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No. 333-______
As filed with the Securities and Exchange Commission on August 15, 2000
SECURITIES AND EXCHANGE COMMISSION
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)
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<CAPTION>
<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
area code, of registrant's principal executive offices) number, including 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
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<CAPTION>
TITLE OF EACH AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
CLASS OF SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value 4,000,000 $4.97(1) $19,880,000 $5,249
$.01 per share
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(1) 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 August 9, 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.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ 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
DATED AUGUST 15, 2000
[LOGO APPEARS HERE]
UP TO 4,000,000 SHARES OF COMMON STOCK
This prospectus relates to the offer and sale of up to 4,000,000 shares of
common stock of US Oncology, Inc. All of these shares are currently held and are
being offered by Texas Oncology, P.A., a medical group with locations throughout
Texas. All of the shares are expected to be offered in a distribution to
Physicians who practice medicine with, and other key employees of, Texas
Oncology, P.A.
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 August 14, 2000 was $5.00 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.
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The date of this prospectus is August 15, 2000
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TABLE OF CONTENTS
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
Plan of Distribution........................................ 10
Legal Matters............................................... 11
Experts..................................................... 11
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US ONCOLOGY, INC.
US Oncology, Inc. (together with its subsidiaries, "US Oncology" or the
"Company") is a cancer management company. The Company 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. The
Company was incorporated in October 1992 under the laws of the State of
Delaware. The Company'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 the Company 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 the Company'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.
The Company's financial statements referred to in this prospectus 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
A PROPOSED INSTRUCTION FROM THE U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
REGARDING GOVERNMENTAL REIMBURSEMENT FOR PHARMACEUTICALS COULD SERIOUSLY DAMAGE
THE COMPANY
The U.S. Department of Health and Human Services recently announced its
intention to publish instructions to the Health Care Financing Administration,
the agency that administers the Medicare program, that would require a new
methodology for calculating the amount that health care providers would receive
from Medicare for certain pharmaceuticals used in outpatient cancer treatment.
The proposed methodology would result in radically lowered reimbursement from
federal government programs for chemotherapy agents and other pharmaceutical
agents used by oncologists, without any adjustment in reimbursement for services
and other costs related to chemotherapy infusion that are currently
undercompensated, resulting in oncologists' incurring losses for the
administration of many chemotherapy treatments. If the instructions are
published, there is a risk that non-governmental payors would follow the
government's lead and seek to lower reimbursement. Furthermore, because the
Secretary of the U.S. Department of Health and Human Services has stated that
she does not intend to submit the proposed change to a formal rule-making
process, the cancer care community may not be offered the opportunity to comment
formally on the proposal or otherwise fully inform the decision making process
with respect to the change.
It is not possible to predict whether the proposed instructions will go
into effect as drafted, in a similar form or at all. Furthermore, it is not
possible to assess whether or how governmental payors might seek to reduce
reimbursement for pharmaceuticals through alternative methods. At this time,
therefore, the Company is unable to quantify the likelihood of such a change in
reimbursement or the impact on the Company's financial condition and results of
operations of any such change that is ultimately adopted. However, if the
proposal were to go into effect as drafted, the Company believes oncologists
would be unable to continue to offer outpatient chemotherapy services to
Medicare patients or other patients subject to similar reimbursement. Such
inability would have a devastating effect on the Company's revenues, net income
and cash flow. Furthermore, such a change would seriously jeopardize the
Company's ability to continue to operate under its existing business model.
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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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 a
subsidiary of 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. Even in the event there are
no negative findings resulting from qui tam lawsuits, the cost to investigate
and defend against such claims are likely to be significant.
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 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.
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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.
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.
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 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.
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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 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
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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,
. 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.
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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."
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 fiscal year ended
December 31, 1999;
- Our Quarterly Reports on Form 10-Q for the three months ended
March 31, 2000 and June 30, 2000;
- Our Proxy Statement filed with the Securities and Exchange Commission on
April 18, 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 77069
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.
9
<PAGE>
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 August 10, 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. Information with respect
to beneficial ownership is based on information as of August 10, 2000 and
assumes that there is outstanding an aggregate of 92,461,760 shares of common
stock. 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
distribution of all shares offered hereby and no other purchases or sales of US
Oncology's common stock.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR NUMBER OF SHARES OWNED AFTER
NAME AND ADDRESS OF TO OFFERING OFFERED THE OFFERING
SELLING STOCKHOLDER NUMBER PERCENT HEREBY NUMBER PERCENT
------------------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Texas Oncology, P.A. 7,867,667 8.5% 4,000,000 3,867,667 4.2%
12221 Merit Drive
Suite 500
Dallas, Texas 75251
</TABLE>
ISSUANCE OF SECURITIES TO SELLING STOCKHOLDER
The shares of common stock being registered pursuant to the registration
statement of which this prospectus is a part were originally issued to the
selling stockholder in four private placement transactions under Section 4(2) of
the Securities Act. The selling stockholder purchased shares of PRN's common
stock upon the organization of PRN in July, 1993, for cash and in exchange for
all of the issued and outstanding shares of common stock of Texas Oncology
Pharmacy Services, Inc. The selling stockholder received additional shares of
PRN common stock in October, 1993, in exchange for the selling stockholder's
shares of common stock of North Texas Oncology Center, Inc. and the selling
stockholder's partnership interests in various partnerships. The selling
stockholder also purchased additional shares of PRN's common stock in September,
1994.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Stock
Transfer and Trust Company.
PLAN OF DISTRIBUTION
The selling stockholder will transfer the shares of common stock being
registered pursuant to this registration statement to certain physician
employees and other key non-physician employees of the selling stockholder as
discretionary bonuses. The selling stockholder's board of directors will decide
which physician employees and other key non-physician employees will receive
shares and how many shares each of them will receive. In making the
determination of who will receive shares and how many shares each will receive,
the selling stockholder's board of directors will consider a number of factors,
including length of service with the selling stockholder and productivity. The
selling stockholder's board of directors may require that certain conditions be
met before a transfer of shares is made to an employee, including requiring the
employee to (a) enter into a new employment agreement with the selling
stockholder; (b) agree to restrictions on the employee's competition with the
selling stockholder after the termination of the employee's employment; and (c)
agree that the employee will transfer all or a portion of the shares received by
the employee back to the selling stockholder at no cost if the employee's
employment terminates prior to one or more
10
<PAGE>
specified future dates. Those conditions may vary from employee to employee as
determined by the selling stockholder's board of directors and will be included
in one or more agreements to be signed by the employee before the employee
receives any shares.
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.
11
<PAGE>
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 treated " Clinical Facility
Expenses" in accordance with the Service Agreement by and between US Oncology
and the selling stockholder. Under that agreement, the selling stockholder is
entitled to retain 65% of earnings before interest and taxes from its medical
practice and US Oncology retains 35% as a management fee. Therefore, effectively
65% of all such expenses of the sale and distribution of the shares being
registered will be borne by the selling stockholder and 35% 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 $ 5,249
Legal fees and expenses $ 3,500
Accounting fees and expenses $10,000
Miscellaneous expenses $ 5,000
-------
Total $23,749
=======
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, Esq.
23.1 Consent of Phillip H. Watts, Esq. (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)]
II-1
<PAGE>
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.
II-2
<PAGE>
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 August 14, 2000.
US ONCOLOGY, INC.
By: /s/ R. DALE ROSS
----------------------------------------------
R. Dale Ross
Chairman of the Board, Chief Executive Officer
and Director
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints 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, August 14, 2000
---------------------------- Chief Executive Officer and
R. Dale Ross Director
/s/ Russell L. Carson Director August 14, 2000
----------------------------
Russell L. Carson
Director
----------------------------
James E. Dalton
/s/ Richard B. Mayor Director August 14, 2000
----------------------------
Richard B. Mayor
Director
----------------------------
Robert A. Ortenzio
/s/ Edward E. Rogoff, M.D. Director August 14, 2000
----------------------------
Edward E. Rogoff, M.D.
Director
----------------------------
Nancy G. Brinker
/s/ J. Taylor Crandall Director August 14, 2000
----------------------------
J. Taylor Crandall
/s/ Boone Powell, Jr. Director August 14, 2000
----------------------------
Boone Powell, Jr.
/s/ Stephen E. Jones, M.D. Director August 14, 2000
----------------------------
Stephen E. Jones, M.D.
/s/ Burton S. Schwartz, M.D. Director August 14, 2000
----------------------------
Burton S. Schwartz, M.D.
/s/ Kathleen G. Lokay Interim Principal Financial and August 14, 2000
---------------------------- Accounting Officer
Kathleen G. Lokay
II-4
