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Registration No. 333-______
As filed with the Securities and Exchange Commission on ____________ __, 2000
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
US ONCOLOGY, INC.
(Exact Name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 84-1213501
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
Phillip H. Watts
US Oncology, Inc.
16825 Northchase Drive, Suite 1300 16825 Northchase Drive, Suite 1300
Houston, Texas 77060 Houston, Texas 77060
(281) 873-2674 (281) 873-2674
(Address, including zip code, and telephone number, including (Name, address, including zip code, and telephone number, including
area code, of registrant's principal executive offices) area code, of agent for service)
</TABLE>
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of each Proposed Maximum Offering Proposed maximum aggregate Amount of
class of securities to be registered Amount to be Registered Price per share Offering price registration fee
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share 227,560 $4.61 (1) 1,049,052 (1) $277
</TABLE>
Estimated solely for the purpose of computing the amount of the registration
fee, based on the average of the high and low prices for our common stock as
reported on The Nasdaq National Market System on July 6, 2000 in
accordance with Rule 457(c) under the Securities Act of 1933.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state
Prospectus Subject to Completion
Dated July 12, 2000
[LOGO OF US ONCOLOGY APPEARS HERE]
227,560 SHARES OF COMMON STOCK
This prospectus relates to the offer and sale of up to 227,560 shares of
common stock of US Oncology, Inc. All of these shares are currently held by,
and are being offered by, Capitol District Oncology, P.C., a medical practice
located in Albany, New York. In this prospectus, references to "we", "us" or
"our" mean US Oncology, Inc. and its subsidiaries.
Our common stock is traded on The Nasdaq National Market System under the
symbol "USON." The last reported sales price of the common stock on The Nasdaq
National Market System on July 11, 2000 was $4.531 per share.
--------------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
----------------------------------------
The date of this prospectus is July 12, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
US Oncology, Inc............................................................ 3
Risk Factors................................................................ 3
Cautionary Statement Regarding Forward Looking Statements................... 8
Where you can Find More Information......................................... 9
Use of Proceeds............................................................. 10
Selling Stockholder......................................................... 10
Issuance of Securities to Selling Stockholder............................... 10
Description of Securities................................................... 10
Transfer Agent and Registrar................................................ 12
Plan of Distribution........................................................ 12
Legal Matters............................................................... 12
Experts..................................................................... 12
</TABLE>
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US ONCOLOGY, INC.
US Oncology, Inc. is a cancer management company. We provides
comprehensive management services under long-term agreements to oncology
practices comprised of over 800 physicians in 26 states. The physicians
affiliated with US Oncology provide all aspects of care related to the diagnosis
and outpatient treatment of cancer, including medical oncology, radiation
oncology, gynecologic oncology, stem cell transplantation, diagnostic radiology
and clinical research. US Oncology was incorporated in October 1992 under the
laws of the State of Delaware. It's principal executive offices are located at
16825 Northchase Drive, Suite 1300, Houston, Texas, and its telephone number is
(281) 873-2674.
On June 15, 1999, a wholly owned subsidiary of US Oncology merged with and
into Physician Reliance Network, Inc. ("PRN"), a cancer management company. As
a result of the merger, PRN became a wholly owned subsidiary of US Oncology, and
each holder of PRN common stock received 0.94 shares of US Oncology's common
stock for each PRN share held. The transaction was accounted for under the
pooling of interests method of accounting and treated as a tax-free exchange. US
Oncology's financial statements included in this report have been retroactively
restated to combine the accounts of US Oncology (formerly known as American
Oncology Resources, Inc. ("AOR")) and PRN for all periods presented using their
historical basis.
RISK FACTORS
There are continued risks relating to the merger with PRN
Effective June 15, 1999, a wholly-owned subsidiary of the Company merged
with PRN (the "Merger"). The Merger could result in synergies and operating
efficiencies. To date, most of the potential benefits have not been, and may
never be, achieved. Whether we ultimately realize these benefits will depend on
a number of factors, many of which are beyond our control. To attain the
benefits of the Merger, we will have to continue to integrate the operations of
AOR and PRN. In particular, we must continue to integrate our management and
other personnel, our information systems and our financial, accounting and other
operational procedures. This process has required us and will continue to
require us to bring together nationwide operations and different corporate and
physician cultures, at significant expense and with management disruption. As
management and other key personnel continue to focus on integration efforts,
management will continue to be distracted from implementing and executing other
strategic and operational objectives. In addition, because of different
cultures of affiliated physician groups, these groups may elect not to implement
the strategic and operational objectives recommended by the Company.
Loss of revenues or a decrease in income of our affiliated physician groups
would impact the Company's results of operations
US Oncology's revenue depends on revenue generated by affiliated physician
groups. Loss of revenue by the affiliated physician groups could seriously harm
the Company. It is possible that our affiliated physician groups will not be
able to maintain successful medical practices. In addition, the management fees
payable to the Company depend upon the profitability of the affiliated physician
groups. (Even under those management agreements where the management fee is
based on the revenues, and not net income, of the affiliated physician groups,
those agreements contain a priority of payments, with US Oncology being paid
last, thereby incentivizing the Company to contain costs.) Any failure by the
physician groups to effectively contain costs will adversely impact the
Company's results of operations. Because the Company does not control the
manner in which its affiliated physician groups conduct their medical practice
(including drug utilization), the Company's ability to control costs related to
the provision of medical care is limited.
If our operations are deemed by regulators not to comply with applicable
regulations, or if restrictive new regulations are passed, we may be seriously
harmed
There can be no assurance that a review of our business or our affiliated
physician groups by courts or by regulatory authorities would not result in
determinations that could seriously harm our operations. Further, the health
care regulatory environment could change and restrict our existing operations or
potential for expansion. The health care industry is highly regulated. We
believe our businesses and the practices of our affiliated physician groups
operate in
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<PAGE>
material compliance with these regulations. However, the relationships between
us and our affiliated physician groups are unique. Many aspects of these
relationships have not been subject to judicial or regulatory interpretation.
There are currently several federal and state initiatives designed to amend
regulations relating to health care. However, we cannot predict whether any such
initiatives will be enacted as legislation or, if enacted, what their form,
effective dates or impact on us will be.
We face the risk of qui tam litigation relating to regulations governing billing
for medical services.
The Company is currently aware of two qui tam lawsuits in which the Company
and an affiliated physician group are named as defendants. Because qui tam
lawsuits are typically filed under seal, the Company could be named in other
such suits of which it is not aware. In addition, as the federal government
intensifies its focus on billing, reimbursement and other healthcare regulatory
violations, private individuals are also bringing more qui tam lawsuits, because
of the potential of financial rewards for such individuals. This trend
increases the risk that the Company may become subject to additional qui tam
lawsuits.
If the reimbursement rate for pharmaceuticals is reduced, we would be seriously
harmed
The Company's profitability depends heavily on the reimbursement rate for
pharmaceuticals. Recently, several new chemotherapy agents have been introduced
that have lower profit margins to the Company than other agents. If this trend
continues, the Company's results of operations could be harmed. Payors are also
intensely negotiating the reimbursement rate for pharmaceuticals. Recently, the
executive branch of the federal government proposed to significantly reduce the
reimbursement rate for chemotherapy agents covered by the federal government.
If the proposal is enacted, the Company's results of operations would be
seriously harmed.
If our physician groups terminated their management agreements, we would be
seriously harmed
Our affiliated physician groups may attempt to terminate their management
agreements. If any of our larger groups were to succeed in such a termination,
we could be seriously harmed. We are aware that some physician groups have
attempted to end or restructure their affiliations with other practice
management companies when they do not have a contractual right to do so. Such
groups argue that their affiliations violate some aspect of health care law. For
example, some physician groups affiliated with other physician practice
management companies have claimed that the management fee arrangements violate
federal or state prohibitions on splitting fees with physicians. If our
affiliated physicians or practices were able to successfully make such an
argument, the effect on our affiliations could harm us.
If a significant number of physicians leaves our affiliated practices, the
Company could be seriously harmed
Our affiliated practices usually enter into employment or noncompetition
agreements with their physicians. We and our affiliated practices try to
maintain such contracts. However, if a significant number of physicians
terminate their relationships with our affiliated practices, the Company could
be seriously harmed.
Our affiliated practices may be unable to enforce noncompetition provisions with
departed physicians
Most of the employment agreements between the affiliated practices and
their physicians include a clause that prevents the physician from competing
with the practice for a period after termination of employment. We cannot
predict whether a court will enforce the noncompetition covenants of the
affiliated practices. If practices are unable to enforce the noncompetition
provisions of their employment agreements, the Company could be seriously
harmed.
We may have additional financing needs
Our expansion, cancer center development and management plans require
substantial capital resources. Operations of the affiliated physician groups
require recurring capital expenditures for renovation, expansion, and the
purchase of costly medical equipment and technology. It is likely that our
capital needs in the next several years will exceed the capital generated from
our operations. Thus, we may incur additional debt or issue additional debt or
equity securities from time to time. This may include the issuance of common
stock or notes in connection with physician
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affiliations. Capital available for health care companies, whether raised
through the issuance of debt or equity securities, is quite limited. As a
result, we may be unable to obtain sufficient financing on terms satisfactory to
us or at all.
Loss of revenue by affiliated physician groups caused by the cost containment
efforts of third-party payors, including the government, could seriously harm us
Loss of revenue by affiliated physician groups caused by the cost
containment efforts of third-party payors could seriously harm us. Physician
groups typically bill various third-party payors, such as governmental programs
like Medicare and Medicaid, private insurance plans and managed care plans, for
the health care services provided to their patients. These third-party payors
negotiate the prices charged for medical services and supplies to lower the cost
of health care services and products paid for by them. Third-party payors also
try to influence legislation to lower costs. Third-party payors can also deny
reimbursement for medical services and supplies if they determine that a
treatment was not appropriate. Our affiliated practices also derive a
significant portion of their revenues from governmental programs. Reimbursement
by governmental programs generally is not subject to negotiation and is
established by governmental regulation.
We and our affiliated practices may become subject to harmful lawsuits
Successful malpractice or products liability claims asserted against the
physician groups or us could seriously harm us. We and our affiliated physician
groups are at risk of malpractice and other lawsuits because they provide health
care services to the public. In addition, managed care providers and physician
practice management companies are increasingly subject to liability claims
arising from physician compensation arrangements and other activities designed
to control costs by reducing services. A successful claim on this basis against
us or an affiliated physician group could harm us. Lawsuits, if successful,
could result in damage awards in excess of the limits of our insurance coverage.
Insurance against losses related to claims of this type is expensive and the
cost varies widely from state to state. In addition, our affiliated physicians
prescribe and dispense pharmaceuticals and, therefore, could be subject to
products liability claims. We and our affiliated physician groups maintain
liability insurance in amounts and coverages we consider appropriate.
We may not be able to successfully affiliate with new physician groups or
integrate the operations of new affiliations
US Oncology has grown by affiliating with new physician groups and
expanding the operations of existing affiliated physician groups. We intend to
continue to pursue this growth strategy. Identifying appropriate physician
groups and negotiating affiliations with them can be costly. We may not be able
to affiliate with additional physician groups on desirable terms. We may
encounter difficulties integrating and expanding the operations of additional
physician groups. Our failure to successfully integrate newly affiliated
physician groups could harm us.
Our development of new cancer centers could be delayed or result in serious
liabilities, and the centers may not be profitable
Another growth strategy of US Oncology is to develop integrated cancer
centers. The development of integrated cancer centers is subject to a number of
risks, including obtaining regulatory approval, delays that often accompany
construction of facilities and environmental liabilities that may attach to
operating cancer centers. Any failure or delay in successfully building and
operating integrated cancer centers or in avoiding liabilities from operations
could seriously harm the Company. In addition, in order for cancer centers to
be operated profitably, our affiliated physician groups must consolidate their
operations within the facilities. If our affiliated physician groups elect not
to close other offices to consolidate operations within a cancer center, our
real estate and occupancy costs would increase, which would harm our operations.
Managed care and capitation can adversely impact our business
A loss in revenues, or a failure to contain costs, by our affiliated
practices under managed care and capitated arrangements, or by payors with which
our affiliated practices have such arrangements, could cause our revenues to be
substantially diminished. Under capitation arrangements, health care providers
do not receive a fee for each medical service provided but instead receive an
aggregate fee for treating a defined population of patients. As a result, health
care providers bear the risk that the costs of providing medical services to the
determined population will exceed the
5
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payments received. The ability of the providers to effectively manage the per
patient costs affects profitability. Although the majority of the revenues of
our affiliated practices come from non-capitated services, capitated
arrangements might become a bigger part of our business in the future.
We could become subject to costly insurance regulations
The Company and its affiliated physician groups may enter into capitation
contracts or other "risk-sharing" arrangements with managed care organizations.
The Company and our affiliated groups would assume risk in connection with
providing healthcare services under these arrangements. If we or our affiliated
groups are considered to be in the business of insurance as a result of entering
into these capitation or other arrangements, we and our affiliated groups could
become subject to a variety of regulatory and licensing requirements applicable
to insurance companies that could harm the Company.
Our business, and the business of our affiliated practices, could be harmed by
competition with other businesses
Our business, and the business of our affiliated practices, could be harmed
by competition with other businesses. The business of providing health care
related services and facilities is competitive. Our revenues depend on the
continued success of our affiliated physician groups. The physician groups face
competition from several sources, including sole practitioners, single- and
multi-specialty groups, hospitals and managed care organizations.
Our success depends on our key personnel, and we may not be able to hire enough
qualified personnel to meet our hiring needs
We will be harmed if we cannot hire and retain suitable executives and
other personnel. The Merger and related integration efforts have placed, and
will continue to place, significant strain on management and key personnel,
which may make it more difficult to retain and attract such personnel. We
believe that our success will depend on continued employment of our management
team and other key personnel. If one or more members of our management team
become unable or unwilling to continue in their present positions, we could be
harmed.
The amortization period for our intangible assets may be reduced, which would
reduce our earnings
In connection with our affiliations with physician practices, US Oncology
records an intangible amount for the price paid for assets less the value of the
tangible assets acquired. US Oncology has amortized, and we will continue to
amortize, these intangible assets. This results in periodic non-cash charges to
our earnings. During 1998, US Oncology shortened the amortization period of its
intangible assets to 25 years. However, if the amortization period is
successfully challenged by regulatory authorities or there is a change in
accounting treatment for such intangibles, we would likely be required to reduce
further the number of years that the intangibles are amortized against our
earnings. This would increase the amount of amortization expense charged against
earnings each year. This increased charge, while non-cash in nature, could
significantly reduce our earnings and seriously harm our business. We expect
these non-cash amortization charges to increase in the future as we continue our
affiliation strategy. In the event that we determine that the value of the
intangible assets related to any specific affiliation is impaired, we could be
required to reduce the value of that asset, which would result in a charge to
earnings.
Our stock price may fluctuate significantly, which may make it difficult to
resell your shares when you want to at prices you find attractive
The market price of US Oncology common stock has been highly volatile. This
volatility may adversely affect the price of our common stock in the future. You
may not be able to resell your shares of common stock following periods of
volatility because of the market's adverse reaction to this volatility. We
anticipate that this volatility, which frequently affects the stock of health
care service companies, will continue. Factors that could cause such volatility
include:
. Our quarterly operating results,
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. Deviations in results of operations from estimates of securities analysts
(which estimates the Company neither endorses nor accepts the
responsibility for),
. General economic conditions or economic conditions specific to the health
care services industry,
. Regulatory or reimbursement changes and
. Other developments affecting competitors or us.
On occasion the equity markets, and in particular the markets for physician
management company stocks, have experienced significant price and volume
fluctuations. These fluctuations have affected the market price for many
companies' securities even though the fluctuations are often unrelated to the
companies' operating performance.
Our shareholder rights plan and anti-takeover provisions of the certificate of
incorporation, bylaws and Delaware law could adversely impact a potential
acquisition by third parties
Our shareholder rights plan and anti-takeover provisions of the certificate
of incorporation, bylaws and Delaware law could adversely impact a potential
acquisition by third parties. The Company has a staggered board of directors,
with three classes each serving a staggered three-year term. This classification
has the effect of generally requiring at least two annual stockholder meetings,
instead of one, to replace a majority of the members of the board of directors.
The Company's certificate of incorporation also provides that stockholders may
act only at a duly called meeting and that stockholders' meetings may not be
called by stockholders. These provisions could discourage potential acquisition
proposals and could delay or prevent a change in control of the Company. These
provisions are intended to increase the likelihood of continuity and stability
in our board of directors and in the policies formulated by them and to
discourage certain types of transactions that may involve an actual or
threatened change of control of the Company, reduce our vulnerability to an
unsolicited acquisition proposal and discourage certain tactics that may be used
in proxy fights. However, these provisions could have the effect of discouraging
others from making tender offers for our shares, and, as a consequence, they
inhibit fluctuations in the market price of the Company's shares that could
result from actual or rumored takeover attempts. Such provisions also may have
the effect of preventing changes in the management of the Company.
In addition, other provisions of the Company's certificate of incorporation
and certain provisions of Delaware law may make it difficult to change control
of the Company and to replace incumbent management. For example, the Company's
certificate of incorporation permits the board of directors, without stockholder
approval, to issue additional shares of common stock or to establish one or more
classes or series of preferred stock with characteristics determined by the
board. US Oncology has also adopted a shareholder rights plan, which would
significantly inhibit the ability of another entity to acquire control of the
Company through a tender offer or otherwise without the approval of the
Company's board of directors. These provisions could limit the price that
certain investors might be willing to pay in the future for shares of common
stock.
We have not paid dividends and do not expect to in the future, which means that
the value of our shares cannot be realized except through sale
US Oncology has never declared or paid cash dividends. We currently expect
to retain earnings for our business and do not anticipate paying dividends on
our common stock at any time in the foreseeable future. Because we do not
anticipate paying dividends, it is likely that the only opportunity to realize
the value of our common stock will be through a sale of those shares. The
decision whether to pay dividends on common stock will be made by the board of
directors from time to time in the exercise of its business judgment. The
Company is currently precluded from paying dividends by the terms of its credit
facilities.
We cannot be sure that the year 2000 problem will not affect our business
Thus far, we have had no significant problems related to year 2000 issues
associated with the computer systems, software, other property and equipment we
use. However, we cannot guarantee that the year 2000 problem will not adversely
affect our business, operating results or financial condition at some point in
the future. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Year 2000 Implications."
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CAUTIONARY STATEMENT
REGARDING FORWARD LOOKING STATEMENTS
The following statements are or may constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995: (i)
certain statements, including possible or assumed future results of operations
of US Oncology, contained herein and in documents incorporated herein by
reference and including any such statements regarding the prospects of the
Company; (ii) any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends" or similar expressions; and
(iii) other statements contained herein or in documents incorporated herein by
reference regarding matters that are not historical facts. Because such
statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Factors that could cause actual results to differ materially include, but are
not limited to, those discussed above under "Risk Factors." Undue reliance
should not be placed on such statements, which speak only as of the date
thereof. The cautionary statements contained or referred to herein should be
considered in connection with any subsequent written or oral forward-looking
statements that may be issued by US Oncology or persons acting on its behalf. US
Oncology does not undertake any obligation to release any revisions to or to
update publicly any forward-looking statements to reflect events or
circumstances after the date thereof or to reflect the occurrence of
unanticipated events.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any of these documents at the public reference rooms maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Securities and Exchange
Commission: New York Regional Office, Seven World Trade Center, New York, New
York 10048, and Central Regional Office, 1801 California Street, Suite 4800,
Denver, Colorado 80202. Please call the Securities and Exchange Commission at
1-800-SEC-0330 for further information on the public reference rooms. Our
filings are also available to the public from commercial documents retrieval
services and at the Internet website maintained by the Securities and Exchange
Commission at http://www.sec.gov.
Our common stock is quoted on The Nasdaq National Market. You may also
read our reports, proxy and information statements and other information at The
Nasdaq Stock Market at 1735 K Street, N.W., Washington, D.C. 20006.
This prospectus is part of the registration statement that we filed with
the Securities and Exchange Commission to register the shares of common stock
referred to above being offered. This prospectus does not contain important
information that you can find in our registration statement and in the annual,
quarterly and special reports, proxy statements and other documents that we file
with the Securities and Exchange Commission.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose in
this prospectus important information to you by referring you to other documents
that have been or will be filed with the Securities and Exchange Commission.
The information below is incorporated in this prospectus by reference and is an
important part of this prospectus, except where any of the information has been
modified or superseded by the information in this prospectus or in information
incorporated by reference in this prospectus. Also, information that we file
after the date of this prospectus with the Securities and Exchange Commission
will automatically be incorporated in this prospectus and update and supersede
this information. We incorporate by reference the documents listed below and
any future filings made with the Securities and Exchange Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
all of the securities offered by this prospectus are sold:
- Our Annual Report on Form 10-K for the year ended December 31, 1999;
- Our Quarterly Report on Form 10-Q for the three months ended March 31,
2000; and
- Our Proxy Statement dated April 17, 2000.
We will provide you, without charge, a copy of the documents incorporated
by reference in this prospectus. We will not provide a copy of the exhibits to
documents incorporated by reference, unless those exhibits are specifically
incorporated by reference into those documents. You may obtain documents
incorporated by reference in this prospectus by requesting them in writing or by
telephone from:
US Oncology, Inc.
16825 Northchase Drive, Suite 1300
Houston, Texas 77060
Attn: Phillip H. Watts, Esq.
(281) 873-2674
You should rely only on the information provided or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of the shares in any state
where the offer is not permitted. You should not assume that the information in
this prospectus, in any prospectus supplement or in any document incorporated by
reference herein is accurate as of any date other than the date on the front of
those documents.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered by
this prospectus.
SELLING STOCKHOLDER
The following table sets forth information known to us with respect to
beneficial ownership of our common stock as of July 11, 2000 by the selling
stockholder. Beneficial ownership is determined in accordance with the rules
and regulations of the Securities and Exchange Commission and generally includes
voting or investment power with respect to securities. We believe based on
information furnished by the selling stockholder that it has sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by it. The table assumes the sale of all shares offered
hereby and no other purchases or sales of US Oncology's common stock. The
shares currently held by, and offered by the selling stockholder hereby
represent less than .5% of the Company's outstanding common stock
<TABLE>
<CAPTION>
Shares Shares
Name and Address of Beneficially Amount of Shares Beneficially
Selling Owned Prior Offered Owned After
Stockholder To Offering Hereby The Offering
----------- ----------- ------ ------------
<S> <C> <C> <C>
Capitol District Oncology, P.C. 227,560 227,560 0
317 South Manning Blvd.
Albany, New York 12208
</TABLE>
ISSUANCE OF SECURITIES TO SELLING STOCKHOLDER
US Oncology's subsidiary, Physician Reliance Network, Inc. agreed to issue
to the selling stockholder the shares of common stock being registered pursuant
to the registration statement of which this prospectus is a part in connection
with the selling stockholder's entering into an agreement pursuant to which
Physician Reliance Network, Inc. manages the non-medical aspects of the oncology
practice conducted by the selling stockholder. The shares offered hereby were
issued on June 1, 2000 pursuant to such agreement. The offer and sale of the
shares to the selling stockholder was a private placement under Regulation D of
the rules promulgated by the SEC under the Securities Act.
DESCRIPTION OF SECURITIES
We have 252,000,000 authorized shares of stock, consisting of 250,000,000
shares of common stock, having a par value of $0.01 per share, and 2,000,000
shares of preferred stock, having a par value of $0.01 per share.
Common Stock
US Oncology is authorized to issue 250,000,000 shares of US Oncology common
stock, $.01 par value per share. As of May 14, 2000, 91,021,148 shares of US
Oncology common stock were issued and outstanding, and US Oncology has agreed to
issue 10,867,525 shares of US Oncology common stock to its affiliated physicians
at specified future dates. In addition, as of December 31, 1999, US Oncology
had granted options to purchase up to 14,608,000 shares of US Oncology common
stock at an average exercise price of $8.16 per share. Holders of US Oncology
common stock are entitled to one vote per share on all matters on which the
holders of US Oncology common stock are entitled to vote. Because holders of US
Oncology common stock do not have cumulative voting rights, holders of a
majority of the shares voting for the election of directors can elect all of the
members of the Board of Directors. A majority vote is also sufficient for other
actions that require the vote or concurrence of stockholders. The US Oncology
common stock is not redeemable and has no conversion or preemptive rights. All
of the outstanding shares of US Oncology common stock are fully paid and non-
assessable. In the event of the liquidation or dissolution of US Oncology,
subject to the rights of the holders of any outstanding shares of US Oncology's
preferred stock, the holders of
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US Oncology common stock are entitled to share pro rata in any balance of the
corporate assets available for distribution to them. US Oncology may pay
dividends if, when and as declared by the Board of Directors from funds legally
available therefor. US Oncology's Credit Facility with First Union National Bank
prohibits US Oncology from paying dividends or making any other distribution on
the US Oncology common stock.
Preferred Stock
US Oncology is authorized to issue up to 2,000,000 shares of preferred
stock, par value $.01 per share. 500,000 of such shares have been designated as
Series A Preferred Stock. No shares of preferred stock are currently
outstanding. US Oncology's Board of Directors is authorized to issue the
preferred stock in series and, with respect to each series, to determine number
of shares in any such series, and fix the designations, preferences,
qualifications, limitations, restrictions and special or relative rights of
shares of any series of preferred stock. The Board of Directors could, without
stockholder approval, issue preferred stock with voting rights and other rights
that could adversely affect the voting power of holders of US Oncology common
stock and could be used to prevent a third party from acquiring control of US
Oncology. US Oncology has no present plans to issue any shares of preferred
stock.
US Oncology has adopted a shareholder rights plan pursuant to which, under
certain circumstances, holders of US Oncology common stock will receive rights
to purchase shares of Series A preferred stock. Shares of Series A Preferred
Stock purchasable upon exercise of the rights will not be redeemable. Each
Preferred Share will be entitled to a minimum preferential quarterly dividend
payment of $10.00 per share but, if greater, will be entitled to an aggregate
dividend per share of 1,000 times the dividend declared per share of US Oncology
common stock. In the event of liquidation, the holders of the Preferred Shares
will be entitled to a minimum preferential liquidation payment of $1,000 per
share; thereafter, and after the holders of the shares of US Oncology common
stock receive a liquidation payment of $1 per share, the holders of the
Preferred Shares and the holders of the shares of US Oncology common stock will
share the remaining assets in the ratio of 1,000 to 1 (as adjusted) for each
Preferred Share and share of US Oncology common stock so held, respectively.
Finally, in the event of any merger, consolidation or other transaction in which
shares of US Oncology common stock are exchanged, each Preferred Share will be
entitled to receive 1,000 times the amount received per share of US Oncology
common stock. These rights are protected by customary antidilution provisions.
In the event that the amount of accrued and unpaid dividends on the Preferred
Shares is equivalent to six (6) full quarterly dividends or more, the holders of
the Preferred Shares shall have the right, voting as a class, to elect two
directors in addition to the directors elected by the holders of the shares of
US Oncology common stock until all cumulative dividends on the Preferred Shares
have been paid through the last quarterly dividend payment date or until non-
cumulative dividends have been paid regularly for at least one year.
Possible Anti-Takeover Provisions
The amended and restated certificate of incorporation of US Oncology
contains provisions that might be characterized as anti-takeover provisions.
Such provisions may render more difficult possible takeover proposals to acquire
control of US Oncology and make removal of management of US Oncology more
difficult. US Oncology's Certificate of Incorporation provides that the Board of
Directors is divided into three classes, with each class serving a staggered
three-year term. This classification has the effect of generally requiring at
least two annual stockholder meetings, instead of one, to replace a majority of
the members of the Board of Directors. US Oncology's Certificate of
Incorporation also provides that all stockholder actions must be effected at a
duly called meeting and not by a consent in writing. In addition, US Oncology's
Amended and Restated Bylaws and Certificate of Incorporation do not permit the
stockholders of the Company to call a special meeting of stockholders. These
provisions of the Certificate of Incorporation and Bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of the combined company. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the combined
company's Board of Directors and in the policies formulated by them to
discourage certain types of transactions that may involve an actual or
threatened change of control of the combined company, to reduce the combined
company's vulnerability to an unsolicited acquisition proposal and to discourage
certain tactics that may be used in proxy fights. However, such provisions
could have the effect of discouraging others from making tender offers for our
shares and, as a consequence, they inhibit fluctuations in the market price of
the company's shares that could result from actual or rumored takeover attempts.
Such provisions also may have the effect of preventing changes in the management
of the Company.
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In addition, certain other provisions of US Oncology's Certificate of
Incorporation and certain provisions of the General Corporation Law of Delaware
(the state in which US Oncology is incorporated) may make it difficult to change
control of the Company and to replace incumbent management. For example, US
Oncology's Certificate of Incorporation permits the Board of Directors, without
stockholder approval, to issue additional shares of Common Stock or to establish
one or more classes or series of Preferred Stock having the number of shares,
designations, relative voting rights, dividend rates, liquidation and other
rights, preferences and limitations that the Board of Directors can establish.
US Oncology has also adopted a Shareholder Rights Plan, which would materially
inhibit the ability of another entity to acquire control of the combined company
through a tender offer or otherwise without the approval of the combined
company's board of directors. These provisions could limit the price that
certain investors might be willing to pay in the future for shares of common
stock.
US Oncology is incorporated under the laws of the State of Delaware.
Section 203 of the Delaware General Corporation Law prevents an interested
stockholder from engaging in a business combination with such corporation for a
period of three years from the time such stockholder became an interested
stockholder unless at least one of the following conditions is met:
- the corporation's board of directors had earlier approved either the
business combination or the transaction by which the stockholder
became an interested stockholder,
- upon attaining that status, the interested stockholder had acquired at
least 85 percent of the corporation's voting stock, not counting
shares owned by persons who are directors and also officers, or
- the business combination is later approved by the board of directors
and authorized by a vote of two-thirds of the stockholders, not
including the shares held by the interested stockholder.
The Delaware General Corporation Law defines an interested stockholder as a
stockholder owning 15 percent or more of a corporation's voting stock. US
Oncology is currently subject to Section 203.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company.
PLAN OF DISTRIBUTION
All of the shares of common stock offered hereby will be distributed to
physicians who are shareholders and employees of the selling stockholder. Such
distributions are being made as bonuses to those physicians based on criteria
developed by, and in accordance with determinations by, the Board of Directors
of the selling stockholder.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon by Phillip H. Watts, Esq., General Counsel of US Oncology.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to US Oncology's Annual Report on Form 10-K for the year ended
December 31, 1999, have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
The report of Arthur Andersen LLP, independent public accountants, relating
to the 1998 and 1997 consolidated financials statements of Physician Reliance
Network, Inc., and incorporated herein by reference to US Oncology's Annual
Report on Form 10-K for the year ended December 31, 1999 is incorporated herein
in reliance given on the authority of said firm as experts in auditing and
accounting.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with any sale or other distribution by the
selling stockholder of the shares being registered, including the expenses of
preparation and distribution of this registration statement and the prospectus
included in this registration statement will be borne by US Oncology. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the Securities and Exchange Commission registration fee.
SEC registration fee $ 277
Legal fees and expenses $ 5,000
Accounting fees and expenses $10,000
Miscellaneous expenses $ 5,000
-------
Total $20,277
=======
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors, and other corporate agents in terms
sufficiently broad to indemnify such persons under some circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933. US Oncology's certificate of incorporation and by-laws
provide for indemnification of US Oncology's directors, officers, employees and
other agents to the extent and under the circumstances permitted by the Delaware
General Corporation Law. US Oncology has also entered into agreements with its
directors and officers that will require US Oncology, among other things, to
indemnify them against some liabilities that may arise by reason of their status
or service as directors to the fullest extent not prohibited by law. In
addition, US Oncology carries director and officer liability insurance.
Item 16. Exhibits.
Exhibits.
5.1 Opinion of Phillip H. Watts
23.1 Consent of Phillip H. Watts (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers, LLP
23.3 Consent of Arthur Andersen LLP
24.1 Powers of Attorney (included on signature page with initial
filing)
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Item 17. Undertakings.
US Oncology hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include 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, each post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
this offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of US Oncology's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of US Oncology
pursuant to the foregoing provisions, or otherwise, US Oncology has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by US Oncology of expenses
incurred or paid by a director, officer or controlling person of US Oncology 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, US Oncology will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, US Oncology,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Houston, State of Texas, on June 30, 2000.
US ONCOLOGY, INC.
By: /s/ R. Dale Ross
--------------------------------------------------
R. Dale Ross
Chairman of the Board, Chief Executive Officer and
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints, jointly and severally, R. Dale
Ross, as his or her attorney-in-fact, each with full power of substitution, for
him or her in any and all capacities to sign any and all amendments to this
Registration Statement (including post-effective amendments), and to file the
same, with exhibits thereto and other documents in connection therewith, with
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our said attorney to any and all amendments
to said Registration Statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ R. Dale Ross Chairman of the Board, June 30, 2000
---------------------------
R. Dale Ross Chief Executive Officer and
Director
/s/ Russell L. Carson Director June 30, 2000
----------------------------
Russell L. Carson
/s/ James E. Dalton Director June 30, 2000
----------------------------
James E. Dalton
/s/ Richard B. Mayor Director June 30, 2000
----------------------------
Richard B. Mayor
/s/ Robert A. Ortenzio Director June 30, 2000
----------------------------
Robert A. Ortenzio
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/s/ Edward E. Rogoff, M.D. Director June 30, 2000
------------------------------------
Edward E. Rogoff, M.D.
/s/ J. Taylor Crandall Director June 30, 2000
------------------------------------
J. Taylor Crandall
/s/ Nancy G. Brinker Director June 30, 2000
------------------------------------
Nancy G. Brinker
/s/ Boone Powell, Jr.
------------------------------------- Director June 30, 2000
Boone Powell, Jr.
/s/ Stephen E. Jones, M.D.
------------------------------------- Director June 30, 2000
Stephen E. Jones, M.D.
/s/ Burton S. Schwartz, M.D.
------------------------------------- Director June 30, 2000
Burton S. Schwartz, M.D.
/s/ Kathleen G. Lokay
------------------------------------- Interim Principal June 30, 2000
Kathleen G. Lokay Financial and
Accounting Officer
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