<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 19, 1996
REGISTRATION NO. 33-59661
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
CORAM HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
1125 SEVENTEENTH STREET, SUITE 1500
DENVER, COLORADO 80202
(303) 292-4973
(Address, including zip code, telephone number and
area code of Registrant's principal executive offices)
<TABLE>
<S> <C> <C>
STATE OF DELAWARE 33-0615337 8082
(State or other jurisdiction of (I.R.S. Employer (Primary Standard Industrial
incorporation or organization) Identification Number) Classification Code Number)
</TABLE>
------------------------
<TABLE>
<S> <C>
DONALD J. AMARAL
CHIEF EXECUTIVE OFFICER Copies to:
CORAM HEALTHCARE CORPORATION RICHARD A. FINK, ESQ.
1125 SEVENTEENTH STREET, SUITE 1500 JEREMY W. MAKARECHIAN, ESQ.
DENVER, COLORADO 80202 BROBECK, PHLEGER & HARRISON LLP
(303) 292-4973 1125 SEVENTEENTH STREET, SUITE 2525
(Name, address, including zip code, and telephone DENVER, COLORADO 80202
number, including area code, of agent for service)
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES 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 in connection with dividend or interest
reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM AMOUNT OF
AMOUNT TO BE OFFERING AGGREGATE REGISTRATION
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PRICE(1) OFFERING PRICE FEE(2)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Common Stock.................................... 748,547 $18.875 $14,128,824 $4,872
- ----------------------------------------------------------------------------------------------------------------
Common Stock Underlying Convertible PIK Note.... 2,777,778(3) $27.00 $75,000,006 $25,862
- ----------------------------------------------------------------------------------------------------------------
TOTAL................................. 3,526,325 -- $89,128,830 $30,734(4)
================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(g).
(2) The registration fee was calculated based on a fee of 1/29 of 1% of the
proposed maximum aggregate offering price.
(3) Pursuant to Rule 416, includes a presently indeterminate number of
additional shares of Common Stock that may become issuable as a result of
certain anti-dilution provisions contained in the TPN Warrants and
Convertible PIK Note.
(4) $30,176 of this fee has been paid. The balance of $558, representing the fee
with respect to the additional 62,500 shares of Common Stock registered
hereby, is being paid herewith.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
******************************************************************************
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE *
* SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR *
* MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT *
* BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR *
* THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE *
* SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE *
* UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS *
* OF ANY SUCH STATE. *
******************************************************************************
SUBJECT TO COMPLETION, DATED APRIL 19, 1996
PROSPECTUS
CORAM HEALTHCARE CORPORATION
------------------------
3,526,325 SHARES OF COMMON STOCK
------------------------
Coram Healthcare Corporation (together with its subsidiaries, the
"Company") is hereby registering up to 2,777,778 shares of its common stock,
$.001 par value per share (the "Common Stock"), as adjusted, to be issued upon
conversion of the Company's $75 million 7% Convertible Subordinated Pay-in-Kind
Note (the "Convertible PIK Note") issued pursuant to the purchase by the Company
of substantially all the assets used in the alternative site infusion business
(the "Caremark Business") of Caremark Inc., a California corporation
("Caremark"). See "Description of Securities." In addition, pursuant to this
Prospectus, certain persons (collectively, the "Selling Stockholders") who hold
748,547 shares of Common Stock may resell or further distribute such securities
on a deferred basis. The Common Stock owned by the Selling Stockholders is
collectively referred to herein as the "Offered Securities." The Selling
Stockholders acquired the Offered Securities (i) in connection with a Settlement
Agreement and Mutual General Release (the "ContinueCare Settlement Agreement")
dated as of April 28, 1995 by and among Curaflex Health Services, Inc., a
wholly-owned subsidiary of the Company ("Curaflex"), certain individuals named
therein and the Company to resolve certain disputes among the parties thereto
and (ii) in connection with a Settlement Agreement and Release, as amended (the
"TPN Settlement Agreement") by and among the Company and T(2) Medical, Inc.,
("T(2)"), a wholly-owned subsidiary of the Company on the one hand, and certain
former shareholders of TPN of Reno, Inc., TPN of Las Vegas, Inc. and Sierra
Nevada Pharmaceutical Consultants, Inc. (collectively, the "Former TPN
Shareholders"), on the other hand. The TPN Settlement Agreement provides for the
issuance of Common Stock and immediately exercisable warrants for the purchase
of Common Stock (the "TPN Warrants"). The Selling Stockholders may sell the
Offered Securities from time to time in transactions on the New York Stock
Exchange (the "NYSE"), in privately negotiated transactions, through the writing
of options on the Common Stock, or by a combination of those methods, at fixed
prices that may be changed, at market prices at the time of sale, at prices
related to market prices or at negotiated prices. The Selling Stockholders may
effect those transactions by selling the Offered Securities to or through
broker-dealers, who may receive compensation in the form of discounts or
commissions from the Selling Stockholders or from the purchasers of the Offered
Securities for whom the broker-dealers may act as agent or to whom they may sell
as principal, or both. See "Selling Stockholders" and "Plan of Distribution."
If all of the TPN Warrants are exercised at their current maximum exercise
price, the Company will receive aggregate proceeds of approximately $1,200,781,
after deducting estimated offering expenses payable by the Company. The Company
will not receive any of the proceeds upon conversion of the convertible PIK Note
or from the sale of the Offered Securities. See "Use of Proceeds" and "Plan of
Distribution."
The Company's Common Stock is presently traded on the NYSE under the symbol
"CRH." On April 9, 1996 the closing bid price of the Common Stock was $5.375.
------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
------------------------
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 COMPANY HAS UNDERTAKEN TO KEEP A REGISTRATION STATEMENT OF WHICH THIS
PROSPECTUS CONSTITUTES A PART EFFECTIVE UNTIL THE EARLIER TO OCCUR OF SEPTEMBER
30, 1999 OR THE EARLIER DISPOSITION OF THE SECURITIES OFFERED HEREBY. AFTER SUCH
PERIOD, IF THE COMPANY CHOOSES NOT TO MAINTAIN THE EFFECTIVENESS OF THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS CONSTITUTES A PART, THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF AND OFFERED HEREBY MAY NOT BE SOLD,
PLEDGED, TRANSFERRED OR ASSIGNED, EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER
THE PROVISIONS OF THE SECURITIES ACT OF 1933, AS AMENDED, OR PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT THEREUNDER.
------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR A SOLICITATION OF AN OFFER TO BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH
IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY DATE SUBSEQUENT TO THE DATE HEREOF.
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
regional offices: Seven World Trade Center, Room 1300, New York, New York 10048,
and Northwestern Atrium Center, 500 West Madison Street, Room 1500, Chicago,
Illinois 60661-2511. Copies of such material can be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
The Company has filed with the Commission a registration statement (herein,
together with all amendments thereto, called the "Registration Statement") of
which this Prospectus constitutes a part, under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and in the exhibits thereto, certain parts of which are
omitted in accordance with the rules and regulations of the Commission, and
reference is made to the Registration Statement and the exhibits thereto for
further information regarding the Company and the securities offered hereby.
Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each such statement is qualified in
its entirety by reference to the copy of the applicable documents filed with the
Commission. The Registration Statement and the exhibits thereto may be inspected
without charge and copies thereof may be obtained upon payment of the prescribed
fees at the public reference facilities of the Commission at its principal
office in Washington, D.C.
The Company's Common Stock is listed on the NYSE. All reports, proxy
statements and other information filed by the Company with the NYSE may be
inspected at the offices of the NYSE at 20 Broad Street, New York, New York
10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company are
incorporated by reference into this Registration Statement:
1. Annual Report on Form 10-K for the fiscal year ended December 31,
1995.
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 the Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities hereby then
remaining unsold, shall be deemed to be incorporated by reference to 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 other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference
(excluding exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents) will be provided without charge by
the Company to each person to whom this Prospectus is delivered, upon the
written request of such person directed to Coram Healthcare Corporation,
Attention: Corporate Communications, 1125 Seventeenth Street, Suite 1500,
Denver, Colorado 80202, telephone (303) 292-4973.
2
<PAGE> 4
THE COMPANY
Coram Healthcare Corporation, a Delaware corporation ("Coram" or the
"Company") is a leading provider of alternate site (outside the hospital)
infusion therapy and related services in the United States. Infusion therapy
involves the intravenous administration of anti-infective, biotherapy,
chemotherapy, pain management, nutrition, and other therapies. Other services
offered by the Company include the provision of lithotripsy and other
non-intravenous products and services.
The Company was formed on July 8, 1994 pursuant to a merger (the "Four-Way
Merger") by and among T(2), Curaflex, Medisys, Inc. ("Medisys") and
HealthInfusion, Inc., each of which was a publicly-held national or regional
provider of home infusion therapy and related services. The Four-Way Merger
enabled the Company to become a national provider of home infusion and other
alternate site health care services. On September 12, 1994, the Company further
broadened its geographic coverage by acquiring H.M.S.S., Inc., a leading
regional provider of home infusion therapies based in Houston, Texas. Effective
April 1, 1995, the Company acquired the Caremark Business, thereby becoming the
largest provider of alternate site infusion therapy service in the United States
based on breadth of service and total revenues (such acquisition, including
certain financings related thereto, are collectively referred to herein as the
"Caremark Transaction"). The Company has substantially completed a branch
corporate office consolidation of its six predecessor companies.
The Company's principal executive offices are located at 1125 Seventeenth
Street, Suite 1500, Denver, Colorado 80202, and its telephone number is (303)
292-4973.
SUBSEQUENT EVENT
On March 29, 1996, a shareholder derivative suit captioned Nirmala Shevde,
on behalf of Coram Healthcare Corporation v. James Sweeney, et al., File No.
96-N-722, was filed in the United States District Court for the District of
Colorado. The complaint sets forth substantially the same allegations as those
made in the previously filed derivative lawsuit, which was filed in Delaware,
and substantially similar relief is sought. See "Risk Factors -- Certain
Litigation." The Company believes it has meritorious defenses in this action,
but due to the uncertainties inherent in the early stages of litigation, the
ultimate disposition cannot presently be determined. An unfavorable outcome
could have a material adverse effect on the financial position, results of
operations and liquidity of the Company.
3
<PAGE> 5
RISK FACTORS
In addition to the other information contained in this Prospectus and the
information incorporated herein by reference, prospective investors should
carefully consider, among others, the following risk factors prior to investing.
In addition, the information incorporated herein by reference contains
forward-looking statements within the meaning of the Securities Act and the
Exchange Act. The Company's actual results could differ materially from those
projected in any forward-looking statements as a result of the factors described
below and elsewhere in the information incorporated herein by reference.
RECENT OPERATING LOSSES; SUBSTANTIAL LEVERAGE; FUTURE OPERATING RESULTS
UNCERTAIN
The Company recorded an operating loss of $283.9 million and a net loss of
$334.1 million for the year ended December 31, 1995, and it has experienced
consecutive quarterly losses in each quarter since the quarter ended March 31,
1995. The Company has only been operating as a combined entity since July 8,
1994, and has incurred cumulative net losses of approximately $456.3 million
(including $407.8 million of special pre-tax charges) from such date through
December 31, 1995. Numerous factors have affected the Company's performance and
financial condition, including, among others, (i) the underperformance of the
Caremark Business from what the Company expected at the time such business was
acquired, combined with the substantial indebtedness that the Company incurred
to acquire the Caremark Business, which the Company expected to service in
substantial part through the operating income and cash flow of the Caremark
Business; (ii) implementation of a policy of terminating physician arrangements
and certain businesses which it inherited from its predecessors which were
potentially in conflict with new federal and state law, resulting in the loss of
a number of historic referral sources; (iii) pricing pressure in the Company's
core infusion business as a result of a continuing shift in payor mix from
traditional indemnity insurers to managed care and government payors and intense
competition among infusion providers; (iv) a disruption in certain relationships
as a result of the Company's headcount reductions and consolidation; and (v)
increased competition from hospitals and physicians offering services similar to
those offered by the Company. There can be no assurance that these factors will
not continue to have an adverse effect on the Company's financial condition and
results of operations in the future. In addition, there can be no assurance that
the Company can increase revenues or become profitable or achieve positive cash
flow from operations in future periods. The future operating results of the
Company will depend on many factors, including stabilization of operating
revenues and pricing pressures, the ability of the Company to implement its
strategy, the level of competition in the home health care industry, the ability
to integrate the Company's purchased businesses into its current organization,
general economic conditions, the ability to attract and retain qualified
personnel at competitive rates and government regulation and reimbursement
policies.
In addition, the Company incurred a significant amount of long-term debt in
connection with the Caremark Transaction. As of December 31, 1995, the Company's
consolidated long-term indebtedness was $506.4 million and its consolidated
stockholders' equity was $18.0 million. The degree to which the Company is
leveraged could impair the Company's ability to finance, through its own cash
flow or from additional financing, its future operations or pursue its business
strategy and make the Company more vulnerable to economic downturns, competitive
and payor pricing pressures and adverse changes in government regulation.
The Company is in the process of implementing a business plan focused on
the basic factors that could lead to profitability: revenue generation, cost
reduction, quality improvement, and cash collection. A central component of the
Company's business strategy is to return management's attention to revenue
generation. The Company intends to increase revenue in part by redirecting its
marketing efforts towards improving its physician relationships. Other aspects
of the Company's strategy include improving reimbursement through an emphasis on
cash collections through the organization and the reassessment of systems
support for reimbursement and cost reduction and cash collection.
The Company has experienced and expects to continue to experience
difficulties with its strategy of improving revenues, as a result of several
factors. These factors include a negative perception of the Caremark Business
among certain physicians as a result of Caremark's guilty plea to federal
charges and concerns among payors and providers as to whether the Company could
continue as a going concern. Implementation of the
4
<PAGE> 6
Company's business strategy could also be affected by a number of factors beyond
the Company's control, such as loss of personnel, the response of competitors
and regulatory developments. Pronounced changes are expected to occur in the
markets which the Company serves, which may require adjustments to the Company's
plan. Execution of this plan has placed and will continue to place significant
demands on the Company's financial and management resources and there can be no
assurance that the Company will be successful in implementing its strategy, or
in responding to ongoing changes in its markets which may require adjustments to
its strategy. If the Company fails to implement its strategy, its business,
results of operations and financial condition will be materially and adversely
affected.
LIQUIDITY; NEED FOR ADDITIONAL FINANCING
On October 13, 1995, the Company and its lenders under its Senior Credit
Facility with Chemical Bank as Agent (the "Senior Credit Facility") and the
holder of a $150 million subordinated bridge note (the "Bridge Note") agreed to
a restructuring of the major terms of both agreements, which postponed the first
principal payment due on the Senior Credit Facility from September 30, 1995 to
March 31, 1996, redefined covenants to be consistent with the Company's new
business strategy and provided a new $25 million credit line. The principal
covenants relate to maintenance of minimum revenues, minimum cash receipts,
maximum cash disbursements and minimum earnings before interest, taxes,
depreciation and amortization. In addition, the covenants, among other things,
restrict the ability of the Company and its subsidiaries to dispose of assets,
incur debt, pay dividends, create liens, make capital expenditures and make
certain investments or acquisitions and otherwise restrict corporate activities
and require that any excess cash balances, as defined, be applied to prepayment
of the debt. Proceeds from the sale of any of the Company's non-core business
must be applied directly to reducing principal indebtedness under the Senior
Credit Facility. The ability of the Company to comply with such provisions may
be affected by events beyond its control. The breach of any of these covenants
could result in a default under the terms of such indebtedness. If the Company
were to default under any of its indebtedness agreements, the lenders to the
Company could, at their option, declare all borrowings immediately due and
payable if any default were not cured prior to any such action by the lenders.
Moreover, there can be no assurance that the Company's cash flow from operations
and current borrowings will be sufficient to meet its short or long-term needs,
and additional sources of funds may be required in future periods. The new line
expires and matures on December 31, 1996 and the entire Senior Credit Facility
has a new maturity date of March 31, 1997. There can be no assurance that the
Company's cash flow from operations will be sufficient to satisfy its
obligations upon the maturity of the new line of credit, the Senior Credit
Facility or the Bridge Note. In order to satisfy such obligations, the Company
may engage in a public or private offering of securities or a sale or merger of
the Company. Any such transaction could result in a substantial dilution in the
ownership interest of the existing stockholders and may have an adverse impact
on the market price of the Company's Common Stock. There can be no assurance
that the Company will undertake such a transaction, the timing thereof or that
the Company will be able to obtain any additional funds or complete such a
transaction on terms acceptable to the Company, if at all.
DEPENDENCE ON KEY PERSONNEL; CHANGES IN MANAGEMENT
The Company is substantially dependent upon the services of its executive
officers, which include Donald J. Amaral, Chief Executive Officer and President,
and Richard M. Smith, Chief Financial Officer, and the loss of services of
either of these executives could have a material adverse affect on the Company.
Effective October 16, 1995, Mr. Amaral was named President and Chief Executive
Officer of the Company, succeeding James M. Sweeney, who remains the Company's
Chairman. Mr. Smith was named Chief Financial Officer on August 30, 1995. The
Company has experienced substantial turnover in its senior management group over
the past twelve months and several of the Company's executive officers have been
in their current positions for only a limited period of time. The Company's
future growth and success depends, in large part, upon its ability to obtain,
retain and expand its staff of professional personnel. There can be no assurance
that the Company will be successful in its efforts to attract and retain such
personnel.
5
<PAGE> 7
CERTAIN LITIGATION
The Company is a party to several lawsuits that could, if their outcomes
were unfavorable, have a material adverse effect on the Company's financial
position, results of operations and liquidity. These lawsuits include (i) 20
civil suits (which were consolidated into one suit) filed by individuals
claiming to have purchased and sold Common Stock during a specified period in
1995, asserting claims under Section 10(b) and 20(a) of the Exchange Act and
Rule 10b-5 of the Commission; (ii) a shareholders' derivative action asserting
substantially similar factual allegations; (iii) a lawsuit filed by the Company
against Caremark Inc. and Caremark International, Inc. (collectively
"Caremark"), and a lawsuit and a cross-complaint filed by Caremark against the
Company, relating to the acquisition of the Caremark Business; and (iv) actions
by plaintiffs in the shareholder litigation which was initiated against T2 in
1992, related to the T2 Settlement Agreement. The Company believes it has
meritorious defenses in these actions. Nevertheless, due to the uncertainties
inherent in the early stages of litigation, the ultimate disposition of the
litigation cannot be presently determined. In addition, even if the ultimate
outcome of the claims pending against the Company and the Company's claims
against Caremark are resolved in favor of the Company, such litigation could
entail considerable cost and the diversion of efforts of management, either of
which could have a material adverse effect upon the Company's results of
operations.
DEPENDENCE ON RELATIONSHIPS WITH THIRD PARTIES
The profitability of the Company's business depends in part on its ability
to establish and maintain close working relationships with managed care
organizations, private and governmental third-party payors, hospitals,
physicians, physician groups, home health agencies, long-term care facilities
and other institutional health providers and insurance companies and large
self-insured employers. A central feature of the Company's business strategy is
to improve its relationships with such third parties in general, and with
physicians in particular. There can be no assurance that the Company will be
successful in improving and maintaining such relationships or that the Company's
existing relationships will be successfully maintained or that additional
relationships will be successfully developed and maintained in existing or
future markets. The loss of such existing relationships or the failure to
continue to develop such relationships in the future could have a material
adverse effect on the Company's business, results of operations, financial
condition or liquidity.
GOVERNMENTAL REGULATION
The Company is subject to extensive federal and state law regulating, among
other things, the provision of pharmacy, home care nursing services, health
planning, health and safety, environmental compliance and toxic waste disposal.
The Company is also subject to fraud and abuse and self referral laws and
"anti-kickback" statutes which affect the Company's business relationships with
physicians and other health care providers and referral sources and its
reimbursement from government payors. The Company may be required to obtain
certification to participate in governmental payment programs, such as Medicare
and Medicaid. Some states have established certificate of need programs
regulating the establishment or expansion of health care facilities, including
certain of the Company's facilities.
Violations of the federal anti-kickback statute are punishable by criminal
or civil penalties, including imprisonment, fines and exclusion of the provider
from future participation in the Medicare and Medicaid programs. Civil
suspension for anti-kickback violations can also be imposed through an
administrative process, without the imposition of civil monetary penalties. The
failure to obtain, renew or maintain any of the required regulatory approvals or
licenses could adversely affect the Company's business and could prevent the
location involved from offering products and services to patients. The Company's
revenues and net earnings could be adversely affected as a result of any such
change or sanctions. The Company believes it complies in all material respects
with these and all other applicable laws and regulations. The health care
services industry will continue to be subject to intense regulation at the
federal and state levels, the scope and effect of which cannot be predicted. No
assurance can be given that the activities of the Company will not be reviewed
and challenged or that government sponsored health care reform, if enacted, will
not have a material adverse effect on the Company.
6
<PAGE> 8
In September 1994, T(2) entered into a settlement agreement with the Office
of the Inspector General (the "OIG") of the Department of Health and Human
Services (the "T(2) OIG Settlement Agreement") settling charges brought on by an
investigation by the OIG into certain operations of T(2). T(2), in expressly
denying liability, agreed to a civil order which enjoins it from violating
federal anti-kickback and false claims laws related to Medicare/Medicaid
reimbursement. The T(2) OIG Settlement Agreement imposes certain restrictions
upon the types of relationships that T(2) may have with referring physicians and
imposes a five year reporting obligation upon T(2). The Company has implemented
measures to ensure compliance with the T(2) OIG Settlement Agreement and has
engaged Richard P. Kusserow, the former Inspector General of the U.S. Department
of Health and Human Services, as a consultant to assist the Company in its
continued development of its compliance program. The internal regulatory
compliance review program is intended to deal with compliance issues under the
T(2) OIG Settlement Agreement and with other legal, regulatory and ethical
compliance issues. However, no assurance can be made that in the future the
Company's business arrangements, past or present, will not be the subject of an
investigation or prosecution by a federal or state governmental authority. Such
investigation could result in any, or any combination, of the penalties
discussed above depending upon the agency involved in such investigation and
prosecution.
DEPENDENCE ON PAYORS AND REIMBURSEMENT RELATED RISKS
The profitability of the Company depends in large part on reimbursement
provided by third party payors. Since alternate site care is generally less
costly to third party payors than hospital-based care, alternate site providers
have historically benefitted from cost containment initiatives aimed at reducing
the costs of hospitalization. However, competition for patients, efforts by
traditional third party payors to contain or reduce health care costs and the
increasing influence of managed care payors such as health maintenance
organizations in recent years have resulted in reduced rates of reimbursement
for services provided by alternate site providers such as the Company. Since
1993, the alternate site infusion industry, including the Company, experienced
severe reductions in the pricing of its products and services as a result of
these trends.
Additionally, managed care payors and even traditional indemnity insurers
increasingly are demanding fee structures and other arrangements providing for
the assumption by health care providers of all or a portion of the financial
risk of providing care (e.g., capitation). Capitation arrangements currently do
not comprise a material component of the Company's revenues. While the Company
believes that short-term pricing pressures are stabilizing and that the
Company's business strategy to become the high quality, low cost provider of
choice in the markets it serves is responsive to these trends, no assurance can
be given that pricing pressures will not continue or that the Company's
financial results will not be adversely affected by such trends. A rapid
increase in the percentage of revenue derived from managed care payors without a
corresponding decrease in the Company's operating costs could have an adverse
impact on the Company's profit margins.
In addition to infusion therapy and related services, the Company also
provides lithotripsy services. Lithotripsy is a non-invasive technique that uses
shock waves to disintegrate kidney stones. The Company's lithotripsy operations
have historically contributed a substantial amount of operating income to the
Company. The Company has recently experienced modest downward pricing pressures
in its lithotripsy operations. These operations may continue to experience
pricing pressures in the future. A material change in the operating performance
of the lithotripsy business could have a material adverse effect on the
consolidated operating results of the Company. In 1993, the Health Care
Financing Administration ("HCFA") released a proposed rule reducing the rate at
which ambulatory surgery centers and certain hospitals would be reimbursed for
the technical component of a lithotripsy procedure. Although the HCFA has not
taken any further action, the adoption of this proposed rule could have a
material adverse effect on the Company's lithotripsy revenues.
CONCENTRATION OF LARGE PAYORS
Managed care organizations have grown substantially in terms of the
percentage of the population that is covered by such organizations and in terms
of their control over an increasing portion of the health care economy. Managed
care plans have continued to consolidate to enhance their ability to influence
the delivery of health care services. The Company has a number of contractual
arrangements with managed care
7
<PAGE> 9
organizations and other parties. None of these arrangements individually
accounted for more than 5% of the Company's net revenues in the year ended
December 31, 1995; however, ten managed care customers accounted for
approximately 12% of the Company's infusion therapy revenue, and the loss of
such customers could have a material adverse effect on the Company's financial
position and results of operations.
INTENSELY COMPETITIVE INDUSTRY
The alternate site health care market is highly competitive and is
experiencing both horizontal and vertical consolidation. Some of the Company's
current and potential competitors include (i) integrated providers of alternate
site health care services; (ii) large, national hospital chains; (iii) local
providers of multiple products and services for the alternate site health care
market; and (iv) physicians, including physicians with whom the Company
previously had business arrangements. The Company has experienced increased
competition from hospitals and physicians who have sought to increase the scope
of services through their offices, including services similar to those offered
by the Company. Integrated alternate site health care companies and certain of
the Company's other competitors have superior financial, marketing and
managerial resources, size, purchasing power and numerous strategic
relationships with providers, referral sources such as physicians and
traditional indemnity and managed care payors. Moreover, there are relatively
few barriers to entry in the local markets which the Company serves. Local or
regional companies are currently competing in many of the home health care
markets served by the Company and others may do so in the future. The Company
expects its competitors to continue to improve their service offerings and price
competitiveness. The Company also expects its competitors to develop new
strategic relationships with providers, referral sources and payors, which could
result in a rapid and dramatic increase in competition. New services
introductions and enhancements and the development of strategic relationships by
the Company's competitors could cause a significant decline in sales or loss of
market acceptance of the Company's services or intense price competition, or
make the Company's services noncompetitive. The Company expects to continue to
encounter increased competition in the future that could limit its ability to
maintain or increase its market share. Such increased competition could have a
material adverse effect on the business, financial position and results of
operations of the Company.
HEALTH CARE REFORM LEGISLATION
In recent years, an increasing number of legislative initiatives have been
introduced or proposed in Congress and in state legislatures that would effect
major changes in the health care system, either nationally or at the state
level. Among the proposals under consideration are various insurance market
reforms, forms of price control, expanded fraud and abuse and anti-referral
legislation and further reductions in Medicare and Medicaid reimbursement. The
Company cannot predict whether any of the above proposals or any other proposals
will be adopted, and if adopted, no assurance can be given that the
implementation of such reforms will not have a material adverse effect on the
business of the Company.
POTENTIAL PROFESSIONAL LIABILITY
The services of the Company involve an inherent risk of professional
liability and, with respect to such services, while the Company has not had any
material claims for professional liability asserted against it, no assurance can
be given that such claims will not be asserted in the future. While the Company
maintains insurance consistent with industry practice, there can be no assurance
that the amount of insurance currently maintained by it will satisfy all claims
made against it or that the Company will be able to obtain insurance in the
future at satisfactory rates or in adequate amounts. The Company cannot predict
the effect that any such claims, regardless of their ultimate outcome, might
have on its business or reputation or on its ability to attract and retain
patients.
CHANGES IN TECHNOLOGY
The alternate site infusion business of the Company is dependent on
physicians continuing to prescribe the administration of drugs and nutrients
through intravenous and other infusion methods. Intravenous administration is
often the most appropriate method for treating critically ill patients and is
often the only way
8
<PAGE> 10
to administer proteins and biotechnology drugs. Nonetheless, technological
advances in drug delivery systems, the development of therapies that can be
administered orally and the development of new medical treatments that cure
certain complex diseases or reduce the need for infusion therapy could adversely
impact the business of the Company.
USE OF PROCEEDS
The proceeds to be received by the Company from the issuance of Common
Stock upon exercise of all of the TPN Warrants will be an aggregate of
approximately $1,200,781, after deducting estimated offering expenses of
approximately $100,000. The amount of such proceeds will vary significantly
depending on the number of TPN Warrants, if any, which are exercised. The net
proceeds are expected to be used by the Company for general corporate purposes.
The Company will not receive proceeds upon conversion of the Convertible PIK
Note. The net proceeds from the sale of the Offered Securities will be received
directly by each Selling Stockholder.
DETERMINATION OF OFFERING PRICE
The exercise price of the TPN Warrants was established by negotiations
between the Company and the Former TPN Shareholders, and the conversion price of
the Convertible PIK Note was established by negotiations between the Company and
Caremark. This Prospectus may be used from time to time by the Selling
Stockholders who offer the Offered Securities registered hereby for sale, and
the offering price of such Offered Securities will be determined by the Selling
Stockholders and may be based on market prices prevailing at the time of sale,
at prices relating to such prevailing market prices, or at negotiated prices.
SELLING STOCKHOLDERS
The following tables set forth certain information with respect to the
Common Stock beneficially owned by each Selling Stockholder as of April 18, 1996
and as adjusted to give effect to the sale of such securities. The securities
offered in this Prospectus by the Selling Stockholders are the Offered
Securities. The Offered Securities are being registered to permit public
secondary trading of such securities, and the Selling Stockholders may offer
such securities for resale from time to time. See "Plan of Distribution."
Messrs. Lester and McCord and Ms. Evans acquired the Common Stock they are
offering hereby in connection with the ContinueCare Settlement Agreement. Under
the ContinueCare Settlement Agreement the Company and the other parties thereto
resolved certain disputes as to their respective rights and obligations under
(i) the Agreement and Plan of Merger dated June 29, 1993 by and among Curaflex,
Curaflex Acquisition, Inc. and ContinueCare Health Systems, Inc. and (ii) the
respective Employment Agreements dated as of June 29, 1993 between the Selling
Stockholders on the one hand, and Curaflex on the other.
Bridget J. and William E. Kahl, as trustees for the William E. Kahl Family
Trust, Craig S. Collins, Lisa K. and Alex E. Rassuchine, as trustees for the
Alex E. Rassuchine Family Trust, Bradley Rassuchine, Carla M. and Raymond L.
Swarts, M.D., Catherine M. and Steven W. Parker, M.D., and Merrilee B. and John
E. Dietrich, M.D. acquired the Common Stock they are offering hereby in
connection with the TPN Settlement Agreement, dated December 27, 1995, which
replaced a previous Settlement Agreement among the Company and the Former TPN
Shareholders dated as of September 30, 1994. Under the TPN Settlement Agreement,
the Company and the other parties thereto resolved certain disputes as to their
respective rights and obligations under an Agreement and Plan of Merger dated
January 29, 1992 by and among TPN of Reno, Inc., TPN of Las Vegas, Inc., Sierra
Nevada Pharmaceutical Consultants, Inc., T and T's wholly-owned subsidiary, TPN,
Inc. Settlement consideration under the TPN Settlement Agreement included cash,
shares of Common Stock of the Company, as well as the TPN Warrants. Shares of
Common Stock issued to the former TPN Shareholders and shares of Common Stock
issuable upon exercise of the TPN Warrants are being registered pursuant to this
Registration Statement. See "Description of Securities."
9
<PAGE> 11
None of such Selling Stockholders has had a material relationship with the
Company within the past three years other than as a result of ownership of the
securities of the Company. The Offered Securities may be offered from time to
time by the Selling Stockholders named below or their nominees, and this
Prospectus may be required to be delivered by persons who may be deemed to be
underwriters in connection with the offer or sale of such securities. See "Plan
of Distribution."
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERING(1)(2) COMMON OFFERING(1)(2)
NAME OF SELLING ---------------------- STOCK ------------------
STOCKHOLDERS AMOUNT PERCENT OFFERED(3) AMOUNT PERCENT
- ------------------------------------------ --------- ------- ---------- ------- -------
<S> <C> <C> <C> <C> <C>
Michael K. Lester......................... 204,868 * 83,721 121,147 *
Terry P. McCord........................... 204,868 * 83,721 121,147 *
Jeri L. Evans............................. 47,089 * 18,605 28,484 *
William E. Kahl Family Trust.............. 197,409(4) * 197,209 200 *
c/o Bridget J. and
William E. Kahl, Trustees
Craig S. Collins.......................... 227,209(5) * 197,209 30,000 *
Alex E. Rassuchine Family Trust........... 122,120(6) * 115,522 6,598 *
c/o Lisa K. and Alex E.
Rassuchine, Trustees
Bradley Rassuchine........................ 45,241(7) * 39,453 5,788 *
Carla M. and Raymond L. Swarts............ 6,197(8) * 4,842 1,355 *
Catherine M. and Steven W. Parker. ....... 4,842(9) * 4,842 ,000 *
Marilee B. and John E. Dietrich........... 4,823(10) * 3,423 1,400 *
--------- ----- ------- ------- -----
All Selling Stockholders as a Group ...... 1,064,666 * 748,547 315,519 *
========= ===== ======= ======= =====
</TABLE>
- ---------------
(1) Shares of Common Stock subject to options or warrants which are currently
exercisable or exercisable within 60 days are deemed outstanding for
purposes of computing the percentage of the person holding such options or
warrants but are not deemed to be outstanding for computing the percentage
of any other person.
(2) No percent of class is shown for holders of less than 1%. Percentage
computations are based on 40,752,661 shares of Common Stock outstanding as
March 31, 1996.
(3) Assumes sale of all Common Stock offered hereby.
(4) Includes 98,604 shares issuable upon exercise of TPN Warrants.
(5) Includes 98,605 shares issuable upon exercise of TPN Warrants.
(6) Includes 57,761 shares issuable upon exercise of TPN Warrants.
(7) Includes 19,726 shares issuable upon exercise of TPN Warrants.
(8) Includes 2,421 shares issuable upon exercise of TPN Warrants.
(9) Includes 2,421 shares issuable upon exercise of TPN Warrants.
(10) Includes 1,712 shares issuable upon exercise of TPN Warrants.
10
<PAGE> 12
PLAN OF DISTRIBUTION
THE COMPANY
The Company is also registering 2,777,778 shares of Common Stock issuable
upon conversion of the Convertible PIK Note at $27.00 per share, subject to
adjustment. This Prospectus will be used in connection with the offer and sale
of the Common Stock issuable upon conversion of the Convertible PIK Note. See
"Description of Securities."
THE SELLING STOCKHOLDERS
The Company has been advised by the Selling Stockholders that the Offered
Securities may be sold from time to time in transactions on the NYSE in
privately negotiated transactions, through the writing of options on the Common
Stock, or by a combination of these methods, at fixed prices that may be
changed, at market prices at the time of sale, at prices related to market
prices or at negotiated prices. The Selling Stockholders will act independently
of the Company in making decisions with respect to the timing, manner and size
of each sale. The Selling Stockholders may effect these transactions by selling
the Offered Securities to or through broker-dealers and/or purchasers of the
Offered Securities for whom they may act as agent.
Each Selling Stockholder has represented that it was acquiring the Offered
Securities without any present intention of effecting a distribution of such
securities except in the manner contemplated in the ContinueCare Settlement
Agreement or the TPN Settlement Agreement and in compliance with applicable
securities laws. In recognition of the fact that investors, even though having
acquired the Offered Securities without a view to distribution, may wish to be
legally permitted to sell such securities when they deem appropriate, the
Company has filed with the Commission under the Securities Act, a Registration
Statement of which this Prospectus forms a part, with respect to the resale of
the Offered Securities from time to time as described herein and has agreed to
prepare and file such amendments and supplements to the Registration Statement
as may be necessary to keep the Registration Statement effective until the
earlier to occur of September 30, 1999 or the earlier disposition of the
Offering Securities.
The Selling Stockholders and broker-dealers who act in connection with the
sale of the Offered Securities may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commissions received by such
broker-dealers and profits on the resale of the Offered Securities as a
principal may be deemed to be underwriting discounts and commissions under the
Securities Act.
DESCRIPTION OF SECURITIES
GENERAL
The authorized capital stock of the Company consists of an aggregate of
75,000,000 shares of Common Stock, par value $.001 per share, and 10,000,000
shares of Preferred Stock, par value $.001 per share ("the Preferred Stock"). As
of March 31, 1996, 40,752,661 shares of Common Stock and no shares of Preferred
Stock were outstanding.
COMMON STOCK
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, have one vote per share in all matters to be voted upon
by shareholders. The shares of Common Stock have no preemptive, conversion or
redemption rights and may only be issued as fully paid and nonassessable shares.
Cumulative voting in the election of directors is not allowed. The holders of a
majority of the issued and outstanding shares of Common Stock are able to elect
all directors of the Company. Each holder of Common Stock, upon liquidation of
the Company, is entitled to receive a pro rata share of the Company's assets
available for distribution to common stockholders.
11
<PAGE> 13
TPN WARRANTS
The Company issued the TPN Warrants pursuant to that TPN Settlement
Agreement and Release dated as of September 30, 1994, dated as of December 27,
1995, by and between the Company and T(2) on the one hand, and the Former TPN
Shareholders on the other hand. Each TPN Warrant currently entitles the
registered holder to purchase one share of Common Stock at an exercise price of
$4 5/8 during the period commencing on the date of issuance and ending September
30, 1999. The exercise price of the TPN Warrants was determined by negotiation
between the Company and the Former TPN Shareholders. The exercise price of the
TPN Warrants and the number and kind of shares of Common Stock or other
securities and property to be obtained upon exercise of the TPN Warrants are
subject to adjustment in certain circumstances, including a stock split or upon
the sale of all or substantially all of the assets of the Company, a merger or
other unusual events so as to enable warrantholders to purchase the kind and
number of shares or other securities or property receivable in such event by a
holder of the kind and number of shares of Common Stock that might otherwise
have been purchased upon exercise of such TPN Warrant. The TPN Warrants may be
exercised upon surrender of the TPN Warrant certificate on or prior to the
expiration date of such TPN Warrants at the principal offices of the Company, or
at the offices of its stock transfer agent, accompanied by payment of the full
exercise price (by certified check payable to the Company) for the number of TPN
Warrants being exercised. Shares of Common Stock issuable upon exercise of the
TPN Warrants upon payment in accordance with their terms will be fully paid and
non-assessable. The TPN Warrants do not confer upon the TPN Warrantholders any
voting or other rights of a stockholder of the Company.
CONVERTIBLE PIK NOTE
The Company is registering up to 2,777,778 shares of Common Stock issuable
upon conversion of the $75 million Convertible PIK Note. The Convertible PIK
Note was issued effective as of April 1, 1995 pursuant to the terms of the Asset
Sale and Note Purchase Agreement dated as of January 29, 1995, as amended as of
April 1, 1995, between the Company and Caremark. The Convertible PIK Note is
convertible at any time subsequent to April 1, 1996, in whole or in part, into
shares of the Company's Common Stock determined by dividing the aggregate
principal amount thereof by $27 per share, subject to adjustment for stock
splits and subdivisions, reverse stock splits, certain other distributions to
holders of its Common Stock, the issuance of options or rights not below market
prices and lender or exchange offers. The conversion price of the Convertible
PIK Note was determined by negotiations between the Company and Caremark and
should not be construed to be predictive of, or to imply that, any price
increases will occur in the Company's securities. The Company is required to
maintain the effectiveness of such registration statement for a three-year
period following the original effective date of the registration statement. The
Convertible PIK Note matures upon the earlier of an event of default or October
1, 2005. Also, prior to April 1, 1997, interest on the Convertible PIK Note is
payable in additional subordinated PIK notes, at the election of the Company.
Thereafter, interest is payable in cash, subject to the satisfaction of certain
lender tests.
LEGAL MATTERS
Certain legal matters have been passed upon for the Company by Brobeck,
Phleger & Harrison LLP, Denver, Colorado.
12
<PAGE> 14
EXPERTS
As set forth in their respective reports incorporated by reference herein,
the consolidated financial statements of the Company at December 31, 1995 and
1994 and for the years then ended have been audited by Ernst & Young LLP,
independent auditors. The consolidated financial statements of the Company for
the year ended December 31, 1993 have been audited by Ernst & Young LLP,
independent auditors, as to combination only. The financial statements of those
entities underlying the combination were audited by Deloitte & Touche LLP, as it
relates to T(2) for the year ended September 30, 1993 (whose report expresses an
unqualified opinion and includes an explanatory paragraph relating to Material
Uncertainties (as defined therein) concerning certain pending claims against
T(2)), and by KPMG Peat Marwick LLP, as it relates to Curaflex, Arthur Andersen
LLP, as it relates to HealthInfusion, and Coopers & Lybrand LLP, as it relates
to Medisys, each for the year ended December 31, 1993. The financial statements
referred to above are incorporated by reference in this Registration Statement
in reliance upon such reports given upon the authority of such firms as experts
in accounting and auditing.
13
<PAGE> 15
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION IN CONNECTION WITH THE OFFERING BEING MADE HEREBY NOT CONTAINED
IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................
2
Incorporation of Certain Documents by
Reference...........................
2
The Company...........................
3
Subsequent Event......................
3
Risk Factors..........................
4
Use of Proceeds.......................
9
Determination of Offering Price.......
9
Selling Stockholders..................
9
Plan of Distribution..................
11
Description of Securities.............
11
Legal Matters.........................
12
Experts...............................
13
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
CORAM HEALTHCARE
CORPORATION
3,526,325 SHARES
OF COMMON STOCK
-----------------
PROSPECTUS
-----------------
, 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Registrant in
connection with the sale of the securities being registered hereby. All of the
amounts shown are estimates, except for the SEC registration fee.
<TABLE>
<CAPTION>
ITEM AMOUNT
------------------------------------------------------------------ --------
<S> <C>
SEC Registration Fee.............................................. $ 30,176
Blue Sky fees and expenses........................................ 5,000
Printing and engraving expenses................................... 1,500
Legal fees and expenses........................................... 50,000
Accounting fees and expenses...................................... 10,000
Miscellaneous fees and expenses................................... 3,324
--------
Total................................................... $100,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
contains provisions permitting corporations organized thereunder to indemnify
directors, officers and other representatives from liabilities in connection
with any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person was or is a director, officer, employee or agent of the corporation,
against liabilities arising in any such action, suit or proceeding, expenses
incurred in connection therewith, and against certain other liabilities. Article
Eight of the Registrant's Certificate of Incorporation provides that the
personal liability of the directors of the Registrant to the Registrant or its
stockholders for monetary damages for a breach of fiduciary duty as a director
is eliminated to the maximum extent permitted by Delaware law. Article Nine of
the Registrant's By-laws provides for indemnification of the Registrant's
directors and officers in a variety of circumstances, which may include
liabilities under the Securities Act of 1933.
ITEM 16. EXHIBITS
(a) Exhibits:
<TABLE>
<C> <S>
4.1 -- Form of Common Stock Certificate for the Registrant's common stock,
$.001 par value per share (Incorporated by reference to Exhibit 4.1
of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
5.1 -- Opinion of Brobeck, Phleger & Harrison LLP.*
23.1 -- Consent of Ernst & Young LLP.*
23.2 -- Reserved
23.3 -- Consent of Deloitte & Touche LLP.*
23.4 -- Consent of KPMG Peat Marwick LLP.*
23.5 -- Consent of Arthur Andersen LLP.*
23.6 -- Consent of Coopers & Lybrand LLP.*
23.7 -- Reserved
23.8 -- Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1).*
24.1 -- Power of Attorney (reference is made to page II-4 of this
Registration Statement).
</TABLE>
- ---------------
* Filed herewith.
II-1
<PAGE> 17
ITEM 17. UNDERTAKINGS
The 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;
(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; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and where applicable such 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 not be deemed to
be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the Prospectus, to each person to whom the Prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be provided by
Article 3 of Regulation S-X is not set forth in the Prospectus, to deliver, or
cause to be delivered to each person to whom the Prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the Prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to provisions described in this Registration Statement or
otherwise, the Registrants have 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 Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants 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 Registrants will, unless
in the opinion of their respective counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of 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-2
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Denver, State of
Colorado, on this 18th day of April, 1996.
CORAM HEALTHCARE CORPORATION
By: /s/ DONALD J. AMARAL
-----------------------------------
Donald J. Amaral
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated, each of whom also constitutes and
appoints Donald J. Amaral, Richard M. Smith and Paul J. Quiner, acting singly or
together, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him in any and all capacities, to sign any
and all amendments and post-effective amendments to this Registration Statement,
and to file the same, with the exhibits thereto and any other documents in
connection therewith with the Securities and Exchange Commission, granting unto
each attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary in connection with such matters,
and hereby ratifying and confirming all that each attorney-in-fact and agent or
his substitute or substitutes may lawfully do or cause to be done by virtue
hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------------- ---------------------------------- ---------------
<C> <S> <C>
/s/ DONALD J. AMARAL President and Chief Executive April 18, 1996
- ----------------------------------- Officer
Donald J. Amaral (Principal Executive Officer)
and Director
/s/ JAMES M. SWEENEY Chairman April 18, 1996
- -----------------------------------
James M. Sweeney
/s/ RICHARD M. SMITH Secretary and Chief Financial April 18, 1996
- ----------------------------------- Officer
Richard M. Smith (Principal Financial Officer and
Principal Accounting Officer)
Vice Chairman of the Board
- ----------------------------------- of Directors
Tommy H. Carter
/s/ RICHARD A. FINK Director April 18, 1996
- -----------------------------------
Richard A. Fink
/s/ ANDREW J. NATHANSON Director April 18, 1996
- -----------------------------------
Andrew J. Nathanson
Director
- -----------------------------------
Stephen G. Pagliuca
/s/ L. PETER SMITH Director April 18, 1996
- -----------------------------------
L. Peter Smith
/s/ DR. GAIL R. WILENSKY Director April 18, 1996
- -----------------------------------
Dr. Gail R. Wilensky
</TABLE>
II-3
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGES
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
4.1 -- Form of Common Stock Certificate for the Registrant's common stock,
$.001 par value per share (Incorporated by reference to Exhibit 4.1
of the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
5.1 -- Opinion of Brobeck, Phleger & Harrison LLP.*
23.1 -- Consent of Ernst & Young LLP.*
23.2 -- Reserved
23.3 -- Consent of Deloitte & Touche LLP.*
23.4 -- Consent of KPMG Peat Marwick LLP.*
23.5 -- Consent of Arthur Andersen LLP.*
23.6 -- Consent of Coopers & Lybrand LLP.*
23.7 -- Reserved
23.8 -- Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1).*
24.1 -- Power of Attorney (reference is made to page II-4 of this
Registration Statement).
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* Filed herewith.
<PAGE> 1
April 18, 1996
Coram Healthcare Corporation
1125 Seventeenth Street, Suite 1500
Denver, Colorado 80202
Re: Registration Statement for Offering of
3,526,325 Shares of Common Stock
Ladies and Gentlemen:
We refer to your registration on Form S-3 (the "Registration Statement")
under the Securities Act of 1933, as amended, of 3,526,325 shares of Common
Stock of the Company, on behalf of the Selling Stockholders. The Registration
Statements includes (i) up to 2,777,778 shares of Common Stock, as adjusted, to
be issued upon conversion of the Company's Convertible PIK Note; (ii) 467,297
shares of Common Stock acquired by certain Selling Stockholders in connection
with the ContinueCare Settlement Agreement and the TPN Settlement Agreement; and
(iii) 281,250 shares of Common Stock issuable upon exercise of warrants issued
pursuant to the TPN Settlement Agreement. Capitalized terms no otherwise defined
herein have the meanings contained in the Registration Statement.
We advise you that, in our opinion, when such shares have been issued and
sold pursuant to the applicable provisions of agreements referenced above, such
shares will be validly issued, fully paid and nonassessable shares of the
Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ BROBECK, PHLEGER & HARRISON LLP
BROBECK, PHLEGER & HARRISON LLP
SAN FRANCISCO PALO ALTO LOS ANGELES ORANGE COUNTY SAN DIEGO NEW
YORK AUSTIN DENVER LONDON*
*BROBECK HALE AND DORR INTERNATIONAL OFFICE
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 33-59661) and
related Prospectus of Coram Healthcare Corporation for the registration of
3,526,325 shares of its common stock and to the incorporation by reference
therein of our report dated March 31, 1996, with respect to the consolidated
financial statements and schedule of Coram Healthcare Corporation included in
its Annual Report (Form 10-K) for the year ended December 31, 1995, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
ERNST & YOUNG LLP
Denver, Colorado
April 18, 1996
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Amendment No. 1 to Registration Statement No.
33-59661 of Coram Healthcare Corporation on Form S-3 of our report dated
November 17, 1993 (December 23, 1993 as to Note 17) (relating to the financial
statements of T(2) Medical Inc. not presented separately herein) appearing in
the Annual Report on Form 10-K of Coram Healthcare Corporation for the year
ended December 31, 1995, and to the reference to us under the heading "Experts"
in the Prospectus, which is part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Atlanta, Georgia
April 17, 1996
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Coram Healthcare Corporation:
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
------------------------------------
KPMG Peat Marwick LLP
Orange County, California
April 17, 1996
<PAGE> 1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference of our report dated March 18, 1994 covering the
consolidated financial statements of HealthInfusion, Inc. and subsidiaries for
the year ended December 31, 1993 and to all references to our Firm included in
this Amendment No. 1 to Form S-3 Registration Statement File No. 33-59661 of
Coram Healthcare Corporation,
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Miami, Florida,
April 18, 1996.
<PAGE> 1
INDEPENDENT ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in Amendment No. 1 to
Registration Statements No. 33-60959 and No. 33-59661 on Form S-3 of Coram
Healthcare Corporation of our report dated February 11, 1994, on the
consolidated financial statements of Medisys, Inc. and Subsidiaries for the year
ended December 31, 1993, which report is included in the Annual Report on Form
10-K of Coram Healthcare Corporation for the year ended December 31, 1995.
/s/ COOPERS & LYBRAND L.L.P.
COOPERS & LYBRAND L.L.P.
April 19, 1996
