<PAGE> 1
Registration No. 333-49983
Filed Pursuant to Rule 424(B)(3)
636,478 SHARES
RENAL CARE GROUP, INC.
COMMON STOCK
This prospectus relates to 636,478 shares (the "Shares") of common
stock, $.01 par value per share (the "Common Stock"), of Renal Care Group, Inc.,
a Delaware corporation ("RCG" or the "Company"). All of these Shares are being
offered for sale by the holders of the Common Stock named herein under the
heading "Selling Shareholders" (the "Selling Shareholders"). The Selling
Shareholders received the Shares in connection with the Company's acquisition of
Little Rock Dialysis, Inc., Northwest Dialysis, Inc., KDCO, Inc., Jefferson
County Dialysis, Inc. and Lawton Dialysis, Inc. in mergers effective as of
January 1, 1998.
The shares of Common Stock of the Company are listed on the Nasdaq
National Market System ("Nasdaq") under the symbol "RCGI". On April 27, 1998,
the last sales price for the shares of Common Stock as reported by Nasdaq was
$35.25 per share.
All or a portion of the Shares may be offered by the Selling
Shareholders from time to time (i) in transactions (which may include block
transactions) on the Nasdaq National Market or such other national securities
exchange or automated interdealer quotation system on which shares of the
Company's Common Stock are then traded, (ii) in negotiated transactions, or
(iii) by a combination of such methods of sale, at fixed prices, which may be
changed, at market prices prevailing at the time 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 directly to purchasers or
through underwriters, agents or broker-dealers, and any such underwriters,
agents or 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 whom such underwriters, agents or broker-dealers may act as
agents or to whom they may sell as principals, or both (which compensation as to
a particular underwriter, agent or broker-dealer might be in excess of customary
compensation). To the extent required, the specific Common Stock to be sold, the
respective purchase prices and public offering prices, names of such agent,
dealer or underwriter, and any applicable commissions or discounts with respect
to a particular offer will be set forth in any accompanying Prospectus
Supplement or, if appropriate, a post-effective amendment to the Registration
Statement of which this Prospectus is a part. See "Selling Shareholders" and
"Plan of Distribution." None of the proceeds from the sale of the Shares by the
Selling Shareholders will be received by the Company. By agreement, the Company
will pay the expenses of this registration. The Selling Shareholders will bear
all underwriting discounts and commissions and transfer taxes, if any. The
Company has agreed to indemnify the Selling Shareholders against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
The Selling Shareholders and any broker-dealer, agents or underwriters
that participate with the Selling Shareholders in the distribution of the Common
Stock may be deemed to be "underwriters" within the meaning of Section 2(11) of
the Securities Act, and any commission received by them and any profit on the
resale of the Common Stock purchased by them may be deemed underwriting
commissions or discounts under the Securities Act. See "Selling Shareholders"
and "Plan of Distribution."
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL 28, 1998
<PAGE> 2
AVAILABLE INFORMATION
Additional information regarding the Company and the shares offered
hereby is contained in the Registration Statement on Form S-3 (of which this
Prospectus forms a part) and the Exhibits relating thereto filed by the Company
with the Securities and Exchange Commission (the "Commission") under the
Securities Act. Statements contained herein concerning the provisions of
documents are necessarily summaries of such documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission.
The Company is subject to the reporting 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"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the offices of the Commission at Judiciary Plaza, Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following
regional offices of the Commission: Seven World Trade Center, Suite 1300, New
York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Copies of such materials can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, the Commission maintains a web site that contains
such materials at http://www.sec.gov. The Company's Common Stock is listed on
the Nasdaq National Market under the symbol "RCGI," and such reports, proxy and
information statements and other information concerning the Company are
available for inspection at the office of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File
No. 0-27640) are hereby incorporated by reference into this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (including those portions of the Company's proxy statement
for the 1998 Annual Meeting of Stockholders incorporated by reference therein);
(2) The Company's Current Report on Form 8-K/A filed with the
Commission on February 20, 1998; and
(3) The description of the Company's Common Stock as set forth in the
Company's registration statement filed pursuant to Section 12 of the Exchange
Act, and any amendment or report filed for the purpose of updating any such
description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the filing of a post-effective amendment 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 Prospectus and
to be a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such earlier statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom
a copy of this Prospectus has been delivered, on the written or oral request of
any such person, a copy of any or all of the documents referred to above which
have been or may be incorporated by reference in the Prospectus, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Requests for such copies should be directed to
Ronald Hinds, Renal Care Group, Inc., 2100 West End Avenue, Suite 800,
Nashville, Tennessee 37203, telephone number (615) 345-5500.
-2-
<PAGE> 3
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS CONTAINS AND INCORPORATES BY REFERENCE CERTAIN
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 WITH RESPECT TO RESULTS OF OPERATIONS AND
BUSINESSES OF THE COMPANY. SUCH FORWARD-LOOKING STATEMENTS MAY INVOLVE
UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS AND
PERFORMANCE OF THE COMPANY TO BE MATERIALLY DIFFERENCE FROM FUTURE RESULTS OR
PERFORMANCE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. CAUTIONARY STATEMENTS
REGARDING THE RISKS ASSOCIATED WITH SUCH FORWARD-LOOKING STATEMENTS, INCLUDE,
WITHOUT LIMITATION, THOSE STATEMENTS INCLUDED UNDER "RISK FACTORS." INVESTORS RE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO
PUBLICLY RELEASE ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
ALL WRITTEN OR ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE
COMPANY ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE FOREGOING CAUTIONARY
STATEMENT.
IN CONNECTION WITH THIS OFFERING, ANY BROKERS OR DEALERS THAT MAY
PARTICIPATE IN THE OFFERING MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH
STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF THE COMPANY AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ STOCK MARKET'S NATIONAL MARKET, IN
THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
-3-
<PAGE> 4
THE COMPANY
The Company is a specialized provider of nephrology services to
patients with kidney disease, including patients suffering from chronic kidney
failure, also known as end-stage renal disease ("ESRD"). As of December 31,
1997, the Company provided dialysis and ancillary services to approximately
8,300 patients through 121 outpatient dialysis centers in 15 states. In addition
to its outpatient dialysis center operations, the Company provided acute
dialysis services through contractual relationships with 70 hospitals and
physician practice management services to 45 of the 123 nephrologists who were
affiliated with the Company's outpatient dialysis centers.
The Company's address is 2100 West End Avenue, Suite 800, Nashville, TN
37203, and its telephone number is (615) 345-5500.
-4-
<PAGE> 5
RISK FACTORS
In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and its
business before purchasing shares of Common Stock offered hereby.
LIMITED COMBINED OPERATING HISTORY
The Company has conducted operations as a combined entity only since
February 1996, upon the closing of its initial public offering. Since the
initial public offering, the Company has made several additional acquisitions of
entities that, in some cases, have been part of the Company's combined
operations for only a few weeks or months. There can be no assurance that the
Company will be able to integrate the dialysis centers, information systems and
related operations of the entities acquired by it or to continue operating them
profitably. Nor can there be any assurance that the Company's management group
will be able to implement effectively the Company's operating and growth
strategy while it is engaged in acquisition activity. Failure to integrate
successfully the centers and other operations acquired by the Company or to
implement effectively the Company's operating and growth strategy could have a
material adverse effect on the Company's results of operations, financial
condition or business.
DEPENDENCE ON GOVERNMENT REIMBURSEMENT
The Company estimates that approximately 64%, 68%, and 63% of the
Company's net revenue for the years ended December 31, 1995 and 1996, and 1997
consisted of reimbursements from Medicare under the ESRD program, including
revenue for the reimbursement of the administration of a bio-engineered hormone,
EPO, to treat anemia. Since 1983, Congressional actions have resulted in
occasional changes in the Medicare composite reimbursement rate, and the Company
is not able to predict whether future rate changes will be made. Legislation or
regulations may be enacted in the future that may significantly modify the ESRD
program or otherwise affect the amount paid for the Company's services. Any such
action could have a material adverse effect on the Company's results of
operations, financial condition and business. Furthermore, increases in
operating costs that are subject to inflation, such as labor and supply costs,
without a compensating increase in prescribed rates, may have a material adverse
effect on the Company's earnings in the future. The Company is also unable to
predict whether certain ancillary services, for which the Company currently is
reimbursed separately, may in the future be included in the Medicare composite
rate.
Revenues from the administration of EPO (the substantial majority of
which are reimbursed through Medicare and Medicaid programs) were approximately
17%, 19%, and 21% of the net revenue of the Company for the years ended December
31, 1995, 1996, and 1997, respectively. EPO reimbursement significantly affects
the Company's earnings. The President has included in his 1999 budget a proposal
to decrease Medicare reimbursement for EPO by $1 (see Medicare Reimbursement
Rates). Any reduction in reimbursement rates for EPO could have a material
adverse effect on the Company's results of operations, financial condition or
business. EPO is produced by a single manufacturer, and any interruption of
supply or product cost increases could have a material adverse effect on the
Company's results of operations, financial condition or business.
The Company estimates that approximately 7%, 6%, and 7% of the
Company's net revenue for the years ended December 31, 1995 and 1996, and 1997,
respectively, were funded by Medicaid or comparable state programs. The Medicaid
programs are subject to statutory and regulatory changes, administrative
rulings, interpretations of policy and governmental funding restrictions, all of
which may have the effect of decreasing program payments, increasing costs or
modifying the way the Company operates its dialysis business.
DEPENDENCE ON OTHER SOURCES OF REIMBURSEMENT
The Company estimates that approximately 29%, 26%, and 30% of its net
revenue for the years ended December 31, 1995 and 1996, and 1997, respectively,
were derived from sources other than Medicare and Medicaid. Substantially all of
this revenue comes from private insurance for chronic dialysis treatments and
payments from hospitals with which the Company has contracts for the provision
of acute dialysis services. In
-5-
<PAGE> 6
general, private insurance reimbursement and payments for treatments performed
at hospitals are at rates significantly higher than Medicare and Medicaid rates.
The Company believes that if Medicare reimbursement for dialysis treatment is
reduced in the future, these private payors may be required to assume a greater
percentage of the costs of dialysis care and, as a result, may focus on reducing
dialysis payments as their overall costs increase. In addition, the Company
believes that health maintenance organizations ("HMOs") and other managed care
providers may have a strong incentive to reduce further the costs of specialty
care and may seek to reduce amounts paid for dialysis. The Company is unable to
predict whether and to what extent changes in these private reimbursement rates
may be made in the future. Any reduction in the rates paid by private insurers
and hospitals or a significant change in the Company's payor mix toward
additional Medicare or Medicaid reimbursement could have a material adverse
effect on the Company's results of operations, financial condition and business.
Similarly, increases in operating costs that are subject to inflation, such as
labor and supply costs, without a compensating increase in private reimbursement
rates, could have a material adverse effect on the Company's results of
operations, financial condition or business.
RISKS ASSOCIATED WITH GROWTH STRATEGY
The Company's strategy includes expanding its dialysis business through
the acquisition and development of dialysis centers and the management of
nephrology practices. Competition for acquisitions in the dialysis industry has
increased significantly in recent years and, as a result, the cost of acquiring
dialysis centers has increased. There can be no assurance that the Company will
be able to identify, acquire or profitably integrate acquired dialysis centers
and nephrology practices. Acquisitions involve a number of risks related to
integration, including adverse short-term effects on the Company's reported
operating results, diversion of management's attention, dependence on retention,
hiring and training of key personnel, including Medical Directors for each
dialysis center, some or all of which could have a material adverse effect on
the Company's results of operations, financial condition or business. In
addition, there can be no assurance that acquired or managed dialysis centers
will achieve net revenue and earnings that justify the Company's investment
therein or expenses related thereto. In order to implement its growth strategy,
the Company may require substantial capital resources and need to incur, from
time to time, short- and long-term bank indebtedness. The Company also may need
to issue in public or private transactions, equity or debt securities, the terms
of which will depend on market and other conditions. There can be no assurance
that any such additional financing will be available on terms acceptable to the
Company, if at all. To the extent that the Company is unable to acquire dialysis
centers or acquire or manage nephrology practices, to integrate such centers and
practices successfully, or to obtain financing on terms acceptable to the
Company, its ability to expand its business could be reduced significantly.
RISKS ASSOCIATED WITH LIABILITIES OF ACQUIRED BUSINESSES
The Company has acquired and will continue to acquire businesses with
prior operating histories. Acquired companies may have unknown or contingent
liabilities, including liabilities for failure to comply with health care laws
and regulations, such as billing and reimbursement, fraud and abuse and similar
anti-referral laws. The Company has from time to time identified certain past
practices of acquired companies that do not conform to its standards. Although
the Company institutes policies designed to conform such practices to its
standards following completion of acquisitions, there can be no assurance that
the Company will not become liable for past activities that may later be
asserted to be improper by private plaintiffs or government agencies. Although
the Company generally seeks to obtain indemnification from prospective sellers
covering such matters, there can be no assurance that any such matter will be
covered by indemnification or, if covered, that the liability sustained will not
exceed contractual limits or the financial capacity of the indemnifying party.
DEPENDENCE ON PHYSICIAN REFERRALS
The Company's dialysis centers depend upon local nephrologists for
referrals of ESRD patients for treatment and one or a few physicians typically
account for all or a significant portion of the patient referral base at a
center. The loss of one or more referring physicians at a particular center
could have a material adverse effect on the operations of such center, and the
loss of a significant number of referring physicians could have a material
adverse effect on the Company's results of operations, financial conditions and
business. In many instances
-6-
<PAGE> 7
stockholders of the Company are the primary referral sources for the dialysis
centers operated by the Company. If such ownership is deemed to violate
applicable federal or state law, such as the illegal remuneration provisions of
the Social Security Act and similar state laws which prohibit the payment of
remuneration to induce referrals, such physician owners may be forced to dispose
of their stock in the Company.
OPERATIONS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION
The Company is subject to extensive federal, state and local regulation
regarding, among other things, fraud and abuse, patient referral, false claims,
health and safety, environmental compliance and toxic waste disposal. Much of
this regulation, particularly in the areas of fraud and abuse and patient
referral, is complex and open to differing interpretations. First, the illegal
remuneration provisions of the Anti-Kickback Statute make it illegal for any
person to, among other things, solicit, offer, receive or pay any remuneration
in exchange for referring, or to induce the referral of, a patient for treatment
which may be paid for by Medicare, Medicaid or a similar state program. Second,
the Stark Law prohibits physician referrals for "designated health services"
(including some of the specific services offered by the Company) to entities
with which a physician or an immediate family member has a "financial
relationship." These laws contain certain statutory exemptions, and federal
agencies have promulgated regulations clarifying certain of these provisions and
exceptions and creating certain additional exceptions or "safe harbors" from
such prohibitions. Many states have enacted similar provisions of law, which may
not have identical prohibitions or exceptions, but which may apply regardless of
whether Medicare or Medicaid funds are involved. However, due to the breadth of
the statutory provisions and the absence in many instances of regulations or
court decisions addressing the specific arrangements by which the Company
conducts its business, it is possible that some of the Company's practices might
be challenged under these laws. Sanctions for violating these federal and state
laws may include civil monetary fines, disqualification from participation in
the Medicare or Medicaid programs, and criminal sanctions. There can be no
assurance that the Company's practices will not be challenged by governmental
authorities, or that the Company will not be subject to sanctions under such
laws or be required to alter or discontinue certain of its practices. In
addition, there can be no assurance that if the Company is required to alter its
practices, that it will be able to do so successfully. The occurrence of any of
these events could result in a material adverse effect on the Company's results
of operations, financial condition or business.
A number of proposals for health care reform have been made recently to
provide greater governmental control of health care spending and to provide
broader access to health care services. For example, HIPAA, among other things,
provides for insurance portability for individuals who lose or change jobs,
limits exclusions for pre-existing conditions, and establishes a pilot program
for medical savings accounts. HIPAA also amends existing crimes and criminal
penalties for Medicare fraud and enacts new federal health care fraud crimes. It
is uncertain what additional health care reform legislation, if any, ultimately
will be implemented or whether other changes in the administration or
interpretation of governmental health care programs will occur. The Company
cannot predict what effect future health care legislation or other changes in
the administration or interpretation of governmental health care statutes,
regulations, or programs may have on the Company's operations.
SUBSTANTIAL COMPETITION
The dialysis industry is fragmented and is consolidating rapidly.
Accordingly, the industry is highly competitive, particularly from the
standpoint of competition for the acquisition of existing dialysis centers and
the development of relationships with referring physicians. Many of the
Company's competitors have substantially greater financial resources and more
established operations and infrastructure than the Company and may compete with
the Company for acquisitions of dialysis centers and nephrology practices. In
addition, the Company may also experience competition from referring physicians
who open their own dialysis centers. There can be no assurance that the Company
will be able to compete effectively with any such competitors.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon the services of certain key executive
officers. The Company's growth will depend in part upon its ability to attract
and retain skilled employees, for whom competition is intense. The
-7-
<PAGE> 8
Company believes that its future success will also depend on its ability to
attract and retain qualified physicians to serve as Medical Directors of its
dialysis centers. The Company does not carry key-man life insurance on any of
its officers. The loss by the Company of any of its executive officers, or the
inability to attract and retain qualified management personnel and Medical
Directors, could have a material adverse effect on the Company's results of
operations, financial condition or business.
SIGNIFICANT INFLUENCE BY MANAGEMENT AND PHYSICIAN STOCKHOLDERS
The Company's directors, executive officers and physician stockholders
beneficially own approximately 31% of the outstanding shares of Common Stock.
The Company's Amended and Restated Certificate of Incorporation and Bylaws do
not provide for cumulative voting. Although directors, executive officers and
physician stockholders do not have any arrangements or understandings among
themselves with respect to the voting of the shares of Common Stock beneficially
owned by such persons, such persons acting together would be able to
significantly influence the election of directors and might be able to approve
or disapprove any matter submitted to a vote of stockholders, including a change
in control in the Company.
POTENTIAL CONFLICTS OF INTEREST
The Company is a party to Medical Director agreements with Stephen D.
McMurray, M.D., W. Tom Meredith, M.D., Thomas A. Lowery, M.D., John D. Bower,
M.D. and Kenneth E. Johnson, M.D., each of whom is a director and stockholder of
the Company. In addition, the Company leases space from Dr. Bower, Dr. Lowery,
and an entity in which Dr. Meredith owns a one-third interest. A director of the
Company, Harry R. Jacobson, M.D., serves as Vice Chancellor of Health Affairs at
Vanderbilt University, and the Company has an agreement with Vanderbilt
University Medical Center to manage its outpatient dialysis facility. The
outside interests of these directors may give rise to certain conflicts of
interest concerning the fulfillment of their responsibilities as directors of
the Company, and such conflicts of interest could result in decisions that may
not reflect the interests of all stockholders equally.
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER AND BYLAW PROVISIONS
The Company's Amended and Restated Certificate of Incorporation and
Bylaws contain a number of provisions that could inhibit a change in control of
the Company by means of a tender offer, merger, proxy contest or otherwise,
including advance notice and super-majority voting provisions, provisions that
establish a classified board of directors, and provisions that enable the Board
of Directors to issue "blank check" preferred stock. Furthermore, the Company
has adopted a Shareholder Protection Rights Agreement, or "poison pill," that
would result in significant dilution to any acquiror that would seek to acquire
15% or more of the Company's then outstanding Common Stock without the consent
of the Board of Directors.
POSSIBLE VOLATILITY OF STOCK PRICE
From time to time, there may be significant volatility in the market
price of the Common Stock. The stock market has periodically experienced
significant price and volume fluctuations, which may be unrelated to the
operating performance of particular companies. Factors such as actual or
anticipated operating results, growth rates, changes in estimates by analysts,
market conditions in the industry, announcements by competitors, regulatory
actions and general economic conditions will vary from period to period. As a
result of the foregoing, the Company's operating results and prospects from time
to time may be below the expectations of the public market analysts and
investors. Any such event would likely result in a material adverse effect on
the price of the Common Stock. Additionally, future sales of substantial amounts
of the Common Stock could adversely affect the market price of the Common Stock.
POTENTIAL ADVERSE MARKET IMPACT OF SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of Common Stock in the public market or
the availability of such shares for sale could adversely affect the prevailing
market price for the Common Stock. Of the 26,485,719 outstanding
-8-
<PAGE> 9
shares of Common stock as of March 31, 1998, and after the offering,
approximately 18,173,064 of those shares will be freely tradeable without
restriction or further registration under the Securities Act of 1933, as amended
(the "Securities Act"), unless purchased by "affiliates" of the Company, as that
term is defined in Rule 144 under the Securities Act. In addition, up to
3,536,890 shares of Common Stock are issuable upon the exercise of options which
will be freely tradeable without restriction unless purchased by an "affiliate."
The remaining approximately 8,312,655 shares outstanding, plus up to 330,000
shares of Common Stock which may be issued upon exercise of warrants, will
become eligible for future sale in the public market in accordance with Rule 144
under the Securities Act, as currently in effect. The Company has granted
certain registration rights with respect to shares of Common Stock to the
holders of a total of approximately 5,726,060 shares of Common Stock and
330,000 shares issuable upon the conversion of warrants.
-9-
<PAGE> 10
MERGERS AND ACQUISITIONS
Effective January 1, 1998, the Company concurrently acquired Little
Rock Dialysis, Inc. ("LRDI"), an Arkansas corporation, Northwest Dialysis, Inc.
("NWDI"), an Arkansas corporation, KDCO, Inc. ("KDCO"), a Missouri corporation,
Jefferson County Dialysis, Inc. ("JCDI"), an Arkansas corporation, and Lawton
Dialysis, Inc. ("LDI"), an Arkansas corporation, pursuant to mergers (the
"Mergers") by which the shareholders of LRDI, NWDI, KDCO, JCDI and LDI received
an aggregate of 1,298,234 shares of Common Stock in exchange for their shares of
stock in LRDI, NWDI, KDCO, JCDI and LDI, respectively.
In connection with such mergers (the "Mergers"), the Company granted
the former shareholders of LRDI, NWDI, KDCO, JCDI and LDI the right to register
for resale the shares of Common Stock received by them. The persons who are
offering shares of Common Stock pursuant to the Registration Statement of which
this Prospectus is a part are referred to herein as the "Selling Shareholders".
The Selling Shareholders acquired all shares of Common Stock offered hereby
pursuant to the above-referenced Mergers. Pursuant to certain demand
registration rights granted in connection with the Mergers, the Company agreed
to register the shares of Common Stock offered by the Selling Shareholders
hereunder.
-10-
<PAGE> 11
SELLING SHAREHOLDERS
The following table sets forth (i) the name of each of the Selling
Shareholders, (ii) the number of shares of Common Stock beneficially owned by
each Selling Shareholder prior to the offering and being offered hereby, and
(iii) the number of shares of Common Stock beneficially owned by each Selling
Shareholder after the completion of the offering.
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Being Shares Beneficially Owned
Name Before the Offering(1) Offered After the Offering(1)
<S> <C> <C> <C>
John Bayliss, M.D.(2) 64,532 31,620 32,912
Ronald D. Hughes, M.D.(3) 303,083 148,863 154,220
David J. Jones(4) 174,408 81,784 92,624
Joe Pevahouse, M.D.(5) 43,022 21,080 21,942
Robert A. Vogel(6) 224,225 109,870 114,355
James A. Wellons, M.D.(7) 43,021 21,080 21,941
James Campbell, M.D.(8) 140,746 68,965 71,781
David Hays, M.D.(9) 60,730 29,757 30,973
Robert Saylor, M.D.(10) 80,163 39,279 40,884
Wade Jordan, M.D.(11) 80,163 39,279 40,884
Stephen Garcia, M.D.(12) 80,163 39,279 40,884
Estate of Patrick Doody, M.D.(13) 3,826 1,874 1,952
Patrick Hatelid, M.D.(14) 3,826 1,874 1,952
John Martinez, M.D.(15) 3,826 1,874 1,952
--------- ------- -------
Total 1,305,734 636,478 669,256
</TABLE>
- ----------------
(1) Assumes that all of the shares held by the Selling Shareholders and
being offered hereby are sold, and that the Selling Shareholders
acquire no additional shares of Common Stock prior to completion of
this offering. Each Selling Shareholder beneficially owns less than 1%
of the total number of shares of Common Stock outstanding.
(2) Dr. Bayliss served as Vice President and a director of LRDI prior to
the Mergers.
(3) Dr. Hughes served as Assistant Vice President and a director of LRDI,
Vice President and a director of NWDI, Assistant Vice President and a
director of JCDI, and Assistant Vice President and a director of LDI
prior to the Mergers.
(4) Mr. Jones served as President and a director of LRDI, President and a
director of NWDI, President and a director of KDCO, President and a
director of JCDI and President and a director of LDI prior to the
Mergers. Includes 7,500 options to acquire shares of Common Stock which
are exercisable within 60 days of the date of this Prospectus.
(5) Dr. Pevahouse served as Vice President and a director of LRDI prior to
the Mergers.
(6) Mr. Vogel served as Assistant Vice President, Secretary and Treasurer
and a director of LRDI, Vice President, Secretary and Treasurer and a
director of NWDI, Assistant Vice President, Secretary and Treasurer and
a director of JCDI and Assistant Vice President, Secretary and
Treasurer and a director of LDI prior to the Mergers.
(7) Dr. Wellons served as Vice President and a director of LRDI prior to
the Mergers.
(8) Dr. Campbell served as a Vice President and a director of JCDI prior to
the Mergers.
(9) Dr. Hays served as a Vice President and a director of LDI prior to the
Mergers.
(10) Dr. Saylor served as Vice President and a director of KDCO prior to the
Mergers.
(11) Dr. Jordan served as Secretary and Treasurer and a director of KDCO
prior to the Mergers.
(12) Dr. Garcia served as Vice President and a director of KDCO prior to the
Mergers.
(13) A representative of the Estate of Patrick Doody, M.D. served as a
director of NWDI prior to the Mergers.
(14) Dr. Hatelid served as Vice President and a director of NWDI prior to
the Mergers.
(15) Dr. Martinez served as Vice President and a director of NWDI prior to
the Mergers.
-11-
<PAGE> 12
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Shareholders,
or by their pledgees, donees, transferees or other successors in interest. Such
sales may be made from time to time (i) in transactions (which may include block
sales) on the Nasdaq National Market or such other national securities exchange
or automated interdealer quotation system on which shares of Common Stock are
then listed, (ii) in negotiated transactions or (iii) through a combination of
such methods of sale, at fixed prices, which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. The Shares may be sold directly to purchasers
or through underwriters, agents or broker-dealers by one or more of the
following: (a) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
a block trade in which the broker or dealer so engaged will attempt to sell the
Shares as agent but may position and resell a portion of the block as principal
to facilitate the transaction; (d) an exchange distribution in accordance with
the rules of the exchange or automated interdealer quotation system on which the
Common Stock is then listed; and (e) through the writing of options on the
Shares. Any such underwriters, agents or 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 underwriters,
agents or broker-dealers may act as agents or to whom they sell as principals,
or both (which compensation as to an underwriter, agent or particular
broker-dealer will be negotiated prior to the sale and may be in excess of
customary compensation). If required by applicable law at the time a particular
offer of Shares is made, the terms and conditions of such transaction will be
set forth in a Prospectus Supplement to this Prospectus. In addition, any Shares
covered by this Prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than pursuant to this
Prospectus.
The Selling Shareholders and any underwriters, agents or broker-dealers
who act in connection with the sale of the shares hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act, and
any compensation received by them might be deemed to be underwriting discounts
and commissions under the Securities Act.
The Selling Shareholders will pay all applicable stock transfer taxes,
transfer fees and brokerage commissions or underwriting or other discounts. The
Company has agreed to bear all expenses in connection with the registration of
the shares being offered by the Selling Shareholders. The Company has agreed to
indemnify the Selling Shareholders against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered
hereby will be passed on for the Company by Alston & Bird LLP, Atlanta, Georgia.
EXPERTS
The consolidated financial statements of the Company appearing in
Renal Care Group, Inc.'s Annual Report (Form 10-K) for the year ended December
31, 1997, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The financial statements of STAT Dialysis Corporation and STAT
Management Corporation and their related healthcare entities, appearing in the
Company's Current Report on Form 8-K/A, for the years ended December 31, 1996
and 1995, have been audited by KPMG Peat Marwick LLP, independent auditors, as
set forth in their report thereon included therein and incorporated herein by
reference. Such combined financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
-12-
<PAGE> 13
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE 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 THE SELLING
SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF ANY OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH THE
PERSON MAKING SUCH OFFER TO WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION
IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
AVAILABLE INFORMATION...................... 2
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE........................... 2
CAUTIONARY NOTICE REGARDING
FORWARD-LOOKING STATEMENTS............. 3
THE COMPANY................................ 4
RISK FACTORS............................... 5
MERGERS AND ACQUISITIONS................... 10
SELLING SHAREHOLDERS....................... 11
PLAN OF DISTRIBUTION....................... 12
LEGAL MATTERS.............................. 12
EXPERTS.................................... 12
</TABLE>
================================================================================
636,478 SHARES
RENAL CARE GROUP, INC.
COMMON STOCK
PROSPECTUS
April 28, 1998
================================================================================
