly regulated at the state and federal
levels. Because of the uniqueness of the structure of the relationships
between the Company and the physician groups and its managed IPAs, there can be
no assurance that review of the Company's business by courts or health care,
tax, labor or other regulatory authorities will not result in determinations
that could adversely affect the operations of the Company or that the health
care regulatory environment will not change in a manner that would restrict the
Company's existing operations or limit the expansion of the Company's business
or otherwise adversely affect the Company. Many state laws restrict the
unlicensed practice of medicine, the splitting or sharing of fees with
non-physician entities and the enforcement of non-competition agreements.
Federal law prohibits the offer, payment, solicitation or receipt of any form
of remuneration in return for the referral of Medicare or state health program
patients or patient care opportunities, or in return for the purchase, lease or
order of items or services that are covered by Medicare or state health
programs. In addition, federal law requires that physician groups be included
within a definition of group practice in order to be permitted to make
referrals within the group. Federal law also prohibits conduct that may result
in price-fixing or other anticompetitive conduct. In addition to criminal
penalties, violators may be excluded from participation in Medicare or state
health programs. Although management of the Company believes the operations of
the Company are in material compliance with existing law, there can be no
assurance that the Company's existing agreements with its physicians including
service agreements or IPA management agreements will not be successfully
challenged.
Applicability of Insurance Regulations. The Company, through
its IPAs, enters into contracts and joint ventures with licensed insurance
companies, such as HMOs, whereby the Company and its IPAs assume risk in
connection with the providing of health care services under capitation
arrangements. To the extent the Company or its managed IPAs are in the
business of insurance as a result of entering into such risk sharing
arrangements, they are subject to a variety of regulatory and licensing
requirements applicable to insurance companies or HMOs. There can be no
assurance that PhyCor or its managed IPAs will not be adversely affected by
such regulations. In connection with multi-specialty medical clinic
acquisitions, the Company has and may continue to acquire HMOs previously
affiliated with such clinics. The HMO industry is highly regulated at the
state level and is highly competitive. Additionally, the HMO industry has been
subject to numerous legislative initiatives within the past several years.
Certain aspects of health care reform legislation may have direct or indirect
consequences for the HMO industry. There can be no assurance that developments
in any of these areas will not have an adverse effect on the Company's
wholly-owned HMOs or on HMOs in which the Company has a partial ownership
interest or other financial involvement.
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Risks Inherent in Provision of Medical Services. The
physician groups with which the Company affiliates and the physicians
participating in networks developed and managed by the Company are involved in
the delivery of health care services to the public and, therefore, are exposed
to the risk of professional liability claims. Claims of this nature, if
successful, could result in substantial damage awards to the claimants which
may exceed the limits of any applicable insurance coverage. Insurance against
losses related to claims of this type can be expensive and varies widely from
state to state. The Company does not control the practice of medicine by
affiliated physicians or the compliance with certain regulatory and other
requirements directly applicable to physicians, physician networks and
physician groups. The Company is indemnified under its service agreements for
claims against the physician groups, maintains liability insurance for itself
and negotiates liability insurance for the physicians affiliated with its
clinics and under its management agreements for claims against the IPAs and
physician members. Successful malpractice claims asserted against the
physician groups, the managed IPAs, or the Company, however, could have a
material adverse effect on the Company.
Impact of Health Care Reform. Although proposed federal
legislation to provide greater control on health care spending has not been
enacted by Congress to date, there can be no assurance that federal health care
legislation will not be adopted in the future. Some states are also adopting
health care programs and initiatives as a replacement for Medicaid. There can
be no assurance that the adoption of such legislation, programs or initiatives
will not have a material adverse effect on the Company.
Dependence on Affiliated Physicians. Substantially all of the
Company's revenue is derived from service or management agreements with the
Company's affiliated clinics, the loss of certain of which could have a
material adverse effect on the Company. In addition, any material decline in
revenue by the Company's affiliated physician groups, whether as a result of
physicians leaving the affiliated physician groups or otherwise, could have a
material adverse effect on the Company.
Risk Associated with PhyCor Management Corporation ("PMC").
PMC, an entity in which the Company owns a minority interest, has been
organized to develop and manage IPAs and provide development and management
services to physician organizations, including assisting in the formation of
prospective PhyCor clinics. PMC is managed by the Company and has a Company
executive officer on its Board of Directors. PMC expects to operate at a loss
during its first few years of operations. The Company will recognize a pro
rata portion of PMC's losses equal to the Company's minority equity interest in
PMC. PMC has been organized so as not to be consolidated with the Company.
Changes in structure or accounting rules or the exercise by the Company of its
option to purchase PMC's Class B Common Stock prior to such time, if any, as
PMC shall have become profitable could result in the Company being required to
consolidate the operations of PMC. Such consolidation could cause the Company
to recognize a greater percentage of PMC's operating losses which could have a
material adverse effect on the Company. See "The Company - Physician
Networks."
Anti-takeover Considerations. The Company is authorized to
issue up to 10,000,000 shares of preferred stock, the rights of which may be
fixed by the Board of Directors. In February 1994, the Board of Directors
approved the adoption of a Shareholder Rights Plan (the "Plan"). The Plan is
intended to encourage potential acquirors to negotiate with the Company's Board
of Directors and to discourage coercive, discriminatory and unfair proposals.
The Company's stock incentive plans provide for the acceleration of the vesting
of options in the event of a change in control, and the Company's Restated
Charter provides for the classification of its Board of Directors into three
classes, with each class of directors serving staggered terms of three years.
In May 1996, the Company's shareholders approved an increase in the number of
authorized shares of Common Stock to 250,000,000. Provisions in the executive
officers' employment agreements provide for post-termination compensation,
including payment of certain of the executive officers' salaries for 24 months,
following a change in control. Most physician groups may terminate their
service agreements with the Company in certain events, including a change in
control of the Company which is not approved by a majority of the Company's
Board of Directors. The former shareholders of North American Medical
Management, Inc., an entity acquired by the Company in January 1995 which
develops and manages IPAs ("North American"), have the right to repurchase the
capital stock of North American in the event of a change of control. A change
in control of the Company also constitutes an event of default under the
Company's bank credit facility. The foregoing
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matters may, together or separately, have the effect of discouraging or making
more difficult an acquisition or change of control of the Company.
THE COMPANY
COMPANY OVERVIEW
As of August 26, 1996, the Company owned and operated 40
clinics with approximately 2,400 physicians in 22 states and manages IPAs with
over 7,000 physicians in 14 markets. The Company's clinics and IPAs provide
capitated medical services to approximately 682,000 members, including
approximately 85,000 Medicare members. PhyCor's objective is to organize
physicians into professionally managed networks that assist physicians in
assuming increased responsibility for delivering cost-effective medical care
while attaining high-quality clinical outcomes.
MULTI-SPECIALTY MEDICAL CLINICS
A multi-specialty medical clinic provides a wide range of
primary and specialty physician care and ancillary services through an
organized physician group practice representing various medical specialties.
Multi-specialty medical clinics historically have been locally owned
organizations managed by practicing physicians.
The Company, in conjunction with its affiliated physician
organizations, achieves growth through the expansion of managed care
relationships, the addition of physicians and the addition and expansion of
ancillary services. In addition, the Company develops physician networks around
its physician groups to enhance managed care contracting and to provide the
physician component of organized health care systems. Effective January 1,
1995, the Company acquired all of the outstanding shares of capital stock of
North American, which operates and manages IPAs. Physicians in affiliated
physician groups may participate in IPAs developed and managed by North
American. See "Physician Networks." The Company is also positioning the clinics
for participation in organized health care systems by establishing strategic
alliances with health maintenance organizations, insurers, hospitals and other
health care providers and by enhancing medical management systems.
Upon the acquisition by the Company of a clinic's operating
assets the affiliated physician group simultaneously enters into a long-term
service agreement with the Company. The Company, under the terms of the service
agreement, provides the physician group with the equipment and facilities used
in their medical practice, manages clinic operations, employs most of the
clinic's non-physician personnel, other than certain diagnostic technicians,
for which it receives a service fee.
The physician groups offer a wide range of primary and
specialty physician care and ancillary services. Approximately one-half of
PhyCor's affiliated physicians are primary care providers. The primary care
physicians are those in family practice, general internal medicine, obstetrics,
pediatrics and emergency and urgent care. The Company works closely with the
physician groups in targeting and recruiting physicians from outside the
community and merging physicians in sole practice or single specialty groups,
especially primary care groups, into the clinics' physician groups.
Substantially all of the physicians practicing in the clinics are certified or
eligible to be certified by the applicable specialty boards.
The Company's affiliated physicians maintain full professional
control over their medical practices, determine which physicians to hire or
terminate and set their own standards of practice in order to promote high
quality health care. Pursuant to its service agreements with physician groups,
the Company manages all aspects of the clinic other than the provision of
medical services, which is controlled by the physician groups. At each clinic,
a joint policy board equally comprised of physicians and Company personnel
focuses on strategic and operational planning, marketing, managed care
arrangements and other major issues facing the clinic. The joint policy board
involves experienced health care managers in the decision-making process and
brings increased discipline and accountability to clinic operations.
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The Company negotiates national arrangements that provide cost
savings to the clinics through economies of scale in malpractice insurance,
supplies and equipment. The Company has a productivity resource program that
aligns staffing with volume and service needs. Upon assuming the operations of
a clinic, the Company implements a standard set of business policies and
reviews the procedure coding practices in each clinic. The Company's new
information processing system is now available in several of the Company's
clinics and is expected to be implemented in additional clinics in the future.
This system provides an expanded capability for accounting, billing,
receivables tracking, scheduling, and management reporting.
PHYSICIAN NETWORKS
IPAs offer physicians an opportunity to participate in
expanding organized health care systems and assistance in contracting with
insurance and HMO organizations and other large purchasers of health care
services. IPAs consolidate independent physicians by providing general
organizational structure and management to the physician network. IPAs provide
or contract for medical management services to assist physician networks in
obtaining and servicing managed care contracts. Physicians affiliated with IPAs
often seek additional practice management services, including billing, staffing
and financial management services, which are provided in certain circumstances
by management service organizations ("MSOs").
Primarily through North American, the Company establishes
management companies through which all health plan contracts are negotiated.
These management companies, in which physicians may have an equity interest,
provide information and operating systems, actuarial and financial analysis,
medical management and provider contract services to the IPA. The Company
assists physicians in forming networks to develop a managed care delivery
system in which the IPA accepts fiscal responsibility for providing a wide
range of medical services. The Company intends to continue to develop primary
care-oriented health delivery systems. It is anticipated that the Company will
target markets that do not have established managed care networks but are in
need of physician networks.
In June 1995, the Company purchased a minority interest in PMC
by acquiring all the outstanding shares of PMC's Class C Common Stock, and the
Company and PMC completed an offering of units consisting of shares of PMC
Class B Common Stock and ten-year warrants to purchase 348,004 shares of the
Company's Common Stock at $15.39 per share. PMC intends to develop and manage
networks of physicians through IPAs and MSOs with which PMC will enter into
long-term relationships. The Company provides services to PMC pursuant to a
ten-year administrative services agreement and has an option to purchase the
remaining equity interest of PMC prior to the end of May 2005.
SELLING SHAREHOLDERS
The Company has issued, and intends to continue to issue,
convertible subordinated notes in connection with its acquisition of the assets
or stock of individual physician practices, single and multi-specialty clinics
and related businesses, including, but not limited to, management services
organizations, consulting firms and other physician management companies. Upon
conversion of such notes, the Selling Shareholders will receive unregistered
shares of Common Stock. The Company has in the past and may in the future
issue warrants to purchase shares of Common Stock to certain individuals in
consideration for (i) consulting or other services provided or to be provided
to the Company and (ii) the execution of a management or service agreement with
the Company or an affiliate. Upon the exercise of such warrants, the Selling
Shareholders will receive unregistered shares of Common Stock. In addition,
the Company has granted options to purchase shares of Common Stock to certain
individuals prior to the adoption of its stock incentive plans. Upon exercise
of such options, the Selling Shareholders will receive unregistered shares of
Common Stock.
The Selling Shareholders may determine to reoffer the Shares
to the public. The identity of the Selling Shareholders, the number of Shares
to be sold by the Selling Shareholders and the price per Share will be
determined at the time of the consummation of the particular transaction.
Specific information regarding the
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transaction, the identity of the Selling Shareholders and the number of Shares
to be resold will be provided at the time of such transaction by means of a
Supplement or a Post-Effective Amendment, as applicable.
PLAN OF OFFERING BY THE SELLING SHAREHOLDERS
The sale of the Shares by the Selling Shareholders may be
effected from time to time in transactions on the Nasdaq Stock Market's
National Market System, in negotiated transactions, through the writing of
options on the Shares, or through a combination of such methods of sale, at
prices related to such prevailing market prices prevailing at the time of sale,
or at negotiated prices. The Selling Shareholders may effect such transactions
by selling the Shares to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders and/or the purchasers of the Shares for which such
broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer may be in excess of
customary commissions).
The Selling Shareholders and any broker-dealers who act in
connection with the sale of the Shares hereunder may be deemed to be an
"underwriter" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and profit on any resale of the Shares as
principal may be deemed to be underwriting discounts and commissions under the
Securities Act.
The Company intends to make available public information
concerning itself in compliance with the Securities Act and the regulations
thereunder, and accordingly, Rule 144 or 145 adopted under the Securities Act
may be available for use by holders of Common Stock to effect transfers of such
securities, subject to compliance with the applicable provisions of such rules.
The terms of particular acquisitions by the Company may require the holder of
Common Stock to use Rule 144 or 145, if available, for the resale of Common
Stock rather than to effect resales pursuant to this Prospectus.
LEGAL MATTERS
Certain legal matters with respect to the validity of the
Common Stock offered hereby will be passed upon for the Company by Waller
Lansden Dortch & Davis, a Professional Limited Liability Company, Nashville
City Center, Nashville, Tennessee.
EXPERTS
The Consolidated Financial Statements of the Company
incorporated herein by reference have been included in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, upon the
authority of such firm as experts in accounting and auditing.
8
<PAGE> 11
<TABLE>
============================================================== ==============================================================
<S> <C>
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE
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 OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFEROR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR 3,000,000 SHARES
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.
PHYCOR, INC.
COMMON STOCK
---------------
---------------
TABLE OF CONTENTS
Page PROSPECTUS
----
---------------
Available Information . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Information by Reference . . . . 2
Risk Factors . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . 6
Selling Shareholders . . . . . . . . . . . . . . . . . . 7
Plan of Offering by the Selling Shareholders . . . . . . 8
Legal Matters . . . . . . . . . . . . . . . . . . . . . . 8
Experts . . . . . . . . . . . . . . . . . . . . . . . . . 8
August 28, 1996
============================================================== ==============================================================
</TABLE>
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses to be incurred in connection with this Registration Statement are as follows.
<S> <C>
Commission Registration Fee $ 23,449
National Association of Securities Dealers, Inc. Fee --
State Qualification Expenses (including legal fees) --
Auditor's Fees and Expenses 10,000
Legal Fees and Expenses 25,000
Miscellaneous Expenses 551
---------
TOTAL $ 50,000
=========
</TABLE>
The Company has agreed to bear all expenses (other than
underwriting discounts and selling commissions, and fees and expenses of
counsel and other advisors to the Selling Shareholders) in connection with the
registration and sale of the Shares being offered by the Selling Shareholders.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Article 8 of the Registrant's Amended Bylaws provides as
follows:
The Corporation may indemnify, and upon request may advance
expenses to, any person (or the estate of any person) who was
or is a party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding,
whether or not by or in the right of the Corporation, and
whether civil, criminal, administrative, investigative or
otherwise, by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against any liability
incurred in the action, suit or proceeding, despite the fact
that such person has not met the standard of conduct set forth
in Section 48-18-502(a) of the Tennessee Business Corporation
Act (the "Act") or would be disqualified for indemnification
under Section 48-18-502(d) of the Act, if a determination is
made by the person or persons enumerated in Section
48-18-502(b) of the Act that the director or officer seeking
indemnification is liable for (i) any breach of the duty of
loyalty to the Corporation or its shareholders, (ii) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law or (iii) voting for or
assenting to a distribution in violation of the Act.
Section 7 of the Registrant's Restated Charter provides as
follows:
The Corporation shall indemnify, and upon request shall advance
expenses to, in the manner and to the full extent permitted by
law, any person (or the estate of any person) who was or is a
party to, or is threatened to be made a party to, any
threatened, pending or completed action, suit or proceeding,
whether or not by or in the right of the Corporation, and
whether civil, criminal, administrative, investigative or
otherwise, by reason of the fact that such person is or was a
director, officer, or employee of the Corporation, or is or was
serving at the request of the Corporation as a director,
officer, partner, trustee, employee or agent of another
corporation, partnership, joint venture, trust or other
enterprise (an "indemnitee"). The indemnification provided
herein shall not be deemed to limit the right of the
Corporation to indemnify any other person for any such expenses
to the full extent permitted by law, nor shall it be deemed
exclusive of any other rights to which any
II-1
<PAGE> 13
person seeking indemnification from the Corporation may have or
hereafter acquire under this Charter or the Bylaws of the
Corporation or under any agreement or vote of shareholders or
disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office; provided, however, that the Corporation
shall not indemnify any such indemnitee in connection with a
proceeding (or part thereof) if a judgment or other final
adjudication adverse to the indemnitee establishes his
liability (i) for any breach of the duty of loyalty to the
Corporation or its shareholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law or (iii) under Section 48-18-304 of
the Tennessee Business Corporation Act.
(b) In addition to the foregoing provisions of the Amended
Bylaws and Restated Charter of the Registrant, directors, officers, employees
and agents of the Registrant may be indemnified by the Registrant, pursuant to
the provisions of Section 48-18-501 et seq. of the Tennessee Code Annotated.
(c) In addition, the Registrant maintains directors and
officers liability insurance.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit Description of
Number Exhibits
- ------ --------
<S> <C>
4.1 Restated Charter of the Registrant (c)
4.2 Amendment to Restated Charter of the Registrant (d)
4.3 Amendment to Restated Charter of the Registrant (a)
4.4 Amended Bylaws of the Registrant (c)
4.5 Form of Common Stock Certificate (e)
5 Opinion of Waller Lansden Dortch & Davis, a Professional
Limited Liability Company, including consent (b)
23.1 Consent of KPMG Peat Marwick LLP (a)
23.2 Consent of Waller Lansden Dortch & Davis, a Professional
Limited Liability Company (b)
24 Power of Attorney (b)
</TABLE>
- -------------------------
(a) Filed herewith.
(b) Previously filed.
(c) Incorporated by reference to the exhibits filed with the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994,
Commission No. 0-19786.
(d) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-3, Registration No. 33-93018.
(e) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-1, Registration No. 33-44123.
II-2
<PAGE> 14
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
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 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 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 2 to the Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Nashville, State of Tennessee, on August 28, 1996.
PHYCOR, INC.
By: /s/Joseph C. Hutts
-----------------------------
Joseph C. Hutts
Chairman of the Board,
President and Chief Executive
Officer
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 dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
* Director August 28, 1996
- -------------------------
Ronald B. Ashworth
* Director August 28, 1996
- -------------------------
Sam A. Brooks, Jr.
* Executive Vice August 28, 1996
- ------------------------- President, Corporate
Thompson S. Dent Services and Director
* Director August 28, 1996
- -------------------------
Winfield Dunn
* Director August 28, 1996
- -------------------------
C. Sage Givens
* Director August 28, 1996
- -------------------------
Joseph A. Hill, M.D.
</TABLE>
II-4
<PAGE> 16
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/Joseph C. Hutts Chairman of the Board, August 28, 1996
- ------------------------------ President, Chief
Joseph C. Hutts Executive Officer
(Principal Executive
Officer) and Director
/s/John K. Crawford Vice President, Treasurer August 28, 1996
- ------------------------------ (Principal Financial and
John K. Crawford Accounting Officer)
* Director August 28, 1996
- ------------------------------
James A. Moncrief, M.D.
* Executive Vice President, August 28, 1996
- ------------------------------ Development and Director
Derril W. Reeves
* Executive Vice President, August 28, 1996
- ------------------------------ Operations and Director
Richard D. Wright
</TABLE>
* By: /s/Joseph C. Hutts
----------------------------------
Joseph C. Hutts,
Attorney-In-Fact
II-5
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Page Number
- -------------- -----------
<S> <C>
4.1 Restated Charter of the Registrant (c)
4.2 Amendment to Restated Charter of the Registrant (d)
4.3 Amendment to Restated Charter of the Registrant (a)
4.4 Amended Bylaws of the Registrant (c)
4.5 Form of Common Stock Certificate (e)
5 Opinion of Waller Lansden Dortch & Davis, a Professional Limited
Liability Company, including consent (b)
23.1 Consent of KPMG Peat Marwick LLP (a)
23.2 Consent of Waller Lansden Dortch & Davis, a Professional Limited
Liability Company (b)
24 Power of Attorney (b)
</TABLE>
_________________________
(a) Filed herewith.
(b) Previously filed.
(c) Incorporated by reference to the exhibits filed with the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994,
Commission No. 0-19786.
(d) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-3, Registration No. 33-93018.
(e) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form S-1, Registration No. 33-44123.
II-6
<PAGE> 1
EXHIBIT 4.3
ARTICLES OF AMENDMENT TO THE RESTATED CHARTER
OF
PHYCOR, INC.
To the Secretary of State of the State of Tennessee:
Pursuant to the provisions of Section 48-20-106 of the Tennessee Code
Annotated, the undersigned corporation submits this Amendment to its Restated
Charter for the purpose of increasing the number of authorized shares of common
stock:
ARTICLE ONE
The name of the corporation is PhyCor, Inc.
ARTICLE TWO
The following resolution amending the Restated Charter of PhyCor, Inc.
(the "Company"), was duly adopted by the Board of Directors of the Company at a
meeting duly held on February 16, 1996:
RESOLVED, that, subject to the approval of the shareholders of the
Company, the Company hereby proposes and declares it advisable to increase the
number of shares of Common Stock which the Company shall have the authority to
issue by deleting in its entirety Section 5(a) of the Company's Restated
Charter and replacing such Section 5(a) with a new Section 5(a) which shall
read as follows:
Two Hundred Fifty Million (250,000,000) shares of Common
Stock, such shares having unlimited voting rights as a class
with each share entitled to one (1) vote per share and such
class of shares entitled to receive the remaining net assets
of the Company upon dissolution after all distributions to
holders of Preferred Stock having a liquidation preference
over the Common Stock; and
ARTICLE THREE
The above amendment to the Restated Charter of the Company was duly
adopted and approved by the shareholders of the Company on May 15, 1996.
PHYCOR, INC.
By: /s/ Joseph C. Hutts
----------------------------
Title: President
-------------------------
Dated: May 22, 1996
<PAGE> 1
EXHIBIT 23.1
The Board of Directors
PhyCor, Inc.:
We consent to incorporation by reference in the registration statement No.
33-98528 on Form S-3 of PhyCor, Inc. of our report dated February 13, 1996,
with respect to the consolidated balance sheets of PhyCor, Inc. and
subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of income, shareholders' equity and cash flows for each of the years
in the three-year period ended December 31, 1995, which report appears in the
December 31, 1995 annual report on Form 10-K of PhyCor, Inc., and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
---------------------
KPMG Peat Marwick LLP
Nashville, Tennessee
August 26, 1996
