<PAGE> 1
REGISTRATION NO. 33-98528
PURSUANT TO RULE 424(B)(5)
SUPPLEMENT TO PROSPECTUS,
DATED AUGUST 28, 1996
PHYCOR, INC.
3,000,000 SHARES
COMMON STOCK
---------------------------
The Prospectus, dated August 28, 1996 (the "Prospectus"), to
which this Supplement, dated November 1, 1996, is attached (the "Supplement"),
relates to the resale by the holders thereof of up to an aggregate of 3,000,000
shares of Common Stock, no par value per share (the "Common Stock"), of PhyCor,
Inc. (the "Company"), issued upon the conversion of subordinated convertible
notes issued or to be issued by the Company without registration under the
Securities Act of 1933, as amended (the "Act") in connection with the
acquisition of the assets of (i) single and multi-specialty medical clinics,
(ii) the assets of individual physician practices and (iii) 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 holders of
Common Stock issued 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.
This Supplement relates to the proposed resale of 117,671
shares of the Company's Common Stock by South Texas Medical Clinics, P.A., a
Texas professional association (the "Clinic"). Such shares were issued to the
Clinic upon the conversion of a 7.0% Subordinated Convertible Note in the
aggregate principal amount of $2,850,000 (the "Conversion Note"). The Company
issued the Conversion Note and one additional 7.0% Convertible Subordinated
Note in the principal amount of $2,733,962 (collectively, the "Purchase Notes")
to the Clinic in connection with the acquisition by PhyCor of Wharton, Inc., a
Tennessee corporation and wholly-owned subsidiary of the Company
("PhyCor-Wharton"), of certain assets of the Clinic pursuant to an Asset
Purchase Agreement between PhyCor and the Clinic effective as of November 1,
1995 (the "Purchase Agreement").
Terms defined in the Prospectus have the same meaning in this
Supplement unless the context requires otherwise. All share numbers used
herein give effect to a three-for-two stock split of the Common Stock effected
June 14, 1996 in the form of a 50% stock dividend.
---------------------------
The date of this Supplement is November 1, 1996.
<PAGE> 2
THIS SUPPLEMENT 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.
Selling Shareholder
The Clinic operates a multi-specialty medical clinic in
Wharton, Texas and maintains six satellite locations in the area. The Clinic's
principal office is located at 2100 Regional Medical Drive, Wharton, Texas
77488.
The Company, through PhyCor-Wharton, acquired substantially
all of the assets of the Clinic pursuant to the Purchase Agreement. In
connection therewith, the Company issued the Purchase Notes to the Clinic in a
transaction exempt from the registration requirements of the Act. On November
1, 1996, the Clinic converted the Conversion Note, in accordance with its
terms, into an aggregate of 117,671 shares of Common Stock (the "Shares"). The
Clinic intends to resell the Shares in accordance with the terms of the
Prospectus.
In connection with the acquisition of the assets of the
Clinic, PhyCor-Wharton entered into a Service Agreement, effective as of
November 1, 1995 (the "Service Agreement") with the Clinic. Pursuant to the
Service Agreement, PhyCor-Wharton will provide the Clinic with the equipment
and facilities used in the medical practice of the Clinic, manage Clinic
operations and employ the Clinic's non-medical professional personnel in
exchange for a service fee. The Service Agreement will be for a term of 40
years and may only be terminated in limited circumstances.
Plan of Distribution
This Supplement relates to the reoffering of the Shares by the
Clinic. The Clinic has designated Equitable Securities Corporation
("Equitable"), a registered broker-dealer, as agent for the resale of the
Shares. The Shares will be sold in private or block transactions in the
over-the-counter market (including the Nasdaq Stock Market (National Market
System)) or otherwise at fixed prices which may be charged, at market prices
prevailing at the time of the sale, at prices related to such prevailing market
price, or at negotiated prices. Equitable has agreed to use its best efforts
to sell the Shares on behalf of the Clinic. The Clinic and/or Equitable may
effect such transactions by selling the Shares to or through other
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Clinic, Equitable and/or the
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they may sell as principal or both (which compensation as to a particular
broker-dealer may be in excess of customary commissions). The Clinic and/or
Equitable and any broker-dealers that act in connection with the sale of the
Shares may be deemed to be an "underwriter" within the meaning of Section 2(11)
of the Act, and any commissions received by (or discounts allowed to) them and
any profit on the resale of the Shares as principal may be deemed to be
underwriting discounts and commissions.
2
