-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QkQfqUjhZJC9CULP2l6jTdLOr9AkcEeFqtJHjOjGmcGgmLvx7cVCVH8rKI7vxTWB gOk5XsQeHNoFAPiGCDBgcw== 0000950144-96-006005.txt : 19960829 0000950144-96-006005.hdr.sgml : 19960829 ACCESSION NUMBER: 0000950144-96-006005 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960828 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHYCOR INC/TN CENTRAL INDEX KEY: 0000881400 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-OFFICES & CLINICS OF DOCTORS OF MEDICINE [8011] IRS NUMBER: 621344801 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 033-98528 FILM NUMBER: 96622544 BUSINESS ADDRESS: STREET 1: 30 BURTON HILLS BLVD STREET 2: STE 400 CITY: NASHVILLE STATE: TN ZIP: 37215 BUSINESS PHONE: 6156659066 MAIL ADDRESS: STREET 1: 30 BURTON HILLS BLVD STREET 2: STE 400 CITY: NASHVILLE STATE: TN ZIP: 37215 POS AM 1 PHYCOR, INC. 1 As filed with the Securities and Exchange Commission on August 28, 1996 Registration No. 33-98528 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 ----------------------- POST-EFFECTIVE AMENDMENT NO. 2 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ PHYCOR, INC. (Exact name of registrant as specified in its charter) TENNESSEE 62-1344801 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 30 BURTON HILLS BOULEVARD, SUITE 400 NASHVILLE, TENNESSEE 37215 (615) 665-9066 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ------------------- JOSEPH C. HUTTS CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER PHYCOR, INC. 30 BURTON HILLS BOULEVARD, SUITE 400 NASHVILLE, TENNESSEE 37215 (615) 665-9066 (Name address, including zip code, and telephone number, including area code, of agent for service) ------------------- COPIES TO: J. CHASE COLE, ESQ. WALLER LANSDEN DORTCH & DAVIS, PLLC NASHVILLE CITY CENTER 511 UNION STREET, SUITE 2100 NASHVILLE, TENNESSEE 37219-1760 (615) 244-6380 -------------------------------------------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after the Effective Date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered 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: [ ] ================================================================================ 2 EXPLANATORY NOTE In accordance with Securities and Exchange Commission Rule 416, the Prospectus included herein has been revised solely to increase the number of shares offered thereby to reflect all stock dividends through the date of the Prospectus. 3 Prospectus 3,000,000 SHARES PHYCOR, INC. COMMON STOCK ---------------------- In accordance with the applicable rules of the Securities and Exchange Commission, this Prospectus may be used in connection with separate offerings of the Common Stock, no par value per share ("Common Stock"), of PhyCor, Inc. (the "Company"). This Prospectus relates to the resale by the holders thereof (the "Selling Shareholders") of up to 3,000,000 shares (the "Shares") of the Company's Common Stock issued without registration under the Securities Act of 1933, as amended (the "Securities Act"), in transactions not involving public offerings upon the conversion of subordinated convertible notes issued or to be issued by the Company without registration under the Securities Act in connection with the acquisition of the assets of single- and multi-specialty medical clinics, the assets of individual physician practices and the assets of related businesses, including, but not limited to, management services organizations, consulting firms and other physician management companies. In addition, this Prospectus also relates to the resale by certain Selling Shareholders of Common Stock issued without registration under the Securities Act in transactions not involving public offerings upon the exercise of options granted by the Company prior to the adoption by the Company of its stock incentive plans and warrants issued as consideration for (i) consulting or other services provided or to be provided to the Company and (ii) the execution of a management or service agreement with the Company or an affiliate. The Common Stock may be resold by the Selling Shareholders in such amounts and on such terms to be set forth in a supplement to this Prospectus (a "Supplement") or a post-effective amendment (a "Post-Effective Amendment") to the Registration Statement in which this Prospectus is included. The specific terms upon which the Common Stock is being offered in connection with the delivery of this Prospectus will be set forth in the Supplement or Post-Effective Amendment, as applicable, and will include the specific number of shares of Common Stock to be sold and other information concerning the Selling Shareholder or Shareholders. The Company's Common Stock may not be sold through this Prospectus without delivery of the applicable Supplement or Post-Effective Amendment. The Shares held by the Selling Shareholders may be offered from time to time in transactions on the Nasdaq Stock Market's National Market System, in negotiated transactions, through the writing of options on the Shares, or a combination of such methods of sale, at prices related to such prevailing market prices, or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares of Common Stock to or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Shareholders and/or the purchasers of the Shares for which such broker-dealer may act as agent or to whom they may sell as principal, or both (which compensation as to a particular broker-dealer might be in excess of customary commissions). None of the proceeds from the sale of the Shares by the Selling Shareholders will be received by the Company. The Company has agreed to bear all expenses (other than underwriting discounts and selling commissions, and fees and expenses of counsel and other advisors to the Selling Shareholders) in connection with the registration of the Shares being offered by the Selling Shareholders. ------------------------------------------------------ THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" APPEARING ON PAGES 3 THROUGH 6. ------------------------------------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTA- TION TO THE CONTRARY IS A CRIMINAL OFFENSE. AUGUST 28, 1996 1 4 AVAILABLE INFORMATION The Company has filed a Registration Statement on Form S-3 declared effective on November 16, 1995 including amendments thereto, relating to the Common Stock offered hereby (the "Registration Statement") with the Securities and Exchange Commission (the "Commission"). This Prospectus and any accompanying Supplement do not contain all of the information set forth in the Registration Statement and exhibits and schedules thereto. Statements contained in this Prospectus as to the contents of any contract or other document referred to are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement or as previously filed with the Commission and incorporated herein by reference. For further information with respect to the Company and the Common Stock offered hereby, reference is made to the Registration Statement, exhibits and schedules. A copy of the Registration Statement may be inspected by anyone without charge at the Commission's principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of all or any part thereof may be obtained from the Commission upon payment of certain fees prescribed by the Commission. The Company is subject to the informational requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance therewith, files reports, proxy statements and other information with the Commission. The reports, proxy statements and other information may be inspected and copied at the offices of the Commission as stated above or at its regional offices located in the Northwestern Atrium Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such material also can be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Company's Common Stock is listed on The Nasdaq Stock Market's National Market System and such reports, proxy statements and other information concerning the Company can be inspected and copied at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents are incorporated herein by reference: (1) The Company's Annual Report on Form 10-K for the year ended December 31, 1995; (2) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; (3) The Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996; and (4) The description of the Company's Common Stock contained in the Company's Registration Statements on Form 8-A, dated January 8, 1992 and March 8, 1994, respectively. All reports and other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering registered hereby shall be deemed to be incorporated by reference into this Prospectus and to be a part hereof from the date of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes hereof to the extent that a statement contained herein (or in any other subsequently filed document which is also incorporated or deemed to be incorporated by reference herein) modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Subject to the foregoing, all information appearing herein is qualified in its entirety by the information appearing in the documents incorporated herein by reference. THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON WRITTEN OR ORAL REQUEST, AT NO CHARGE, FROM THE COMPANY. REQUESTS SHOULD BE DIRECTED TO PHYCOR, INC., 30 BURTON HILLS BOULEVARD, SUITE 400, NASHVILLE, TENNESSEE 37215, ATTENTION: N. CAROLYN FOREHAND, VICE PRESIDENT AND GENERAL COUNSEL (TELEPHONE NUMBER (615) 665-9066). IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE FIVE BUSINESS DAYS PRIOR TO THE DATE ON WHICH THE FINAL INVESTMENT DECISION MUST BE MADE. 2 5 RISK FACTORS In addition to the other information in this Prospectus, the following factors should be considered carefully in evaluating an investment in the Shares offered hereby and any accompanying Prospectus Supplement or Post- Effective Amendment, as applicable. No Assurance of Continued Rapid Growth. The Company's continued growth is dependent upon its ability to achieve significant consolidation of multi-specialty medical clinics, to sustain and enhance the profitability of those clinics and to develop and manage independent practice associations ("IPAs"). The process of identifying suitable acquisition candidates and proposing, negotiating and implementing an economically feasible affiliation with a physician group or formation or management of a physician network is lengthy and complex. Clinic and physician network operations require intensive management in a dynamic marketplace increasingly subject to cost containment pressures. There can be no assurance that PhyCor will be able to sustain its historically rapid rate of growth. The success of PhyCor's strategy to develop and manage IPAs is largely dependent upon its ability to form networks of physicians, to obtain favorable payor contracts, to manage and control costs and to realize economies of scale. Many of the agreements entered into by physicians participating in PhyCor-managed IPAs are not exclusive arrangements. The physicians, therefore, could join competing networks or terminate their relationships with the IPAs. There can be no assurance that PhyCor will continue to be successful in establishing new IPA networks or maintaining relationships with affiliated physicians. See "The Company-Physician Networks." Additional Financings. The Company's multi-specialty medical clinic acquisition and expansion program and its IPA development and management plans require substantial capital resources. The operations of its existing clinics require ongoing capital expenditures for renovation and expansion and the addition of costly medical equipment and technology utilized in providing ancillary services. The Company may also, in certain circumstances, acquire real estate in connection with clinic acquisitions. The Company will require additional financing for the development of additional IPAs and expansion and management of its existing IPAs. The Company expects that its capital needs over the next several years will exceed capital generated from operations. The Company plans to incur indebtedness and to issue, from time to time, additional debt or equity securities, including the issuance of Common Stock or convertible notes in connection with the types of transactions identified on the cover page of this Prospectus. The Company's bank credit facility requires the lenders' consent for borrowings in connection with the acquisition of certain clinic assets. There can be no assurance that sufficient financing will be available or available on terms satisfactory to the Company. Competition. The business of providing health care related services is highly competitive. Many companies, including professionally managed physician practice management companies, have been organized to pursue the acquisition of medical clinics, manage such clinics, employ clinic physicians or provide services to IPAs. Large hospitals, other multi-specialty clinics and other health care companies, health maintenance organizations ("HMOs") and insurance companies are also involved in activities similar to those of the Company. Some of these competitors have longer operating histories and significantly greater resources than the Company. There can be no assurance that the Company will be able to compete effectively, that additional competitors will not enter the market, or that such competition will not make it more difficult to acquire the assets of multi-specialty clinics on terms beneficial to the Company. See "The Company - Physician Networks." Risks Associated with Capitation; Reliance on Physician Networks. Many of the payor contracts entered into on behalf of PhyCor-managed IPAs are based on capitated fee arrangements. Under capitation arrangements, health care providers bear the risk, subject to certain loss limits, that the aggregate costs of providing medical services to the members will exceed the premiums received. The management fees are based, in part, upon a share of surplus, if any, of a capitated amount of revenue. Agreements with payors also contain "shared risk" provisions under which the Company and the IPA can earn additional compensation based on utilization of hospital services by members and may be required to bear a portion of any loss in connection with such "shared risk" provisions. Any such losses could have a material adverse effect on the Company. The profitability of the managed IPAs is dependent upon the ability of the providers to effectively manage the per patient costs of providing medical services and the level of utilization of medical services. The management fees are also based upon a percentage 3 6 of revenue collected by the IPAs. Any loss of revenue by the IPAs as a result of losing affiliated physicians, the termination of third party payor contracts or otherwise could have a material adverse effect on management fees derived by the Company from its management of IPAs. Through its service agreements, the Company also shares in capitation risk assumed by its affiliated physician groups. Risks of Changes in Payment for Medical Services. The profitability of the Company may be adversely affected by Medicare and Medicaid regulations, cost containment decisions of third party payors and other payment factors over which the Company has no control. The federal Medicare program has undergone significant legislative and regulatory changes in the reimbursement and fraud and abuse areas, including the adoption of the resource-based relative value scale ("RBRVS") schedule for physician compensation under Medicare, which may continue to have a negative impact on the Company's revenue. Efforts to control the cost of health care services are increasing. Many of the Company's physician groups are becoming affiliated with provider networks, managed care organizations and other organized health care systems, which often provide fixed fee schedules or capitation payment arrangements that are lower than standard charges. Future profitability in the changing health care environment, with differing methods of payment for medical services, is likely to be affected significantly by management of health care costs, pricing of services and agreements with payors. Because the Company derives its revenues from the revenues generated by its affiliated physician groups and from its managed IPAs, further reductions in payments to physicians generally or other changes in payment for health care services could have an adverse effect on the Company. Additional Regulatory Risks. The health care industry and physicians' medical practices are highly regulated at the state and federal levels. Because of the uniqueness of the structure of the relationships between the Company and the physician groups and its managed IPAs, there can be no assurance that review of the Company's business by courts or health care, tax, labor or other regulatory authorities will not result in determinations that could adversely affect the operations of the Company or that the health care regulatory environment will not change in a manner that would restrict the Company's existing operations or limit the expansion of the Company's business or otherwise adversely affect the Company. Many state laws restrict the unlicensed practice of medicine, the splitting or sharing of fees with non-physician entities and the enforcement of non-competition agreements. Federal law prohibits the offer, payment, solicitation or receipt of any form of remuneration in return for the referral of Medicare or state health program patients or patient care opportunities, or in return for the purchase, lease or order of items or services that are covered by Medicare or state health programs. In addition, federal law requires that physician groups be included within a definition of group practice in order to be permitted to make referrals within the group. Federal law also prohibits conduct that may result in price-fixing or other anticompetitive conduct. In addition to criminal penalties, violators may be excluded from participation in Medicare or state health programs. Although management of the Company believes the operations of the Company are in material compliance with existing law, there can be no assurance that the Company's existing agreements with its physicians including service agreements or IPA management agreements will not be successfully challenged. Applicability of Insurance Regulations. The Company, through its IPAs, enters into contracts and joint ventures with licensed insurance companies, such as HMOs, whereby the Company and its IPAs assume risk in connection with the providing of health care services under capitation arrangements. To the extent the Company or its managed IPAs are in the business of insurance as a result of entering into such risk sharing arrangements, they are subject to a variety of regulatory and licensing requirements applicable to insurance companies or HMOs. There can be no assurance that PhyCor or its managed IPAs will not be adversely affected by such regulations. In connection with multi-specialty medical clinic acquisitions, the Company has and may continue to acquire HMOs previously affiliated with such clinics. The HMO industry is highly regulated at the state level and is highly competitive. Additionally, the HMO industry has been subject to numerous legislative initiatives within the past several years. Certain aspects of health care reform legislation may have direct or indirect consequences for the HMO industry. There can be no assurance that developments in any of these areas will not have an adverse effect on the Company's wholly-owned HMOs or on HMOs in which the Company has a partial ownership interest or other financial involvement. 4 7 Risks Inherent in Provision of Medical Services. The physician groups with which the Company affiliates and the physicians participating in networks developed and managed by the Company are involved in the delivery of health care services to the public and, therefore, are exposed to the risk of professional liability claims. Claims of this nature, if successful, could result in substantial damage awards to the claimants which may exceed the limits of any applicable insurance coverage. Insurance against losses related to claims of this type can be expensive and varies widely from state to state. The Company does not control the practice of medicine by affiliated physicians or the compliance with certain regulatory and other requirements directly applicable to physicians, physician networks and physician groups. The Company is indemnified under its service agreements for claims against the physician groups, maintains liability insurance for itself and negotiates liability insurance for the physicians affiliated with its clinics and under its management agreements for claims against the IPAs and physician members. Successful malpractice claims asserted against the physician groups, the managed IPAs, or the Company, however, could have a material adverse effect on the Company. Impact of Health Care Reform. Although proposed federal legislation to provide greater control on health care spending has not been enacted by Congress to date, there can be no assurance that federal health care legislation will not be adopted in the future. Some states are also adopting health care programs and initiatives as a replacement for Medicaid. There can be no assurance that the adoption of such legislation, programs or initiatives will not have a material adverse effect on the Company. Dependence on Affiliated Physicians. Substantially all of the Company's revenue is derived from service or management agreements with the Company's affiliated clinics, the loss of certain of which could have a material adverse effect on the Company. In addition, any material decline in revenue by the Company's affiliated physician groups, whether as a result of physicians leaving the affiliated physician groups or otherwise, could have a material adverse effect on the Company. Risk Associated with PhyCor Management Corporation ("PMC"). PMC, an entity in which the Company owns a minority interest, has been organized to develop and manage IPAs and provide development and management services to physician organizations, including assisting in the formation of prospective PhyCor clinics. PMC is managed by the Company and has a Company executive officer on its Board of Directors. PMC expects to operate at a loss during its first few years of operations. The Company will recognize a pro rata portion of PMC's losses equal to the Company's minority equity interest in PMC. PMC has been organized so as not to be consolidated with the Company. Changes in structure or accounting rules or the exercise by the Company of its option to purchase PMC's Class B Common Stock prior to such time, if any, as PMC shall have become profitable could result in the Company being required to consolidate the operations of PMC. Such consolidation could cause the Company to recognize a greater percentage of PMC's operating losses which could have a material adverse effect on the Company. See "The Company - Physician Networks." Anti-takeover Considerations. The Company is authorized to issue up to 10,000,000 shares of preferred stock, the rights of which may be fixed by the Board of Directors. In February 1994, the Board of Directors approved the adoption of a Shareholder Rights Plan (the "Plan"). The Plan is intended to encourage potential acquirors to negotiate with the Company's Board of Directors and to discourage coercive, discriminatory and unfair proposals. The Company's stock incentive plans provide for the acceleration of the vesting of options in the event of a change in control, and the Company's Restated Charter provides for the classification of its Board of Directors into three classes, with each class of directors serving staggered terms of three years. In May 1996, the Company's shareholders approved an increase in the number of authorized shares of Common Stock to 250,000,000. Provisions in the executive officers' employment agreements provide for post-termination compensation, including payment of certain of the executive officers' salaries for 24 months, following a change in control. Most physician groups may terminate their service agreements with the Company in certain events, including a change in control of the Company which is not approved by a majority of the Company's Board of Directors. The former shareholders of North American Medical Management, Inc., an entity acquired by the Company in January 1995 which develops and manages IPAs ("North American"), have the right to repurchase the capital stock of North American in the event of a change of control. A change in control of the Company also constitutes an event of default under the Company's bank credit facility. The foregoing 5 8 matters may, together or separately, have the effect of discouraging or making more difficult an acquisition or change of control of the Company. THE COMPANY COMPANY OVERVIEW As of August 26, 1996, the Company owned and operated 40 clinics with approximately 2,400 physicians in 22 states and manages IPAs with over 7,000 physicians in 14 markets. The Company's clinics and IPAs provide capitated medical services to approximately 682,000 members, including approximately 85,000 Medicare members. PhyCor's objective is to organize physicians into professionally managed networks that assist physicians in assuming increased responsibility for delivering cost-effective medical care while attaining high-quality clinical outcomes. MULTI-SPECIALTY MEDICAL CLINICS A multi-specialty medical clinic provides a wide range of primary and specialty physician care and ancillary services through an organized physician group practice representing various medical specialties. Multi-specialty medical clinics historically have been locally owned organizations managed by practicing physicians. The Company, in conjunction with its affiliated physician organizations, achieves growth through the expansion of managed care relationships, the addition of physicians and the addition and expansion of ancillary services. In addition, the Company develops physician networks around its physician groups to enhance managed care contracting and to provide the physician component of organized health care systems. Effective January 1, 1995, the Company acquired all of the outstanding shares of capital stock of North American, which operates and manages IPAs. Physicians in affiliated physician groups may participate in IPAs developed and managed by North American. See "Physician Networks." The Company is also positioning the clinics for participation in organized health care systems by establishing strategic alliances with health maintenance organizations, insurers, hospitals and other health care providers and by enhancing medical management systems. Upon the acquisition by the Company of a clinic's operating assets the affiliated physician group simultaneously enters into a long-term service agreement with the Company. The Company, under the terms of the service agreement, provides the physician group with the equipment and facilities used in their medical practice, manages clinic operations, employs most of the clinic's non-physician personnel, other than certain diagnostic technicians, for which it receives a service fee. The physician groups offer a wide range of primary and specialty physician care and ancillary services. Approximately one-half of PhyCor's affiliated physicians are primary care providers. The primary care physicians are those in family practice, general internal medicine, obstetrics, pediatrics and emergency and urgent care. The Company works closely with the physician groups in targeting and recruiting physicians from outside the community and merging physicians in sole practice or single specialty groups, especially primary care groups, into the clinics' physician groups. Substantially all of the physicians practicing in the clinics are certified or eligible to be certified by the applicable specialty boards. The Company's affiliated physicians maintain full professional control over their medical practices, determine which physicians to hire or terminate and set their own standards of practice in order to promote high quality health care. Pursuant to its service agreements with physician groups, the Company manages all aspects of the clinic other than the provision of medical services, which is controlled by the physician groups. At each clinic, a joint policy board equally comprised of physicians and Company personnel focuses on strategic and operational planning, marketing, managed care arrangements and other major issues facing the clinic. The joint policy board involves experienced health care managers in the decision-making process and brings increased discipline and accountability to clinic operations. 6 9 The Company negotiates national arrangements that provide cost savings to the clinics through economies of scale in malpractice insurance, supplies and equipment. The Company has a productivity resource program that aligns staffing with volume and service needs. Upon assuming the operations of a clinic, the Company implements a standard set of business policies and reviews the procedure coding practices in each clinic. The Company's new information processing system is now available in several of the Company's clinics and is expected to be implemented in additional clinics in the future. This system provides an expanded capability for accounting, billing, receivables tracking, scheduling, and management reporting. PHYSICIAN NETWORKS IPAs offer physicians an opportunity to participate in expanding organized health care systems and assistance in contracting with insurance and HMO organizations and other large purchasers of health care services. IPAs consolidate independent physicians by providing general organizational structure and management to the physician network. IPAs provide or contract for medical management services to assist physician networks in obtaining and servicing managed care contracts. Physicians affiliated with IPAs often seek additional practice management services, including billing, staffing and financial management services, which are provided in certain circumstances by management service organizations ("MSOs"). Primarily through North American, the Company establishes management companies through which all health plan contracts are negotiated. These management companies, in which physicians may have an equity interest, provide information and operating systems, actuarial and financial analysis, medical management and provider contract services to the IPA. The Company assists physicians in forming networks to develop a managed care delivery system in which the IPA accepts fiscal responsibility for providing a wide range of medical services. The Company intends to continue to develop primary care-oriented health delivery systems. It is anticipated that the Company will target markets that do not have established managed care networks but are in need of physician networks. In June 1995, the Company purchased a minority interest in PMC by acquiring all the outstanding shares of PMC's Class C Common Stock, and the Company and PMC completed an offering of units consisting of shares of PMC Class B Common Stock and ten-year warrants to purchase 348,004 shares of the Company's Common Stock at $15.39 per share. PMC intends to develop and manage networks of physicians through IPAs and MSOs with which PMC will enter into long-term relationships. The Company provides services to PMC pursuant to a ten-year administrative services agreement and has an option to purchase the remaining equity interest of PMC prior to the end of May 2005. SELLING SHAREHOLDERS The Company has issued, and intends to continue to issue, convertible subordinated notes in connection with its acquisition of the assets or stock of individual physician practices, single and multi-specialty clinics and related businesses, including, but not limited to, management services organizations, consulting firms and other physician management companies. Upon conversion of such notes, the Selling Shareholders will receive unregistered shares of Common Stock. The Company has in the past and may in the future issue warrants to purchase shares of Common Stock to certain individuals in consideration for (i) consulting or other services provided or to be provided to the Company and (ii) the execution of a management or service agreement with the Company or an affiliate. Upon the exercise of such warrants, the Selling Shareholders will receive unregistered shares of Common Stock. In addition, the Company has granted options to purchase shares of Common Stock to certain individuals prior to the adoption of its stock incentive plans. Upon exercise of such options, the Selling Shareholders will receive unregistered shares of Common Stock. The Selling Shareholders may determine to reoffer the Shares to the public. The identity of the Selling Shareholders, the number of Shares to be sold by the Selling Shareholders and the price per Share will be determined at the time of the consummation of the particular transaction. Specific information regarding the 7 10 transaction, the identity of the Selling Shareholders and the number of Shares to be resold will be provided at the time of such transaction by means of a Supplement or a Post-Effective Amendment, as applicable. PLAN OF OFFERING BY THE SELLING SHAREHOLDERS The sale of the Shares by the Selling Shareholders may be effected from time to time in transactions on the Nasdaq Stock Market's National Market System, in negotiated transactions, through the writing of options on the Shares, or through a combination of such methods of sale, at prices related to such prevailing market prices prevailing at the time of sale, or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares to or through broker-dealers, and such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Shareholders and/or the purchasers of the Shares for which such broker-dealers may act as agent or to whom they sell as principal, or both (which compensation as to a particular broker-dealer may be in excess of customary commissions). The Selling Shareholders and any broker-dealers who act in connection with the sale of the Shares hereunder may be deemed to be an "underwriter" within the meaning of Section 2(11) of the Securities Act, and any commissions received by them and profit on any resale of the Shares as principal may be deemed to be underwriting discounts and commissions under the Securities Act. The Company intends to make available public information concerning itself in compliance with the Securities Act and the regulations thereunder, and accordingly, Rule 144 or 145 adopted under the Securities Act may be available for use by holders of Common Stock to effect transfers of such securities, subject to compliance with the applicable provisions of such rules. The terms of particular acquisitions by the Company may require the holder of Common Stock to use Rule 144 or 145, if available, for the resale of Common Stock rather than to effect resales pursuant to this Prospectus. LEGAL MATTERS Certain legal matters with respect to the validity of the Common Stock offered hereby will be passed upon for the Company by Waller Lansden Dortch & Davis, a Professional Limited Liability Company, Nashville City Center, Nashville, Tennessee. EXPERTS The Consolidated Financial Statements of the Company incorporated herein by reference have been included in reliance upon the report of KPMG Peat Marwick LLP, independent certified public accountants, upon the authority of such firm as experts in accounting and auditing. 8 11 ============================================================== ============================================================== NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS AND,IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFEROR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR 3,000,000 SHARES ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. PHYCOR, INC. COMMON STOCK --------------- --------------- TABLE OF CONTENTS Page PROSPECTUS ---- --------------- Available Information . . . . . . . . . . . . . . . . . . 2 Incorporation of Certain Information by Reference . . . . 2 Risk Factors . . . . . . . . . . . . . . . . . . . . . . 3 The Company . . . . . . . . . . . . . . . . . . . . . . . 6 Selling Shareholders . . . . . . . . . . . . . . . . . . 7 Plan of Offering by the Selling Shareholders . . . . . . 8 Legal Matters . . . . . . . . . . . . . . . . . . . . . . 8 Experts . . . . . . . . . . . . . . . . . . . . . . . . . 8 August 28, 1996 ============================================================== ==============================================================
12 PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Expenses to be incurred in connection with this Registration Statement are as follows. Commission Registration Fee $ 23,449 National Association of Securities Dealers, Inc. Fee -- State Qualification Expenses (including legal fees) -- Auditor's Fees and Expenses 10,000 Legal Fees and Expenses 25,000 Miscellaneous Expenses 551 --------- TOTAL $ 50,000 =========
The Company has agreed to bear all expenses (other than underwriting discounts and selling commissions, and fees and expenses of counsel and other advisors to the Selling Shareholders) in connection with the registration and sale of the Shares being offered by the Selling Shareholders. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) Article 8 of the Registrant's Amended Bylaws provides as follows: The Corporation may indemnify, and upon request may advance expenses to, any person (or the estate of any person) who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against any liability incurred in the action, suit or proceeding, despite the fact that such person has not met the standard of conduct set forth in Section 48-18-502(a) of the Tennessee Business Corporation Act (the "Act") or would be disqualified for indemnification under Section 48-18-502(d) of the Act, if a determination is made by the person or persons enumerated in Section 48-18-502(b) of the Act that the director or officer seeking indemnification is liable for (i) any breach of the duty of loyalty to the Corporation or its shareholders, (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or (iii) voting for or assenting to a distribution in violation of the Act. Section 7 of the Registrant's Restated Charter provides as follows: The Corporation shall indemnify, and upon request shall advance expenses to, in the manner and to the full extent permitted by law, any person (or the estate of any person) who was or is a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, by reason of the fact that such person is or was a director, officer, or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise (an "indemnitee"). The indemnification provided herein shall not be deemed to limit the right of the Corporation to indemnify any other person for any such expenses to the full extent permitted by law, nor shall it be deemed exclusive of any other rights to which any II-1 13 person seeking indemnification from the Corporation may have or hereafter acquire under this Charter or the Bylaws of the Corporation or under any agreement or vote of shareholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office; provided, however, that the Corporation shall not indemnify any such indemnitee in connection with a proceeding (or part thereof) if a judgment or other final adjudication adverse to the indemnitee establishes his liability (i) for any breach of the duty of loyalty to the Corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or (iii) under Section 48-18-304 of the Tennessee Business Corporation Act. (b) In addition to the foregoing provisions of the Amended Bylaws and Restated Charter of the Registrant, directors, officers, employees and agents of the Registrant may be indemnified by the Registrant, pursuant to the provisions of Section 48-18-501 et seq. of the Tennessee Code Annotated. (c) In addition, the Registrant maintains directors and officers liability insurance. ITEM 16. EXHIBITS.
Exhibit Description of Number Exhibits - ------ -------- 4.1 Restated Charter of the Registrant (c) 4.2 Amendment to Restated Charter of the Registrant (d) 4.3 Amendment to Restated Charter of the Registrant (a) 4.4 Amended Bylaws of the Registrant (c) 4.5 Form of Common Stock Certificate (e) 5 Opinion of Waller Lansden Dortch & Davis, a Professional Limited Liability Company, including consent (b) 23.1 Consent of KPMG Peat Marwick LLP (a) 23.2 Consent of Waller Lansden Dortch & Davis, a Professional Limited Liability Company (b) 24 Power of Attorney (b)
- ------------------------- (a) Filed herewith. (b) Previously filed. (c) Incorporated by reference to the exhibits filed with the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994, Commission No. 0-19786. (d) Incorporated by reference to the exhibits filed with the Registrant's Registration Statement on Form S-3, Registration No. 33-93018. (e) Incorporated by reference to the exhibits filed with the Registrant's Registration Statement on Form S-1, Registration No. 33-44123. II-2 14 ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3 15 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Post-Effective Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Nashville, State of Tennessee, on August 28, 1996. PHYCOR, INC. By: /s/Joseph C. Hutts ----------------------------- Joseph C. Hutts Chairman of the Board, President and Chief Executive Officer 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.
Name Title Date ---- ----- ---- * Director August 28, 1996 - ------------------------- Ronald B. Ashworth * Director August 28, 1996 - ------------------------- Sam A. Brooks, Jr. * Executive Vice August 28, 1996 - ------------------------- President, Corporate Thompson S. Dent Services and Director * Director August 28, 1996 - ------------------------- Winfield Dunn * Director August 28, 1996 - ------------------------- C. Sage Givens * Director August 28, 1996 - ------------------------- Joseph A. Hill, M.D.
II-4 16
Name Title Date ---- ----- ---- /s/Joseph C. Hutts Chairman of the Board, August 28, 1996 - ------------------------------ President, Chief Joseph C. Hutts Executive Officer (Principal Executive Officer) and Director /s/John K. Crawford Vice President, Treasurer August 28, 1996 - ------------------------------ (Principal Financial and John K. Crawford Accounting Officer) * Director August 28, 1996 - ------------------------------ James A. Moncrief, M.D. * Executive Vice President, August 28, 1996 - ------------------------------ Development and Director Derril W. Reeves * Executive Vice President, August 28, 1996 - ------------------------------ Operations and Director Richard D. Wright
* By: /s/Joseph C. Hutts ---------------------------------- Joseph C. Hutts, Attorney-In-Fact II-5 17 EXHIBIT INDEX
Exhibit Number Page Number - -------------- ----------- 4.1 Restated Charter of the Registrant (c) 4.2 Amendment to Restated Charter of the Registrant (d) 4.3 Amendment to Restated Charter of the Registrant (a) 4.4 Amended Bylaws of the Registrant (c) 4.5 Form of Common Stock Certificate (e) 5 Opinion of Waller Lansden Dortch & Davis, a Professional Limited Liability Company, including consent (b) 23.1 Consent of KPMG Peat Marwick LLP (a) 23.2 Consent of Waller Lansden Dortch & Davis, a Professional Limited Liability Company (b) 24 Power of Attorney (b)
_________________________ (a) Filed herewith. (b) Previously filed. (c) Incorporated by reference to the exhibits filed with the Registrant's Annual Report on Form 10-K for the year ended December 31, 1994, Commission No. 0-19786. (d) Incorporated by reference to the exhibits filed with the Registrant's Registration Statement on Form S-3, Registration No. 33-93018. (e) Incorporated by reference to the exhibits filed with the Registrant's Registration Statement on Form S-1, Registration No. 33-44123. II-6 EX-4.3 2 AMENDMENT TO RESTATED CHARTER 1 EXHIBIT 4.3 ARTICLES OF AMENDMENT TO THE RESTATED CHARTER OF PHYCOR, INC. To the Secretary of State of the State of Tennessee: Pursuant to the provisions of Section 48-20-106 of the Tennessee Code Annotated, the undersigned corporation submits this Amendment to its Restated Charter for the purpose of increasing the number of authorized shares of common stock: ARTICLE ONE The name of the corporation is PhyCor, Inc. ARTICLE TWO The following resolution amending the Restated Charter of PhyCor, Inc. (the "Company"), was duly adopted by the Board of Directors of the Company at a meeting duly held on February 16, 1996: RESOLVED, that, subject to the approval of the shareholders of the Company, the Company hereby proposes and declares it advisable to increase the number of shares of Common Stock which the Company shall have the authority to issue by deleting in its entirety Section 5(a) of the Company's Restated Charter and replacing such Section 5(a) with a new Section 5(a) which shall read as follows: Two Hundred Fifty Million (250,000,000) shares of Common Stock, such shares having unlimited voting rights as a class with each share entitled to one (1) vote per share and such class of shares entitled to receive the remaining net assets of the Company upon dissolution after all distributions to holders of Preferred Stock having a liquidation preference over the Common Stock; and ARTICLE THREE The above amendment to the Restated Charter of the Company was duly adopted and approved by the shareholders of the Company on May 15, 1996. PHYCOR, INC. By: /s/ Joseph C. Hutts ---------------------------- Title: President ------------------------- Dated: May 22, 1996 EX-23.1 3 CONSENT OF KPMG PEAT MARWICK LLP 1 EXHIBIT 23.1 The Board of Directors PhyCor, Inc.: We consent to incorporation by reference in the registration statement No. 33-98528 on Form S-3 of PhyCor, Inc. of our report dated February 13, 1996, with respect to the consolidated balance sheets of PhyCor, Inc. and subsidiaries as of December 31, 1995 and 1994 and the related consolidated statements of income, shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995, which report appears in the December 31, 1995 annual report on Form 10-K of PhyCor, Inc., and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG Peat Marwick LLP --------------------- KPMG Peat Marwick LLP Nashville, Tennessee August 26, 1996 -----END PRIVACY-ENHANCED MESSAGE-----