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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 27, 1996
REGISTRATION NO. __-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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CORAM HEALTHCARE CORPORATION
(Exact name of Registrant as specified in its charter)
1125 SEVENTEENTH STREET, SUITE 2100
DENVER, COLORADO 80202
(303) 292-4973
(Address, including zip code, telephone number and
area code of Registrant's principal executive offices)
STATE OF DELAWARE
(State or other jurisdiction of incorporation or organization)
33-0615337
(I.R.S. Employer Identification Number)
8082
(Primary Standard Industrial Classification Code Number)
DONALD J. AMARAL
CHIEF EXECUTIVE OFFICER
CORAM HEALTHCARE CORPORATION
1125 SEVENTEENTH STREET, SUITE 2100
DENVER, COLORADO 80202
(303) 292-4973
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
DAVID L. GERSH, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 SOUTH FLOWER STREET, SUITE 2300
LOS ANGELES, CALIFORNIA 90071-2371
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]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================================
Proposed Proposed Maximum
Amount to be Maximum Aggregate Amount of
Title of Securities to be Registered Registered Offering Price (1) Offering Price Registration Fee(2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 184,444 $4.00 $737,776 $254.41
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL 184,444 -- $737,776 $254.41
==============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457, based upon the closing price for shares of the
Registrant's common stock on September 24, 1996 of $4.00 per share as
reported on the New York Stock Exchange.
(2) The registration fee was calculated based on a fee of 1/29 of 1% of the
proposed maximum aggregate offering price.
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. *
* *
***************************************************************************
[RED HERRING LEGEND]
PROSPECTUS SUBJECT TO COMPLETION,
DATED SEPTEMBER 26, 1996
CORAM HEALTHCARE CORPORATION
184,444 SHARES OF COMMON STOCK,
PAR VALUE $.001 PER SHARE
Pursuant to this Prospectus, certain persons (collectively the "Selling
Stockholders") who hold 184,444 shares of Common Stock, $.001 par value per
share (the "Common Stock") of Coram Healthcare Corporation (together with its
subsidiaries, the "Company") 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 may sell the Offered Securities from time to time in transactions
on the New York Stock Exchange (the "NYSE") and, in certain cases, 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."
The Company will not receive any proceeds 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 September 24, 1996 the closing price of the Common Stock was
$4.00.
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.
IF THE COMPANY CHOOSES NOT TO MAINTAIN THE EFFECTIVENESS OF THE REGISTRATION
STATEMENT OF WHICH THIS PROSPECTUS CONSTITUTES A PART, THE SECURITIES 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.
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED 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.
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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 on
Form S-3 (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, as amended by Form 10-K/A No. 1 filed on June 6, 1996 and
Form 10-K/A No. 2 filed on June 28, 1996.
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2. Quarterly Report on Form 10-Q for the period ended March
31, 1996, as amended by Form 10-Q/A No. 1 filed on June 6, 1996.
3. Quarterly Report on Form 10-Q for the period ended June
30, 1996, as amended by Form 10-Q/A No. 1 filed on August 21, 1996.
4. Current Report on Form 8-K dated June 30, 1996.
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 2100,
Denver, Colorado 80202, telephone (303) 292-4973.
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 as a result of a merger (the
"Four-Way Merger") of T2 Medical, Inc., a wholly-owned subsidiary of the
Company ("T2"), Curaflex Health Services, Inc., a wholly-owned subsidiary of
the Company ("Curaflex"), Medisys, Inc., a wholly-owned
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subsidiary of the Company ("Medisys") and HealthInfusion, Inc., a wholly-owned
subsidiary of the Company ("HealthInfusion"), 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. ("HMSS"), a leading regional provider of home infusion therapies based in
Houston, Texas. Effective April 1, 1995, the Company acquired substantially all
the assets used in the alternate site infusion business of Caremark
International Inc. (the "Caremark Business" and such acquisition, including
certain financings related thereto, the "Caremark Transaction"), thereby
becoming the largest provider of alternate site infusion therapy service in the
United States based on breadth of service and total revenue.
The Company's principal executive offices are located at 1125
Seventeenth Street, Suite 2100, Denver, Colorado 80202, and its telephone
number is (303) 292-4973.
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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 and
the other information set forth herein 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; FUTURE OPERATING RESULTS UNCERTAIN
The Company recorded operating losses of $283.9 million and $12.6
million and net losses of $334.1 million and $41.4 million for the year ended
December 31, 1995 and the six months ended June 30, 1996, respectively, 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
$497.7 million (including $413.8 million of non-recurring and special charges)
from such date through June 30, 1996. 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 it expected
to service in substantial part through the operating income and cash flow of
the Caremark Business; (ii) the implementation of a policy of terminating
physician arrangements and certain businesses during fiscal 1995 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 business, financial condition and
results of operations in the future. In addition, there can be no assurance
that the Company can increase revenue 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
revenue and pricing pressures, the
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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.
A central component of the Company's business strategy is to focus on
revenue generation. The Company intends to increase revenue in part by
redirecting its marketing efforts towards improving its physician
relationships. The Company has experienced and expects to continue to
experience difficulties with its strategy of improving revenue as a result of
several factors. These factors include a negative perception of the Caremark
Business among certain physicians as a result of the guilty plea of Caremark
Inc. and Caremark International, Inc. (collectively "Caremark") to federal
charges. The Company believes the guilty plea by Caremark to criminal felony
charges in June 1995 has negatively impacted revenue referral sources and
employee morale throughout the Company. In addition, Caremark recently
announced a substantial settlement with private payors with whom Caremark did
business before selling the Caremark Business to the Company. The Company
believes the guilty plea and the causes underlying the settlement with private
payors have had an adverse effect on the Company's revenue because of a
reluctance of referral sources to continue to refer patients to the business
formerly owned by Caremark. The Company is unable to quantify such effect at
this time. There can be no assurance that these factors will not continue to
have an adverse effect on the Company's business, financial condition and
results of operations in the future.
In addition, there continues to be concern among payors and providers
as to whether the Company will continue as a going concern. The Company has
experienced inquiries on this matter directly from payors and providers, and
believes that these concerns have negatively impacted referrals and the ability
to secure contracts. The Company believes that the concerns stem from adverse
operating results during 1995, public disclosures related thereto and questions
raised by competitors and the news media. There can be no assurance that the
Company will be successful in mitigating these concerns or that they will not
continue to have an adverse effect on the Company's business, financial
condition and results of operations in the future.
Implementation of the 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 strategy. Execution of this strategy
has placed and will continue to
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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 successfully or does not respond adequately to ongoing
changes in its markets for the Company's products and services, the Company's
business, financial condition and results of operations will be materially
adversely affected.
In 1995, the Company's lithotripsy business had net revenue, and
pre-tax income and cash flow from operating activities net of minority interest
of approximately $53 million, $19 million and $25 million, respectively, while
the Company had combined net revenue, a pre-tax loss and negative cash flow
from operations of $602.6 million, $334.2 million and $16.8 million,
respectively. The Company is currently evaluating strategic alternatives
concerning its lithotripsy business, which may include a sale of such business,
and has engaged an investment bank to evaluate the strategic alternatives
concerning divestiture of its lithotripsy business. No assurance can be given
as to whether the lithotripsy business will be sold or the amount of proceeds
that may be realized from any such sale. While the sale of the lithotripsy
business could have a material adverse effect on the Company's revenue,
operating results and cash flows, the required application of proceeds to the
Company's Senior Credit Facility with Chemical Bank as Agent (the "Senior
Credit Facility") could significantly reduce the Company's indebtedness under
the Senior Credit Facility and related interest expense, although no assurance
can be given as to the aggregate amount of such reductions. Proceeds realized
from any such sale will be applied to reduce amounts on the Senior Credit
Facility.
SUBSTANTIAL LEVERAGE
The Company incurred a significant amount of long-term debt in
connection with the Caremark Transaction. As of June 30, 1996, the Company's
consolidated long-term indebtedness was $492.0 million and its consolidated
stockholders' equity was $1.1 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, thereby making the Company more vulnerable to economic downturns,
competitive and payor pricing pressures and adverse changes in government
regulation. At June 30, 1996, $376.1 million of the Company's borrowings were
under arrangements with variable interest rates. As of June 30, 1996, there
was $199.8 million outstanding under the Senior Credit Facility, all of which
is payable currently. Payment of interest of $26.3 million on a $150 million
subordinated rollover note (the "Rollover Note") is deferred to March 31, 1997.
Any significant increase in the interest rates on those borrowings would have a
material adverse effect on the Company's
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business, financial condition and result of operation. See "-- Liquidity; Need
for Additional Financing."
LIQUIDITY; NEED FOR ADDITIONAL FINANCING
On October 13, 1995, the Company and its lenders under the Senior
Credit Facility and a bridge note (the "Bridge Note") agreed to a restructuring
of the major terms of both agreements. The amendments to the Senior Credit
Facility postponed the first principal payment due thereunder from September
30, 1995 to March 31, 1996, provided a new $25 million credit line and
redefined covenants to be consistent with the Company's new business strategy.
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 the Company's non-core
businesses 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.
The Bridge Note was issued on April 6, 1995 to an affiliate of
Donaldson, Lufkin & Jenrette as an unsecured obligation of the Company in a
principal amount of $150 million. The Bridge Note was not repaid in full on
its April 6, 1996 due date, and the Rollover Note, which matures on October 6,
2000, was issued for the outstanding principal on the Bridge Note.
If the Company were to default under any of its indebtedness
agreements and did not cure such default prior to the lenders acting thereon,
the lenders to the Company could, at their option, declare all borrowings
immediately due and payable. 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 credit line expires and matures on
December 31, 1996 and the Senior Credit Facility matures on 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 Rollover 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
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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.
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 effect 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 since the beginning of fiscal 1995, 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.
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
business, financial condition and results of operations. These lawsuits
include (i) approximately 20 civil suits (which were consolidated into one
suit) (the "Consolidated Action") 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) two shareholders' derivative action's asserting substantially
similar factual allegations; (iii) a lawsuit filed by the Company against
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 intends to
vigorously defend itself in these matters. 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,
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either of which could have a material adverse effect upon the Company's
business, financial condition and results of operations.
On August 8, 1996 the Company announced an agreement in principle to
settle the Consolidated Action and certain derivative litigation. The agreement
in principle, which is subject to approval by the U.S. District Court for the
District of Colorado (the "District Court"), provides that the Company's
insurance policies will pay $22.25 million, the Company will pay $250,000 and
the Company will issue 5 million freely tradeable shares of Common Stock. The
agreement in principle contains several contingencies, including the following:
(1) the insurance carriers and the Company must deposit all cash into an
interest-bearing escrow account no later than August 31, 1996 (such deposit
having been made prior to such date); (2) the average value of Coram's stock
must remain above $2.50 during the twenty days immediately preceding final
approval of the settlement; (3) the Company may cancel the settlement if ten
percent or more of the class members opt out of the settlement; (4) the Company
must not voluntarily commence, or be involuntarily put into, any bankruptcy
proceeding prior to the final approval of the settlement or at any time prior to
the effective date of the settlement, and (5) the Company must not be more than
thirty days delinquent in paying interest or principal on its Senior Credit
Facility. During the quarter ended June 30, 1996, the Company recorded a
non-cash charge of $12.5 million in connection with the expected future issuance
of shares. The $12.5 million, which was recorded in operations as a provision
for a shareholder litigation settlement and in shareholder's equity as common
stock to be issued, represents the 5 million shares at the minimum value under
the agreement of $2.50 per share. The actual value of the shares will be
determined once the settlement receives final court approval and the shares are
actually issued. The value of the shares at issuance may be higher than the
$12.5 million and therefore may result in an additional charge to earnings in a
future period. Any additional charge may be material. There is no assurance
that the District Court will approve such settlement. In the event such
settlement is not so approved, such litigation could continue to entail
considerable cost and the diversion of efforts of management.
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
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maintaining such relationships, or that the Company will be able to develop and
maintain additional relationships in existing health care markets or health
care markets that develop in the future. The failure of the Company to
maintain and improve its existing relationships or to continue to develop
additional relationships could have a material adverse effect on the Company's
business, its financial condition and its results of operations.
GOVERNMENTAL REGULATION
The Company is subject to extensive federal and state laws 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, other health care providers, referral sources
and its reimbursement from governmental 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 business, financial condition and results of operations could be
materially adversely affected as a result of any such change or sanction. 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.
In September 1994, T2 entered into a settlement agreement with the
Office of the Inspector General (the "OIG") of the Department of Health and
Human Services (the T2 OIG Settlement Agreement") settling charges brought on
by an investigation by the OIG into certain operations of T2. T2, 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 T2 OIG Settlement
12
<PAGE> 14
Agreement imposes certain restrictions upon the types of relationships that T2
may have with referring physicians and imposes a five year reporting obligation
upon T2. The Company has implemented an internal review program to ensure
compliance with the T2 OIG Settlement Agreement. The internal regulatory
compliance review program is intended to deal with compliance issues under the
T2 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, which could have a material adverse effect on the Company's
business, financial condition and results of operations.
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,
alternative 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 alternative site
providers. Since 1993, the alternative site infusion industry, including the
Company, experienced severe reductions in the pricing of its products and
services as a result of these trends.
The ability of the Company to collect from third party payors depends
on the timely and accurate filing of claims. In 1995, the Company experienced
significant delays in billing as well as difficulties in receiving timely
reimbursements. The delays were caused in part by the inability to efficiently
complete, obtain or process certain claim documentation and in part by lack of
familiarity with the billing systems of its predecessor entities and the
Caremark Business. The passage of time makes incomplete documentation required
for billing and payment difficult or impossible to obtain or replace, and can
delay claim submission past deadlines imposed by certain payors. Any further
disruptions in those procedures could adversely affect the ability of the
Company to collect its accounts receivable, and that would have an adverse
effect on the Company's business, financial condition and results of
operations.
13
<PAGE> 15
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, no
assurance can be given that pricing pressures will not continue or that the
Company's business, financial condition and results of operations 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
gross margins.
In addition to infusion therapy and related services, the Company also
provides lithotripsy services. Lithotripsy is a non-invasive technique that
utilizes shock waves to disintegrate kidney stones. The Company's lithotripsy
operations have historically contributed a substantial amount of operating
income to the Company. During fiscal 1995, the Company experienced modest
downward pricing pressures in its lithotripsy operations, as a result of which
the Company's lithotripsy revenues per procedure declined by approximately
5.5%. 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. See "-- Recent Operating Losses; Future Operating
Results Uncertain."
CONCENTRATION OF LARGE PAYORS
Managed care has grown substantially. Consequently, the percentage of
the population that is covered by organizations providing such type of care has
expanded significantly 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
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 and in the six months ended June 30, 1996; however, ten
managed care customers accounted for approximately 12% and 11% of the Company's
14
<PAGE> 16
infusion therapy revenue in the year ended December 31, 1995 and the six months
ended June 30, 1996, respectively, and the loss of such customers could have a
material adverse effect on the Company's business, financial condition 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 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 dramatic increase in competition. New service
introductions and enhancements, acquisitions, continued industry consolidation
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. There can be no assurance that the Company will be able to
compete successfully against current or future competitors or that competitive
pressures will not have a material adverse effect on the Company's business,
financial condition and results of operations.
FUTURE HEALTH CARE PROPOSALS AND 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
15
<PAGE> 17
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 adoption and implementation of any
of the above or other proposals could 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. The Company maintains insurance consistent with industry practice
and such insurance has been adequate to cover claims asserted against the
Company as of the date hereof. There can be no assurance that the amount of
insurance currently maintained by the Company will continue to 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, reputation or 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 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.
POTENTIAL VOLATILITY OF STOCK PRICE
The market price of the Common Stock is likely to be highly volatile
and may be significantly affected by factors such as actual or anticipated
fluctuations in the Company's operating results, new products or contracts by
the Company or its competitors, conditions and trends in the healthcare
industry, adoption of new accounting standards affecting the healthcare
industry, changes in financial estimates by securities analysts, general market
conditions and other factors. In addition, the stock market has from time to
time experienced significant price and volume fluctuations that have
particularly affected the market prices for the common stocks of healthcare
companies. These broad market fluctuations may adversely affect the market
price of the Common Stock. In the past, following periods of volatility in the
market price of a particular company's securities, securities class action
litigation
16
<PAGE> 18
has often been brought against the company. There can be no assurance that
such litigation will not occur in the future with respect to the Company; such
litigation could result in substantial costs and a diversion of management's
attention and resources, which could have a material adverse effect upon the
Company's business, financial condition and results of operations.
DETERMINATION OF OFFERING PRICE
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 table sets forth certain information with respect to the
Common Stock beneficially owned by each Selling Stockholder as of September 24,
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. See "Plan of Distribution."
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)(3)
NAME OF -------------------- STOCK -----------------
SELLING STOCKHOLDERS AMOUNT PERCENT OFFERED AMOUNT PERCENT
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Olav Bergheim 40,000 * 40,000 0 -
Rita and Don Gillespie 67,733 * 44,444 23,289 *
Ivy Meds, Inc. 100,000 * 100,000 0 -
</TABLE>
* Less than 1%
17
<PAGE> 19
(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) Percentage computations are based on 42,218,635 shares of Common Stock
outstanding as of September 24, 1996, not including 140,000 shares
issued to Mr. Bergheim and Ivy Meds subsequent to such date and prior
to the date hereof.
(3) Assumes sale of all Common Stock offered hereby.
From February 1995 to August 1995, Mr. Bergheim was Executive Vice
President of the Company. Mr. Bergheim has not had any other material
relationship with the Company within the past three years other than as a
result of ownership of the securities of the Company.
Rita Gillespie is general manager for the Tampa, St. Petersburg and
Sarasota markets (the "Market Area"), and has held this position since prior to
September 1993. Ms. Gillespie has agreed to remain employed by the Company
through December 31, 1996, and thereafter may resign on sixty days notice to
the Company. Pursuant to agreements between the Company and the Gillespies,
Mr. and Ms. Gillespie have the right to receive certain earn-out payments in
the event the Market Area meets certain performance targets in fiscal 1996. Don
Gillespie was an employee of a subsidiary of Curaflex until March 1996.
Neither Rita Gillespie nor Don Gillespie has had any other material
relationship with the Company within the past three years other than as a
result of ownership of the securities of the Company.
Ivy Meds, Inc., a Colorado corporation doing business as Ivy Meds of
Denver, Inc. ("Ivy Denver") acquired the 100,000 shares of Common Stock (the
"Ivy Meds Shares") it is offering hereby pursuant to the Settlement Agreement,
Mutual Release and Covenant not to Sue dated as of September 20, 1996 (the "Ivy
Meds Agreement") among Ivy Meds of America, a Colorado general partnership
("Ivy America"), Ivy Denver, the Company and certain other parties. Pursuant
to the Ivy Meds Agreement, Ivy Denver has agreed that it will sell the Ivy Meds
Shares only in "Brokers' Transactions" (as such term is defined under Rule 144
promulgated under the Securities Act).
The Company has been advised by Ivy Denver that the net proceeds
realized from the sale by Ivy Denver of the Ivy Meds Shares, and any part
thereof, will be divided equally among the following twenty-four individuals
and entities (the "Ivy Participants"):
Pete Baker, M.D. Robert L. Cox, M.D.
Burton P. Golub, M.D. Jesse M. Hofflin, M.D.
18
<PAGE> 20
Jordan Gulinson, M.D. Phillip D. Hanna, M.D.
David C. Howson Seymour Katz, M.D.
Robin Kovachy, M.D. David B. Link, M.D.
Ronald E. Kramer, M.D. Frederick W. Lewis, M.D.
Richard T. McMahon, M.D. Ronald S. Murray, M.D.
Daniel M. Perlman, M.D. Mark G. Scattergood, Ph.D.
Merritt C. Rudolph, M.D. John Sabel, M.D.
Theodore H. Stathos, M.D. Donald A. Standberg, M.D.
Robert D. Weber, M.D. David R. Travarthern, M.D.
Josephine Williams, M.D. Burns, Wall, Smith and
Mueller, P.C.
Prior to the Company, Ivy Denver and certain other parties entering
into the Ivy Meds Agreement, Ivy Denver had contractual relationships with the
Company and Curaflex with respect to (i) the formation and operation of Ivy
America between the Company and Ivy Denver, and (ii) the furnishing of
prescription drugs and peripherals for home infusion services. Such
relationships were terminated pursuant to the Ivy Meds Agreement. Other than
in connection with such relationships, neither Ivy Denver nor any of the Ivy
Participants had any position, office or other material relationship within the
last three years with the Company or any predecessor to the Company other than
(i) as a member physician in the home infusion business operated by Ivy Denver
and for which the Company and Curaflex furnished drugs and related products and
services and (ii) as a consultant to or counsel to Ivy Denver and/or Ivy
America with respect to its home infusion business The Company has been
informed by Ivy Denver that none of the Ivy Participants is the holder, of
record or beneficially, of any securities of the Company.
PLAN OF DISTRIBUTION
The Company has been advised by the Gillespies and Mr. Bergheim that
Offered Securities offered thereby may be sold from time to time in
transactions on the NYSE in privately negotiated transactions, through the
writing of options on the Offered Securities, 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.
Ivy Denver has agreed that it will sell the Ivy Meds Shares only in
"Brokers' Transactions" (as such term is defined under Rule 144 promulgated
under the Securities Act). Pursuant to the Ivy Meds Agreement, the Company has
agreed to pay all commissions incurred in the sale of the Offered Securities by
Ivy Denver so long as such securities are sold through Paine Webber, Inc.
The Selling Stockholders will act independently of the Company in
making decisions with respect to the timing, manner and size of each sale.
Except as set forth above, the Selling Stockholders may effect these
transactions by
19
<PAGE> 21
selling the Offered Securities to or through broker-dealers and/or purchasers
of the Offered Securities for whom they may act as agent.
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.
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 September 24, 1996, 42,218,635 shares of Common Stock were outstanding,
not including 140,000 shares issued to Mr. Bergheim and Ivy Meds subsequent to
such date and prior to the date hereof, 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.
LEGAL MATTERS
Certain legal matters have been passed upon for the Company by Paul,
Hastings, Janofsky & Walker LLP.
EXPERTS
As set forth in their report incorporated by reference herein, the
consolidated financial statements of the Company at December 31, 1995 and 1994
20
<PAGE> 22
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 T2 for the year ended September 30, 1993, and by KPMG
Peat Marwick LLP, as it relates to Curaflex, Arthur Andersen LLP, as it relates
to HealthInfusion, and Coopers & Lybrand, Independent Accountants, 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.
21
<PAGE> 23
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 . . . . . . . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . 3
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 4
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . 6
DETERMINATION OF OFFERING PRICE . . . . . . . . . . . . . . . . 17
SELLING STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . 17
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 19
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . 20
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 20
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
22
<PAGE> 24
CORAM HEALTHCARE
CORPORATION
184,444 SHARES
OF COMMON STOCK
PROSPECTUS
, 1996
23
<PAGE> 25
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 $ 250
Blue Sky fees and expenses 2,000
Printing and engraving expenses 1,500
Legal fees and expenses 25,000
Accounting fees and expenses 15,000
Miscellaneous fees and expenses 6,250
-------
Total $50,000
=======
</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:
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 Paul, Hastings, Janofsky & Walker LLP.*
II-1
<PAGE> 26
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 Paul, Hastings, Janofsky & Walker LLP (included in
Exhibit 5.1).*
24.1 -- Power of Attorney (reference is made to page II-5 of this
Registration Statement).
* Filed herewith.
II-2
<PAGE> 27
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
II-3
<PAGE> 28
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 Registrant pursuant to provisions described in this Registration
Statement or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question 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-4
<PAGE> 29
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all the requirements for filing on Form S-3 and 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 26th day of
September, 1996.
CORAM HEALTHCARE CORPORATION
By: /s/ DONALD J. AMARAL
-------------------------------------
Donald J. Amaral
President and Chief Executive Officer
POWER OF ATTORNEY
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 date indicated, each of whom also
constitutes and appoints Donald J. Amaral, Richard M. Smith and Paul J. Quiner,
acting singly or together, his or her true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution for him or her 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 things
requisite and necessary in connection with such matters, and hereby ratifying
and confirming all that each attorney-in-fact and agent or his or her
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
-------------------------------------------------------------------
<S> <C> <C>
/s/ DONALD J. AMARAL
- ----------------------------
Donald J. Amaral President and Chief Executive
Officer (Principal Executive
Officer) and Director September 26, 1996
/s/ JAMES M. SWEENEY
- ----------------------------
James M. Sweeney Chairman September 26, 1996
/s/ RICHARD M. SMITH
- ----------------------------
Richard M. Smith Secretary and Chief Financial
Officer (Principal Financial
Officer) September 26, 1996
</TABLE>
II-5
<PAGE> 30
<TABLE>
<S> <C> <C>
/s/ RICHARD A. FINK
- --------------------------------------
Richard A. Fink Director September 26, 1996
/s/ ANDREW J. NATHANSON
- --------------------------------------
Andrew J. Nathanson Director September 26, 1996
/s/ STEPHEN G. PAGLIUCA
- --------------------------------------
Stephen G. Pagliuca Director September 26, 1996
- --------------------------------------
L. Peter Smith Director
/s/ DR. GAIL R. WILENSKY
- --------------------------------------
Dr. Gail R. Wilensky Director September 26, 1996
/s/ PAMELA M. SPANIAC
- --------------------------------------
Pamela M. Spaniac Vice President and Controller
(Principal Accounting officer) September 26, 1996
</TABLE>
II-6
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGES
-------------------------------------------------------------------------------------------------
<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 Paul, Hastings, Janofsky & Walker 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 Paul, Hastings, Janofsky & Walker LLP (included in
Exhibit 5.1).*
24.1 -- Power of Attorney (reference is made to page II-5 of this
Registration Statement).
</TABLE>
* Filed herewith.
II-7
<PAGE> 1
EXHIBIT 5.1
PAUL, HASTING, JANOFSKY & WALKER LLP
A LIMITED LIABILITY PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS
555 South Flower Street
Los Angeles, California 90071-2371
Telephone (213) 683-6000
Facsimile (213) 627-0705
September 27, 1996
Coram Healthcare Corporation
Bank One Building
1125 17th Street, Suite 2100
Denver, Colorado 80202
Dear Ladies and Gentlemen:
We are furnishing this opinion of counsel to Coram Healthcare
Corporation, a Delaware corporation (the "Company"), for filing as Exhibit 5 to
the Registration Statement on Form S-3 (the "Registration Statement") to be
filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, relating to the resale of up to 184,444
shares (the "Shares") of its Common Stock, $.001 par value.
We have examined the Certificate of Incorporation and Bylaws,
each as amended to date, of the Company, and the originals, or copies certified
or otherwise identified, of records of corporate action of the Company as
furnished to us by the Company, certificates of public officials and of
representatives of the Company, and such other instruments and documents as we
deemed necessary, as a basis for the opinions hereinafter expressed. In such
examination we have assumed the genuineness of all signatures, the authenticity
of all corporate records and other documents submitted to us and the conformity
to original documents submitted to us as certified or photostatic copies.
Based upon our examination as aforesaid, and in reliance upon
our examination of such questions of law as we deem relevant under the
circumstances, we are of the opinion that the Shares, when sold as described in
the Registration Statement, will be validly issued, fully paid and
non-assessable.
We express no opinion with respect to the applicability or
effect of the laws of any jurisdiction other than the Delaware General
Corporation Law as in effect on the date hereof.
We hereby consent to the filing of this opinion of counsel as
Exhibit 5 to the Registration Statement and to our being named in the
Registration Statement under the heading "Legal Matters".
Very truly yours,
/s/ Paul, Hastings, Janofsky & Walker LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Coram
Healthcare Corporation for the registration of 184,444 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 Amendment No. 2 to the Annual Report
(Form 10-K/A) for the year ended December 31, 1995, filed with the Securities
and Exchange Commission.
/s/ ERNST & YOUNG LLP
Denver, Colorado
September 25, 1996
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement 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 T2
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
Atlanta, Georgia
September 24, 1996
<PAGE> 1
EXHIBIT 23.4
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
Orange County, California
September 25, 1996
<PAGE> 1
EXHIBIT 23.5
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 Form S-3 Registration Statement of Coram Healthcare Corporation.
/s/ ARTHUR ANDERSEN LLP
Miami, Florida,
September 25, 1996.
<PAGE> 1
EXHIBIT 23.6
INDEPENDENT ACCOUNTANTS' CONSENT
We consent to the incorporation by reference in this Registration
Statement 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. We also consent to the reference to our Firm under the
caption "Experts."
/s/ COOPERS & LYBRAND L.L.P.
Minneapolis, Minnesota
September 25, 1996
