As filed with the Securities and Exchange Commission on August 29, 2002
Registration Statement No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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IntegraMed America, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 06-1150326
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Manhattanville Road Claude E. White
Purchase, New York 10577 Vice President and General Counsel
(914) 253-8000 One Manhattanville Road
---------------------------- Purchase, New York 10577
(Address, including zip code, (914) 253-8000
and telephone number, including -----------------------------------
area code, of registrant's principal (Address, including zip code,
executive offices) and telephone number, including
area code, of agent for service)
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with copies to:
SETH PEARLSTEIN, ESQ.
Dorsey & Whitney LLP
250 Park Avenue
New York, NY 10177
(212) 415-9200
Approximate date of commencement of proposed sale to the public: As
soon as practicable 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, as amended ("the Securities Act") 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:
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CALCULATION OF REGISTRATION FEE
================================================================================================================
Title of Securities Amount to be Proposed Maximum Proposed Maximum Aggregate Amount of
to be Registered (1) Registered Offering Price Offering Price Registration Fee
================================================================================================================
Common Stock, $.01 par value 220,000(1) $6.37(2) $1,401,400 $129
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Common Stock, $.01 par value 105,600(3) $6.37(2) $672,672 $62
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Total 325,600 N/A $2,074,072 $191
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(1) Amount of shares of Common Stock to be registered.
(2) Estimated solely for purposes of calculating the registration fee, based
upon the average of the high and low sales prices of the Common Stock on
the Nasdaq National Market on August 23, 2002, pursuant to Rule 457(c)
under the Securities Act.
(3) Amount of shares of Common Stock issuable upon exercise of warrants to be
registered. To be offered and sold by the selling stockholders upon the
exercise of outstanding warrants.
This 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.
Subject to Completion, Dated August 29, 2002
PRELIMINARY PROSPECTUS
325,600 Shares
IntegraMed America, Inc.
COMMON STOCK
-----------
The stockholders listed in this prospectus are offering an aggregate of
325,600 shares of our common stock, including 105,600 shares to be issued upon
the exercise of warrants. The common stock offered by this prospectus and the
warrants to be exercised for shares of common stock also offered by this
prospectus were sold to the selling stockholders in transactions exempt from
registration under the Securities Act.
The shares of common stock being offered by the selling stockholders
may be sold from time to time in transactions on the Nasdaq National Market, in
the over-the-counter market or in negotiated transactions. The selling
stockholders directly, or through agents or dealers designated from time to
time, may sell the common stock offered by them at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined at the time of
sale or at negotiated prices.
Our common stock is listed on the Nasdaq National Market under the
symbol "INMD". On August 28, 2002, the last reported sale price of the common
stock on the Nasdaq National Market was $6.06 per share.
-----------
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 7.
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The Securities and Exchange Commission and state securities regulators have
not approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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__________, 2002
TABLE OF CONTENTS
Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS..........................2
WHERE YOU CAN FIND MORE INFORMATION ABOUT US..................................3
OUR COMPANY...................................................................5
RISK FACTORS..................................................................7
USE OF PROCEEDS..............................................................18
SELLING STOCKHOLDERS.........................................................19
PLAN OF DISTRIBUTION.........................................................20
LEGAL MATTERS................................................................22
EXPERTS......................................................................22
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In this prospectus, "IntegraMed," the "Company," "we," "us," and "our"
refer to IntegraMed America, Inc. and its subsidiaries.
The following trademarks and service marks appear in this prospectus or
in documents incorporated by reference in this prospectus: IntegraMed
America(R), FertilityDirect(TM), Reproductive Science Centers(R), ARTWorks(R).
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information different from that contained in or incorporated by reference in
this prospectus. The shares of common stock offered by this prospectus will be
offered or sold only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus.
--------------------
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements represent our management's judgment regarding
future events. Forward-looking statements typically are identified by use of
terms such as "may," "will," "should," "plan," "expect," "anticipate,"
"estimate" and similar words, or the negative thereof, although some
forward-looking statements are expressed differently. All forward-looking
statements other than statements of historical fact included in this prospectus
regarding our financial position, business strategy and plans or objectives for
future operations are forward-looking statements. We cannot guarantee the
accuracy of the forward-looking statements, and you should be aware that our
actual results could differ materially from those contained in the
forward-looking statements due to a number of factors, including the following:
o our ability to acquire additional business service agreements
o our ability to raise additional debt and/or equity capital to finance
future growth
o the loss of significant business service agreements
o the profitability or lack thereof at Reproductive Science
Centers(R)serviced by us
o increases in overhead due to expansion
2
o the exclusion of infertility and assisted reproductive services from
insurance coverage
o governmental laws and regulations regarding healthcare
o changes in managed care contracting
o the timely development of and acceptance of new infertility, assisted
reproductive and genetic technologies and techniques
You should also consider carefully the statements under "Risk Factors",
which address these and other factors that could cause our results to differ
from those set forth in the forward-looking statements. All subsequent written
and oral forward-looking statements attributable to us or persons acting on our
behalf are expressly qualified in their entirety by the applicable cautionary
statements. We have no plans or obligation to update these forward-looking
statements except as required by applicable law.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file with the Commission at the Public Reference Room at
the Commission, at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information
concerning the Public Reference Room. The Commission also makes these documents
available on its web site at http://www.sec.gov.
We have filed with the Commission a registration statement on Form S-3
under the Securities Act of 1933, as amended, relating to the common stock
offered by this prospectus. This prospectus constitutes a part of the
registration statement but does not contain all of the information set forth in
the registration statement and its exhibits. For further information, we refer
you to the registration statement and its exhibits.
The Commission allows us to "incorporate by reference" the information
we file with it, which means that we can disclose important information to you
by referring you to another document we have filed with the Commission. The
information incorporated by reference is an important part of this prospectus
and information that we file later with the Commission will automatically update
and supersede this information. We incorporate by reference the following:
o The description of common stock contained in the Registration
Statement on Form 8-A filed with the Commission on May 28, 1991;
o Annual Report on Form 10-K for the fiscal year ended December 31, 2001
filed with the Commission on April 1, 2002;
o Definitive Proxy Statement on Schedule 14A filed with the Commission
on April 25, 2002;
o Quarterly Report on Form 10-Q for the period ending March 31, 2002,
filed with the Commission on May 15, 2002;
o Current Report on Form 8-K filed with the Commission on June 25, 2002;
o Quarterly Report on Form 10-Q for the period ending June 30, 2002
filed with the Commission on August 14, 2002; and
o Any future filings we make with the Commission until the selling
stockholders sell all of the common stock offered by them pursuant to
the prospectus.
3
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address or telephone number:
IntegraMed America, Inc.
One Manhattanville Road
Purchase, New York 10577
(telephone no. 914-253-8000)
Attention: Claude E. White, Vice President and General Counsel
4
OUR COMPANY
The following is a summary of us and our business. Because it is a
summary it does not contain all of the information that you should consider
before investing. You should read this entire prospectus and all of the
documents that are incorporated by reference in this prospectus and the section
of this prospectus entitled "Risk Factors," before making an investment
decision.
IntegraMed America, Inc. offers products and services to patients,
providers, payors and suppliers in the fertility industry. The IntegraMed
Network is comprised of 15 fertility centers in major markets across the United
States, pharmaceutical products and services, a financing subsidiary, the
Council of Physicians and Scientists, and a leading fertility portal
(www.integramed.com).
Nine fertility centers have access to our FertilityDirect(TM) Program.
The FertilityDirect Program provides contracted fertility centers with exclusive
market access to our products and services that support patient recruitment.
Included in this program are:
o Shared Risk Refund packages (includes up to three cycles of in vitro
fertilization for one fixed price with a significant refund if the
patient does not deliver a baby);
o treatment financing;
o Internet marketing; and
o Certain administrative, information and marketing services.
We license these programs exclusively to one leading fertility center in each
major market targeted.
Six of the fertility centers are designated as "Reproductive Science
Centers(R)" and as such, have access to our FertilityDirect Program in addition
to being provided with a full range of services including:
o Administrative Services - We offer accounting and finance services,
human resource functions, and purchasing of supplies and equipment.
o Access to Capital - We offer immediate access to capital for expansion
and growth. We also offer physician providers in our network rapid
access to the latest technologies and facilities in order for them to
provide a full spectrum of services and compete effectively for
patients in the marketplace.
o Marketing and Sales - We provide access to business-building
techniques to facility growth and development through our marketing
and sales programs.
o Integrated Information Systems - We have developed a nationwide,
integrated information system called ARTWorks(R) to collect and
analyze clinical, patient, financial and marketing data.
o Assistance in Identifying Best Clinical Practices - Our Council of
Physicians and Scientists review the principal elements necessary to
achieve successful clinical outcomes and assist practices in
optimizing such outcomes. Our structured Clinical Quality Improvement
Program under the auspices of our Council of Physicians and Scientists
produces a distinctive competitive advantage in the marketplace for
our network of Reproductive Science Centers.
IntegraMed Pharmaceutical Services, Inc., or IPSI, one of our wholly
owned subsidiaries, contracts for the marketing of fertility-related
pharmaceutical products to the patients of the Reproductive Science Centers and
certain affiliates. IPSI contracts with ivpcare, inc., a licensed pharmacy
specializing in dispensing pharmaceutical products, which provides certain
business services to IPSI.
5
Our strategy is to align information, technology and finance for the
benefit of fertility patients, providers, payors and suppliers. The primary
elements of our strategy include:
o selling additional FertilityDirect contracts to leading fertility
centers in major markets;
o selling Shared Risk Refund treatment packages to patients of
contracted fertility centers and managing the risk associated with the
program;
o selling additional Reproductive Science Center business services
contracts;
o increasing revenues at Reproductive Science Centers;
o increasing sales of pharmaceutical products and services;
o expanding clinical research opportunities; and
o establishing Internet-based access to patient-specific information on
treatment process and outcomes.
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We are incorporated in Delaware. Our principal executive offices are
currently located at One Manhattanville Road, Purchase, New York 10577, and our
telephone number is (914) 253-8000. Our website can be found at
http://www.integramed.com. Information on our website is not a part of this
prospectus.
6
RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks described below are not the only ones facing
our company. Additional risks not presently known to us or that we currently
deem immaterial may also impair our business operations.
Our business, financial condition or results of operations could be
materially adversely affected by any of these risks. The trading price of our
common stock could decline due to any of these risks and you may lose all or
part of your investment.
This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
Risks Related to Our Company
We rely on affiliations with fertility centers which may or may not benefit us.
A key element of our strategy is to expand through acquisitions of
additional business service agreements and through the expansion of services
offered by affiliated fertility centers. Identifying physician practice
candidates to be affiliated with our network of fertility centers and proposing,
negotiating and implementing economically feasible affiliations with such groups
can be a lengthy, complex and costly process. We may not be able to successfully
establish affiliations with additional fertility centers. In particular, we may
not be able to acquire assets of, enter into business services agreements with,
or profitably manage, additional fertility centers or successfully integrate
additional fertility centers into a network that will provide appropriate
incentives for such practices to improve operating efficiencies and reduce costs
while delivering high-quality patient care. In addition, anticipated benefits of
our acquisitions may not be realized, or there may be substantial unanticipated
costs associated with such acquisitions.
The termination or modification of our service agreements with fertility centers
could materially impact our earnings.
We have entered into agreements with 15 fertility centers to provide a
wide array of services. Six of these centers are categorized as Reproductive
Science Centers and we provide them with our full product offering. Nine of the
other centers are participants in our FertilityDirect Program. Although our
service agreements tend to be long-term, with management agreements generally
ranging from ten to 20 years and generally may be terminable only for cause, we
cannot be certain that a fertility center will not terminate its agreement with
us. The termination of one or more of theses agreements could have a significant
impact on our earnings. In December 2000, our agreement with one of our former
hospital-based Reproductive Science Centers was terminated. Although we received
an early termination fee, such fee may not have fully compensated us for the
potential fees we would have received over the remaining one-year term of the
agreement.
In addition, we revised our fee structure with our Reproductive Science
Centers during 2001. The revised structure reduced the fixed percentages owing
to us on the revenue and medical practice earnings of four centers. The lower
fees are to be phased in over an estimated five-year period. Although we believe
that the revised fee structure will be more than offset by growth in the
underlying medical practice, any future restructuring of fees may not be as
favorable.
7
Our business service revenue depends on the profitability of the fertility
centers serviced by us.
Our service fees from Reproductive Science Centers is largely based
upon a percentage of the centers' revenue and earnings. Therefore, if the
centers' revenues and earnings decline, so will our fees. Although we provide
much of the marketing and administrative services for the Reproductive Science
Centers, there are aspects of their profitability that are beyond our control.
If the businesses of the Reproductive Science Centers do not grow or are not
successful or if their earnings are negatively impacted by operating or fixed
expenses, our revenue from these centers will be negatively affected.
Further, we cannot be sure that any fertility centers will maintain a
successful medical practice or that any of the key physicians will continue to
practice with such fertility centers. Our business depends, to a significant
degree, on the fertility center's ability to recruit and retain qualified
physicians. In addition, fertility centers enter into non-competition agreements
with the physicians. However, such agreements may not be enforceable if
challenged in court and may not prevent the physician from moving his or her
practice to another region in the United States. Moreover, a non-competition
covenant would not prevent the physician from abandoning the practice of
medicine. In addition, these agreements restrict competition for a limited
period of time which may vary depending upon particular state law requirements.
Therefore, a departing physician may directly compete with his or her former
practice group after the expiration of such time period. Any resulting loss of
revenue by a fertility center could have a material adverse effect on us.
Our growth could be hindered by lack of available financing.
To fund future growth we may need additional capital. The only current
readily available source of funds is our $7.0 million working capital revolving
credit facility. Historically, we have financed our operations through sales of
equity securities, issuances of notes and internally generated sources. All of
these sources may not be available in the future to fund additional growth. We
may not be able to raise capital or borrow money on favorable terms or at all.
Should this be the case, our ability to acquire new business service agreements
or expand operations will be impaired.
Our growth places significant demands on us and our resources.
As we expand our operations, we will be required to hire and retain
additional management and administrative personnel and develop and expand
operational systems to support related growth. This growth will continue to
place significant demands on our management, technical, financial and other
resources. Continued growth may impair our ability to efficiently provide
management services to the fertility centers and to adequately manage and
supervise its employees. The failure to manage growth effectively could have a
material adverse effect on our business, financial condition and operating
results. In addition, such growth will require additional overhead expenses
which may be greater than any realized incremental revenue. Further, as we
implement new products and services, costs of implementation may be incurred
prior to achieving related revenues.
The success of our growth strategy depends on our ability to adapt to new
markets and effectively integrate newly acquired practices.
Our expansion into new markets will require us to maintain and
establish payor and customer relationships and to convert the clinical and
financial reporting systems of new practices to our systems. Significant delays
or expenses with regard to this process could materially harm the integration of
additional practices and our profitability. The integration of additional
practices also requires the implementation and centralization accounting, sales
and marketing, payroll, human resources, management information systems, cash
8
management, risk management and other systems, which may be difficult, costly
and time-consuming. Accordingly, our operating results, particularly in fiscal
quarters immediately following a new practice affiliation, may be adversely
affected while we attempt to complete the integration process. We may encounter
significant unanticipated costs or other problems associated with the future
integration of practices into our combined network of affiliated practices. Our
expansion into new markets may require us to comply with present or future laws
and regulations that may differ from those to which we are currently subject.
Failure to meet these requirements could materially impede our growth objectives
or materially harm our business.
Future acquisitions by fertility centers may not be acceptable to stockholders.
Unless otherwise required by law, we do not intend to seek stockholder
approval for acquisitions of business service agreements with fertility centers.
Accordingly, our stockholders are dependent on management's judgment with
respect to such transactions. These acquisitions may involve the issuance of a
significant number of additional shares, the assumption or issuance by us of
indebtedness and the undertaking by us of material obligations, including
long-term management agreements.
Our success is dependent on fertility centers negotiating favorable contracts
with managed care organizations.
Our ability to expand our operations is dependent, in part, on the
ability of the fertility centers serviced by us to renew their contracts with
managed care organizations and to contract, on a favorable basis, with
additional managed care organizations. In order for fertility centers to obtain
new contracts, which increasingly involves a competitive bidding process, we
must assist the fertility centers in accurately anticipating the costs of
providing services so that the fertility centers are able to undertake contracts
where they can expect to realize adequate profit margins or otherwise meet their
objectives. There can be no assurance that fertility centers will be successful
in contracting with sufficient numbers of managed care organizations or in
negotiating contracts with managed care organizations on terms favorable to us
and the fertility centers.
In connection with managed care contracts, the fertility centers may be
required to enter into contracts under which services will be provided on a
fee-for-service or risk-sharing/capitated basis. Under certain capitated
contracts, a fertility center accepts a predetermined amount per covered plan
member, per month in exchange for providing all necessary covered services. Such
a contract shifts much of the risk of providing health care from the payor to
the provider. Under such an agreement, the fertility center is at risk to the
extent costs of providing medical services to plan members exceed the fixed fee
reimbursement amount. Medical costs are affected by a variety of factors that
are difficult to predict and not within our control. To the extent medical costs
for services performed by physicians at the fertility centers exceed
reimbursement amounts, the revenues and earnings of the respective fertility
centers would decrease. Accordingly, our service fees for servicing such
fertility centers which are based on revenues and/or earnings of the respective
fertility centers would decrease. Any such decrease would adversely effect our
business, financial condition and operating results.
We depend on third-party payors for our revenue stream.
Almost two-thirds of our revenues for each of the six months ended June
30, 2002 and the fiscal years ended December 31, 2001 and 2000, were derived
from revenues received by the fertility centers from third-party payors. In
addition, we receive substantial reimbursed costs which are indirectly derived
from third-party payors. Cost containment pressures are increasing in the health
care industry as third-party payors institute measures designed to limit
payments to health care providers. Such cost containment measures include
reducing reimbursement rates, limiting services covered, increasing utilization
review of services, negotiating prospective or discounted contract pricing,
9
adopting capitation strategies and seeking competitive bids. Such measures could
adversely affect the amounts or types of services that may be reimbursable to
the fertility centers in the future. In particular, assisted reproductive
technology services, commonly referred to as ART, may not be reimbursable to the
fertility centers in the future. We believe that this trend will continue to
result in a reduction from historical levels in per-patient revenue for
fertility centers. Reimbursement rates vary depending on the type of third-party
payors. Changes in the composition of third-party payors reimbursing the
fertility centers from higher reimbursement rate payors to lower reimbursement
rate payors could have an adverse effect on our operating results. In addition,
although several states, including California, Illinois, Maryland, Massachusetts
and New York, states in which we do business, mandate that insurance companies
either provide or offer coverage for certain infertility and ART services, in at
least one state efforts have been made to limit or repeal these requirements. It
cannot be determined what effect, if any, changes in the levels of state
mandated insurance coverage would have on our revenues.
Since fertility centers charge their patients on a fee-for-service basis, they
incur financial risk related to collections as well as potentially long
collection cycles when seeking reimbursement from third-party payors.
Substantially all of our net revenues are derived from the fertility
centers' charging for services on a fee-for-service basis. Accordingly, we
assume the financial risk related to collection, including the potential
uncollectability of accounts, long collection cycles for accounts receivable and
delays attendant to reimbursement by third-party payors, such as private
insurance plans and managed care organizations. Increases in write-offs of
doubtful accounts, delays in receiving payments or potential retroactive
adjustments and penalties resulting from audits by payors may adversely affect
our operating cash flow and liquidity, require us to borrow funds to meet our
current obligations, reduce our profitability, impede our growth or otherwise
materially adversely affect our business.
We and Reproductive Science Centers rely on third-party vendors to produce
medications that are vital to the provision of fertility and ART services.
Our subsidiary, IntegraMed Pharmaceutical Services, Inc., has
contracted solely with ivpcare, inc., to provide certain business services
including the dispensing of pharmaceutical products. In addition, the
Reproductive Science Centers are dependent on third-party vendors that produce
fertility medications that are vital to the provision of infertility and ART
services. Should any of these vendors experience a supply shortage of
medication, such supply shortage may have an adverse impact on our operations
and the fertility centers.
We rely on the skills of certain key individuals.
We are substantially dependent on the efforts and skills of our current
executive management for our day to day management and the implementation of our
business strategy. Because of the difficulty in finding adequate replacements
for the executive management, the loss, incapacity or unavailability of any of
these individuals could adversely affect our operations. In addition, our
success is also dependent upon our ability to attract and retain additional
qualified personnel to support our anticipated growth.
We have established certain anti-takeover provisions.
Our Board of Directors is authorized to issue from time to time,
without stockholder authorization, shares of preferred stock with such terms and
conditions as the Board of Directors may determine in its sole discretion. The
rights of the holders of common stock will be subject to, and may be adversely
affected by, the rights of the holders of any preferred stock that may be issued
in the future. The issuance of preferred stock, while providing flexibility in
10
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of our outstanding voting stock. We are also subject to Section 203 of the
Delaware General Corporation Law which, subject to certain exceptions, prohibits
a Delaware corporation from engaging in any of a broad range of business
combinations with any "interested stockholder" for a period of three years
following the date that such stockholder became an interested stockholder. Any
of these provisions could discourage, hinder or preclude an unsolicited
acquisition of us and could make it less likely that stockholders receive a
premium for their shares as a result of any such attempt.
We have recorded a significant amount of intangible assets, which may never be
realized.
Our business service agreements have resulted in significant increases
in net identifiable intangible assets and goodwill. Net identifiable intangible
assets, which include business service agreements rights, were approximately $
20.3 million at June 30, 2002, representing approximately 45% of our total
assets. Net identifiable intangible assets are recorded at fair value on the
date of acquisition and are being amortized over periods ranging from 10 to 25
years. On an ongoing basis, we make an evaluation to determine whether events
and circumstances indicate that all or a portion of the carrying value of
intangible assets may no longer be recoverable, in which case an additional
charge to earnings may be necessary. Any future determination requiring the
write-off of a significant portion of intangible assets could materially harm
our results of operations for the period in which the write-off occurs, which
could adversely affect our stock price.
We depend on numerous complex information systems and any failure to
successfully maintain those systems or implement new systems could materially
harm our operations.
We depend upon numerous information systems to provide operational and
financial information on our practices, provide test reporting to physicians and
handle our complex billing operations. No assurance can be given that we will be
able to enhance existing and/or implement new information systems that can
integrate successfully the disparate operational and financial information
systems of our practices. The failure to successfully implement and maintain
operation, financial, test reporting, billing and physician practice information
systems could substantially impede the implementation of our operating and
growth strategies and the realization of expected operating efficiencies.
Risks Related to Our Industry
The business of providing health care services is intensely competitive and is
continuing to evolve in response to pressures to find the most cost-effective
method of providing quality health care.
We experience competitive pressures for the acquisition of the assets
of, and the provision of business services to, additional physician practices.
Although we focus on physician practices that provide infertility and ART, we
compete for management contracts with other health care services companies, as
well as hospitals and hospital-sponsored management services organizations. If
federal or state governments enact laws that attract other health care providers
to the managed care market, we may encounter increased competition from other
institutions seeking to increase their presence in the managed care market and
which have substantially greater resources than us. We may not be able to
compete effectively with our competitors, and additional competitors may enter
the market. Increased competition will make it more difficult to acquire the
assets of, and provide business services for, physician practices on terms
beneficial to us.
The infertility industry is highly competitive and characterized by
technological improvements. New ART services and techniques may be developed
that may render obsolete the ART services and techniques currently employed at
11
the fertility centers. Competition in the areas of infertility and ART services
is largely based on pregnancy rates and other patient outcomes. Accordingly, the
ability of a fertility center to compete is largely dependent on its ability to
achieve adequate pregnancy rates and patient satisfaction levels.
As a participant in the health care industry, our operations and our
relationships with the fertility centers are subject to extensive and increasing
regulation by various governmental entities at the federal, state and local
levels.
We believe our operations and those of the fertility centers are in
material compliance with applicable health care laws. Nevertheless, the laws and
regulations in this area are extremely complex and subject to changing
interpretation and many aspects of our business and business opportunities have
not been the subject of federal or state regulatory review or interpretation.
Accordingly, we cannot be sure that our operations have been in compliance at
all times with all such laws and regulations. In addition, we cannot be sure
that a court or regulatory authority will not determine that our past, current
or future operations violate applicable laws or regulations. If our
interpretation of the relevant laws and regulations is inaccurate, there could
be a material adverse effect on our business, financial condition and operating
results. In addition, such laws could be interpreted in a manner inconsistent
with our practices. Therefore, a review of us or the fertility centers by courts
or regulatory authorities could result in a determination that would require us
or the fertility centers to change current practices. Future changes to the
health care regulatory environment may also restrict our or the fertility
centers' existing operations or their expansions. Any significant restructuring
or restriction could have a material adverse effect on our business, financial
condition and operating results.
Our operations in Massachusetts, New York, the District of Columbia, California,
and Illinois, are subject to prohibitions relating to the corporate practice of
medicine.
The laws of Massachusetts, New York, the District of Columbia,
California, and Illinois prohibit corporations other than professional
corporations, associations and in some cases, hospitals or nonprofit
organizations, from practicing medicine or exercising control over physicians,
prohibit physicians from practicing medicine in partnership with, or as
employees of, any person not licensed to practice medicine and prohibit certain
types of corporations from acquiring the goodwill of a medical practice. In the
context of business service contracts between a corporation not authorized to
practice medicine and the physicians or their professional entity, the laws of
most of these states focus on the extent to which the corporation exercises
control over the physicians and on the ability of the physicians to use their
own professional judgment as to diagnosis and treatment. We believe our
operations are in material compliance with applicable state laws relating to the
corporate practice of medicine. We perform non-medical administrative services,
and assist the physicians in providing clinical services. We do not represent to
the public that we offer medical services, and we do not exercise influence or
control over the practice of medicine by physicians with whom we contract in
these states. In each of these states, the related professional corporation is
the sole employer of the physicians, and the professional corporation retains
the full authority to direct the medical, professional and ethical aspects of
its medical practice. However, although we believe our operations are in
material compliance with applicable state corporate practice of medicine laws,
the laws and their interpretations vary from state to state, and they are
enforced by regulatory authorities that have broad discretionary authority. As a
result, we cannot be sure that these laws will be interpreted in a manner
consistent with our practices or that other laws or regulations will not be
enacted in the future that could have a material adverse effect on our business,
financial condition and operating results. If a corporate practice of medicine
law is interpreted in a manner that is inconsistent with our practices, we could
be required to restructure or terminate our relationship with the applicable
professional corporation in order to bring our activities into compliance with
such law. The termination of, or failure of us to successfully restructure, any
such relationship could result in fines or a loss of revenue that could have a
material adverse effect on our business, financial condition and operating
12
results. In addition, expansion of our operations to new jurisdictions could
require structural and organizational modifications of our relationships with
the professional corporation in order to comply with additional state statutes.
Physicians in the states of New York and Illinois are subject to express
fee-splitting prohibitions.
The laws of New York and Illinois prohibit physicians from splitting
professional fees with non-physicians and health care professionals not
affiliated with the physician performing the services generating the fees. In
New York, this prohibition includes any fee we may receive from the fertility
centers which is set in terms of a percentage of, or otherwise dependent on, the
income or receipts generated by the physicians. In certain states, such as New
York, any fees that a non-physician receives in connection with the management
of a physician practice must bear a reasonable relationship to the services
rendered, based upon the fair market value of such services. Under Illinois law,
the courts have broadly interpreted the fee-splitting prohibition in that state
to prohibit compensation arrangements that include:
o fees that a management company may receive based on a percentage of
net profits generated by physicians, despite the performance of
legitimate management services,
o fees received by a management company engaged in obtaining referrals
for its physician where the fees are based on a percentage of certain
billings collected by the physician, and
o purchase price consideration to a seller of a medical practice based
on a percentage of the buyer's revenues following the acquisition.
Several of the other states where we have operations, such as California, do not
expressly prohibit fee-splitting but do have corporate practice of medicine
prohibitions. In these states, regulatory authorities frequently interpret the
corporate practice of medicine prohibition to encompass fee-splitting,
particularly in arrangements where the compensation charged by the management
company is not reasonably related to the services rendered.
We believe that our current operations are in material compliance with
applicable state laws relating to fee-splitting prohibitions. However, we cannot
be certain that these laws will be interpreted in a manner consistent with our
practices or that other laws or regulations will not be enacted in the future
that could have a material adverse effect on our business, financial condition
and operating results. If a fee-splitting law is interpreted in a manner that is
inconsistent with our practices, we could be required to restructure or
terminate our relationship with the applicable fertility centers in order to
bring our activities into compliance with such law. The termination of, or
failure of us to successfully restructure, any such relationship could have a
material adverse effect on our business, financial condition and operating
results. In addition, expansion of our operations to new jurisdictions could
require structural and organizational modifications of our relationships with
the fertility centers in order to comply with additional state statutes.
Certain of our services raise issues under state insurance regulations.
Certain of our fertility centers provide patients with fertilization
services for a fixed fee. If the patient does not become pregnant after
completing the three cycles of fertilization services, we will return a large
portion of the fixed fee to the patient. It is possible that a state insurance
13
regulator could interpret this program as the "business of insurance" and
thereby subject us to the insurance laws of such jurisdiction. Notwithstanding a
lack of uniformity among various states with regard to activity that constitutes
insurance activity, we believe that, because our primary purpose in offering
this program is to provide high quality fertility services rather than to assume
the risk of failure of these services, and because we actually provide the
relevant health services rather than simply serving as a conduit for payment,
our program should not be regarded as an insurance contract. However, a
regulator could take a contrary position, and attempt to require us to comply
with insurance regulations.
We are subject to state laws that prohibit kickbacks in return for referral of
patient and self-referral laws.
We are subject to state statutes and regulations that prohibit
kickbacks in return for the referral of patients in each state in which we have
operations. Several of these laws apply to services reimbursed by all payors,
not simply Medicare of Medicaid. Violations of these laws may result in
prohibition of payment for services rendered, loss of licenses as well as fines
and criminal penalties.
In addition, New York, California, Florida, Virginia, Maryland,
Massachusetts, and Illinois have enacted laws on self-referrals that apply
generally to the health care profession, and we believe it is likely that more
states will follow. Our operations in New York, California, and Illinois have
laboratories which are or will be subject to such prohibitions on referrals for
services to entities in which the referring physician has a beneficial interest.
However, New York, Maryland and California have an exception for "in-office
ancillary services" and in Illinois, the self-referral laws do not apply to
services within the health care worker's office or group practice or to outside
services as long as the health care worker directly provides health services
within the entity and will be personally involved with the provision of care to
the referred patient. We believe that the laboratories in our operations fit
within the exceptions contained in such statutes or are not subject to the
statute at all. Each of the laboratories in the states in which these
self-referral laws apply are owned by the fertility centers in that state and
are located in the office of such fertility centers. However, laws could be
interpreted in a manner inconsistent with our practices, or other laws or
regulations could be enacted in the future that may have a material adverse
effect on our business, financial condition or operating results. In addition,
expansion of our operations to new jurisdictions could require structural and
organizational modifications of our relationships with the fertility centers in
order to comply with new or revised state statutes.
In connection with corporate practice of medicine laws referred to
above, the fertility centers with whom we are affiliated necessarily are
organized as separate legal entities. As such, the fertility centers may be
deemed to be persons separate both from us and from each other under the
antitrust laws and, accordingly, subject to a wide range of laws that prohibit
anti-competitive conduct among separate legal entities. We believe we are in
compliance with these laws and we intend to comply with any state and federal
laws that may affect our development of health care networks. However, a review
of our business by courts or regulatory authorities could have a material
adverse effect on our operation and the fertility centers. Our business could be
harmed by future interpretation or implementation of the health care insurance
portability and accountability act.
Our business could be harmed by future interpretation or implementation of the
Healthcare Insurance Portability and Accountability Act.
The Health Care Insurance Portability and Accountability Act, or HIPAA,
created provisions that impose criminal penalties for fraud against any health
care benefit program, for theft or embezzlement involving health care and for
false statements in connection with the payment of any health benefits. The
HIPAA provisions apply not only to federal programs, but also to private health
benefit programs. HIPAA also broadened the authority of the Office of the
Inspector General of the U.S. Department of Health and Human Services to exclude
14
participants from federal health care programs. Because of the uncertainties as
to how the HIPAA provisions will be enforced, we are currently unable to predict
their ultimate impact on us. Compliance with HIPAA could cause us to modify our
business operations in a manner that would increase our operating costs or
impede our growth. In addition, although we are unaware of any current
violations of HIPAA, if we were found to be in violation of HIPAA, the
government could seek penalties against us. Significant fines could cause
liquidity problems and adversely affect our results of operations.
Federal and state regulation of the privacy, security and transmission of health
information could restrict our operations, impede the implementation of our
business strategies or cause us to incur significant costs.
The privacy, security and transmission of health information is subject
to federal and state laws and regulations, including HIPAA. Some of our
operations will be subject to HIPAA and its regulations. Because HIPAA's privacy
regulations do not supersede state laws that are more stringent, we will have to
comply both with the federal privacy regulations under HIPAA and with any state
privacy laws that are more stringent than HIPAA. Our operations that are subject
to HIPAA must be in compliance with HIPAA's regulations by April 2003. Another
set of regulations issued under HIPAA establish uniform standards relating to
data reporting, formatting, and coding that covered entities must use when
conducting certain transactions involving health information. The compliance
date for these regulations is October 2002, unless extended by filing a request.
A third set of regulations, which have not yet been finalized, will establish
minimum security requirements to protect health information. The HIPAA
regulations could result in significant financial obligations for us and will
pose increased regulatory risk. The privacy regulations could limit our use and
disclosure of patient health information and could impede the implementation of
some of our business strategies. At this time, we are unable to determine the
full impact of the HIPAA regulations on our business and our business strategies
or the total cost of complying with the regulations, but the impact and cost
could be significant. Many states have enacted, or indicated an intention to
enact, privacy laws similar to HIPAA. These state laws could also restrict our
operations, impede the implementation of our business strategies or cause us to
incur significant compliance costs. In addition, failure to comply with federal
or state privacy laws and regulations could subject us to civil or criminal
penalties.
Providers of ART services are subject to heavy government regulation.
With the increased utilization of ART services, government oversight of
the ART industry has increased and legislation has been adopted or is being
considered in a number of states regulating the storage, testing and
distribution of sperm, eggs and embryos. Although we believe we are currently in
compliance with such legislation where failure to comply would subject us to
sanctions by regulatory authorities, any failure to comply could have a material
adverse effect on our business, financial condition and operating results.
The fertility centers' clinical laboratories are subject to government
regulations at the federal, state and local level.
The fertility centers' endocrine and embryology clinical laboratories
are subject to governmental regulations at the federal, state and local levels.
The fertility centers have obtained, and from time to time renew, federal and/or
state licenses for the laboratories operated at the fertility centers.
The Clinical Laboratory Improvement Amendments of 1988, or CLIA,
extended federal oversight to all clinical laboratories, including those that
handle biological matter, such as eggs, sperm and embryos, by requiring that all
laboratories be certified by the government, meet governmental quality and
15
personnel standards, undergo proficiency testing, be subject to biennial
inspections, and remit fees. The sanctions for failure to comply with CLIA and
these regulations include suspension, revocation or limitation of a laboratory's
CLIA certificate necessary to conduct business, significant fines or criminal
penalties. We believe we are in material compliance with the foregoing
standards. Nevertheless, the loss of license, imposition of a fine, future
changes in such federal, state and local laws and regulations or a change in the
interpretation of current laws and regulations could have a material adverse
effect on us.
Political, economic and regulatory influences are subjecting the health care
industry in the United States to fundamental change.
Changes in the law, new interpretations of existing laws, or changes in
payment methodology or amounts, may have a dramatic effect on the relative costs
associated with doing business and the amount of reimbursement provided by
government and other third party payors. In recent years, there have been
numerous initiatives on the federal and state levels for comprehensive reforms
affecting the payment for and availability of health care services. We believe
that such initiatives will continue during the foreseeable future. Aspects of
certain of these reforms as proposed in the past, such as further reductions in
payments and additional prohibitions on physician ownership, directly or
indirectly, of facilities to which they refer patients, if adopted, could
adversely affect us. In addition, some states in which we operate or may operate
in the future are also considering various health care reform proposals. We
anticipate that federal and state governments will continue to review and assess
alternative health care delivery systems and payment methodologies, and that
public debate of these issues will likely continue in the future. Due to
uncertainties regarding the ultimate features of reform initiatives and their
enactment and implementation, we cannot predict which, if any, of such reform
proposals will be adopted, when they may be adopted or what impact they may have
on us; however, the exclusion of ART services as a reimbursable health care
benefit would have a material adverse effect on our business, financial
condition and operating results. In addition, the announcement of reform
proposals and the investment community's reaction to such proposals, as well as
announcements by competitors and third-party payors of their strategies to
respond to such initiatives, could adversely effect the market price of the
common stock.
The provision of health care services entails the substantial risk of potential
claims of medical malpractice and similar claims.
We do not engage in the practice of medicine or assume responsibility
for compliance with regulatory requirements directly applicable to physicians
and we require associated fertility centers to maintain medical malpractice
insurance. In general, we have established a program that provides the fertility
centers with such required insurance. However, in the event that services
provided at the fertility centers are alleged to have resulted in injury or
other adverse effects, we are likely to be named as a party in a legal
proceeding.
Although we currently maintain liability insurance that we believe is
adequate as to both risk and amount, successful malpractice claims could exceed
the limits of our insurance and could have a material adverse effect on our
business, financial condition or operating results. Moreover, we may not be able
to obtain such insurance on commercially reasonable terms in the future, and any
such insurance may not provide adequate coverage against potential claims. In
addition, a malpractice claim asserted against us could be costly to defend,
could consume management resources and could adversely affect our reputation and
business, regardless of the merit or eventual outcome of such claim. Further, in
connection with the acquisition of the assets of certain fertility centers, we
may assume certain of the stated liabilities of such practice. Therefore, claims
may be asserted against us for events related to such practice prior to our
acquisition of the fertility centers. We maintain insurance coverage related to
those risks that we believe is adequate as to both risk and amount, although a
successful claim could exceed applicable policy limits.
16
There are inherent risks specific to the provision of infertility and
ART services. For example, the long-term effects on women of the administration
of fertility medication, integral to most infertility and ART services, are of
concern to certain physicians and others who fear the medication may prove to be
carcinogenic or cause other medical problems. Currently, fertility medication is
critical to most infertility and ART services and a ban by the United States
Food and Drug Administration or any limitation on its use would have a material
adverse effect on us. Further, ART services increase the likelihood of multiple
births, which are often premature and may result in increased costs and
complications.
Risks Related To Our Common Stock
Future sales of our share capital could cause the price of our common stock to
decline.
Sales of substantial amounts of our common stock in the open market, or
the availability of such shares for sale, could adversely affect the price of
our common stock. Prior to the issuance of the shares of common stock offered
for resale by this prospectus, we had 3,335,765 shares of common stock
outstanding as of July 30, 2002. At July 30, 2002 there were outstanding stock
options to purchase 931,310 shares of our common stock at a weighted average
exercise price of approximately $4.45 per share; and warrants to purchase an
aggregate 30,000 shares of our common stock, all of which are currently
exercisable. An additional 114,237 shares of common stock are reserved for grant
under our stock option plans. The shares of our common stock that may be issued
under the outstanding options issued pursuant to our stock option plans are
currently registered with the Securities and Exchange Commission. Future sales
of our common stock or the availability of our common stock for sale could
adversely affect the market price for our common stock or our ability to raise
capital by offering equity securities.
We have never paid Common Stock cash dividends and do not anticipate paying cash
dividends in the foreseeable future.
We have not paid any Common Stock cash dividends, nor do we anticipate
paying any cash dividends in the foreseeable future. We intend to retain any
earnings which we may generate to finance our growth.
The issuance of preferred stock may adversely affect rights of common
stockholders or discourage a takeover.
Under our restated certificate of incorporation, our board of directors
has the authority to issue up to 2,500,000 shares of "blank check" preferred
stock and to determine the price, rights, preferences and privileges of those
shares without any further vote or action by our stockholders. The rights of the
holders of common stock will be subject to, and may be adversely affected by,
the rights of the holders of any shares of preferred stock that may be issued in
the future.
17
While we have no present intention to authorize any additional series
of preferred stock, such issuance, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could also
have the effect of making it more difficult for a third party to acquire a
majority of our outstanding voting stock. The preferred stock may have other
rights, including economic rights senior to the common stock, and, as a result,
the issuance thereof could have a material adverse effect on the market value of
the common stock.
Our stock price is volatile and the value of your investment may decrease for
various reasons, including reasons that are unrelated to the performance of our
business.
On occasion the equity markets 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. There has been significant volatility in the
market price of securities of health care companies that often has been
unrelated to the operating performance of such companies. In fact, since
September 1, 2001, our common stock, which trades on the Nasdaq National Market,
has traded from a low of $1.50 per share to a high of $9.20 per share. We
believe that various factors, such as legislative and regulatory developments,
investigations by regulatory bodies or third-party payors, quarterly variations
in our actual or anticipated results of operations, lower revenues or earnings
than those anticipated by securities analysts, the overall economy and the
financial markets could cause the price of our common stock to fluctuate
substantially. Any fluctuation of our stock price may make it difficult to
resell your shares when you want to at prices you find attractive. In addition,
securities class action claims have been brought against companies whose stock
prices have been volatile. This kind of litigation could be very costly and
could divert our management's attention and resources. Any adverse determination
in this type of litigation could also subject us to significant liabilities, any
or all of which could materially harm our liquidity and capital resources.
USE OF PROCEEDS
All of the shares of common stock offered pursuant to this prospectus
are being offered by the selling stockholders listed under "Selling
Stockholders." We will not receive any proceeds from sales of common stock by
the selling stockholders. Some of the shares of common stock to be sold in this
offering have not yet been issued and will only be issued upon the exercise of
warrants. We will receive estimated net proceeds of approximately $902,000 if
all of the shares underlying warrants offered under this prospectus are
exercised. However, the warrants may not be exercised, in which event we would
not receive any proceeds. We intend to use any proceeds received from the
exercise of the warrants for general corporate purposes.
18
SELLING STOCKHOLDERS
The shares of common stock being offered by the selling stockholders
were sold to the selling stockholders in a transaction exempt from registration
under the Securities Act. All of the shares offered for resale were issued and
sold by IntegraMed in a private placement transaction which was consummated on
July 30, 2002 or issued to the placement agent for such private placement. We
entered into a purchase agreement with the selling stockholders who purchased in
the private placement in connection with the acquisition of the stock being
offered pursuant to this prospectus.
The following table sets forth information as of July 31, 2002 with
respect to each selling stockholder and the number of shares of common stock
beneficially owned by such selling stockholder and assumes that all of the
shares offered for resale pursuant to this prospectus will be sold in this
offering:
Shares Owned Shares Shares Owned Percentage of
Prior to Being Upon Completion Outstanding Stock
Name Offering Offered Of Offering Owned After Offering
-----------------------------------------------------------------------------------------------------------------------------
Michael Young 134,400(1) 134,400 - *
The Lynch Foundation 57,240(2) 7,840 49,400 *
Peter S. & Carolyn A. Lynch 151,600(3) 10,976 112,400(4) *
Peter S. Lynch Charitable Lead Annuity Trust 2,352(5) 2,352 - *
Peter S. Lynch Charitable UniTrust 2,352(6) 2,352 - *
Peter S. Lynch Charitable Remainder Trust 15,680(7) 15,680 - *
Peter H. Kamin 174,400(8) 89,600 40,000(9) *
Peter H. Kamin Children's Trust 59,800(10) 44,800 15,000 *
H.C. Wainwright & Co., Inc. 6,160(11) 6,160 - *
Julia Aryeh 8,800(11) 8,800 - *
Steven Markovich 880(11) 880 - *
Robert Nathan 1,760(11) 1,760 - *
----------------------------
* Less than 1%-
----------------------------
1 Includes 38,400 shares of common stock underlying warrants which will
become exercisable on January 31, 2003 at an exercise price of $9.00 per
share.
2 Includes 2,240 shares of common stock underlying warrants which will become
exercisable on January 31, 2003 at an exercise price of $9.00 per share.
3 Includes 3,136 shares of common stock underlying warrants which will become
exercisable on January 31, 2003 at an exercise price of $9.00 per share and
27,704 shares of common stock which Mrs. Lynch is deemed to beneficially
own, of which 7,000 shares of common stock are held in the Lynch Children's
Trust for the benefit of Anne Lynch for which she is trustee, 7,000 shares
of common stock are held in the Lynch Children's Trust for the benefit of
Elizabeth Lynch for which she is trustee, 7,000 shares of common stock are
held in the Lynch Children's Trust for the benefit of Mary Lynch for which
she is trustee, 1,680 shares of common stock and 672 shares of common stock
underlying warrants that are currently held in the Peter S. Lynch
Charitable Lead Annuity Trust for which she is trustee, 1,680 shares of
common stock and 672 shares of common stock underlying warrants that are
currently held in the Peter S. Lynch Charitable UniTrust for which she is
trustee and 2,000 shares of common stock that are held in her IRA Rollover
account. The shares held by the Peter S. Lynch Charitable Lead Annuity
Trust and the Peter S. Lynch Charitable UniTrust are being sold in this
offering. Also includes shares Mr. Lynch is deemed to beneficially own,
consisting of 55,000 shares of common stock and 2,240 shares of common
stock underlying warrants that are currently held by the Lynch Foundation
for which he is a trustee and 11,200 shares of common stock and 4,480
shares of common stock underlying warrants that are currently held in the
Peter S. Lynch Charitable Remainder Trust for which he is trustee, all but
49,400 shares are being sold in this offering.
4 Includes 23,000 shares of common stock which Mrs. Lynch is deemed to
beneficially own, of which 7,000 shares of common stock are held in the
Lynch Children's Trust for the benefit of Anne Lynch for which she is
trustee, 7,000 shares of common stock are held in the Lynch Children's
Trust for the benefit of Elizabeth Lynch for which she is trustee, 7,000
shares of common stock are held in the Lynch Children's Trust for the
benefit of Mary Lynch for which she is trustee and 2,000 shares of common
stock are held in her IRA Rollover account. Also includes 49,400 shares of
common stock held by the Lynch Foundation of which Mr. Lynch is a trustee.
5 Includes 672 shares of common stock underlying warrants which will become
exercisable on January 31, 2003 at an exercise price of $9.00 per share.
6 Includes 672 shares of common stock underlying warrants which will become
exercisable on January 31, 2003 at an exercise price of $9.00 per share.
7 Includes 4,480 shares of common stock underlying warrants which will become
exercisable on January 31, 2003 at an exercise price of $9.00 per share.
8 Includes 25,600 shares of common stock underlying warrants which will
become exercisable on January 31, 2003 at an exercise price of $9.00 per
share. Also includes 59,800 shares of common stock held in the Peter H.
Kamin Children's Trust for which Mr. Kamin is trustee.
9 Includes 15,000 shares of common stock held in the Peter H. Kamin
Children's Trust for which Mr. Kamin is trustee.
10 Includes 12,800 shares of common stock underlying warrants which will
become exercisable on January 31, 2003 at an exercise price of $9.00 per
share.
11 Consists of shares of common stock underlying warrants currently
exercisable at an exercise price of $6.25 per share.
19
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of the selling
stockholders. The selling stockholders may offer and sell their shares of common
stock from time to time, in their discretion, in one or more transactions at
fixed prices, at prevailing market prices at the time of sale, at prices related
to the prevailing market prices, at varying prices determined at the time of
sale, or at negotiated prices. Such prices will be determined by the selling
stockholders or by agreement between a selling stockholder and its underwriters,
dealers, brokers or agents. The selling stockholders will act independently of
us in making decisions with respect to the timing, manner and size of each sale
hereunder. These sales may be effected at various times in one or more of the
following transactions, or in other kinds of transactions:
o transactions on the New York Stock Exchange or on any national
securities exchange or U.S. inter-dealer system of a registered
national securities association on which our common stock may be
listed or quoted at the time of sale;
o in the over-the-counter market;
o in private transactions and transactions otherwise than on these
exchanges or systems or in the over-the-counter market;
o in connection with short sales of the shares;
o by pledge to secure or in payment of debt and other obligations;
o through the writing of options, whether the options are listed on an
options exchange or otherwise;
o in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or over-the-counter options; or
o through a combination of any of the above transactions.
The selling stockholders and their successors, including their
transferees, pledgees or donees or their successors, may sell the common stock
directly to purchasers or through underwriters, broker-dealers or agents, who
may receive compensation in the form of discounts, concessions or commissions
from the selling stockholder or the purchasers in amounts to be negotiated.
These discounts, concessions or commissions as to any particular underwriter,
broker-dealer or agent may be in excess of those customary in the types of
transactions involved. Such brokers and dealers and any other participating
brokers or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act, in connection with such sales. From time to time, one or more of
the selling stockholders may pledge, hypothecate or grant a security interest in
some or all of the shares owned by them, and the pledgees, secured parties or
persons to whom such securities have been hypothecated shall, upon foreclosure
in the event of default, be deemed to be selling stockholders hereunder. In
addition, a selling stockholder may, from time to time, sell short our common
stock, and in such instances, this prospectus may be delivered in connection
with such short sales and the shares offered hereby may be used to cover such
short sales. In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 of the Securities Act may be sold under
Rule 144 rather than pursuant to this prospectus.
20
To the extent required under the Securities Act, the aggregate amount
of selling stockholders' shares being offered and the terms of the offering, the
names of any such agents, brokers, dealers or underwriters and any applicable
commission with respect to a particular offer will be set forth in an
accompanying prospectus supplement. Any underwriters, dealers, brokers, or
agents participating in the distribution of the shares may receive compensation
in the form of underwriting discounts, concessions, commissions or fees from a
selling stockholder and/or purchasers of selling stockholders' shares, for whom
they may act. In addition, sellers of selling stockholders' shares may be deemed
to be underwriters under the Securities Act and any profits on the sale of
selling stockholders' shares by them may be deemed to be discount commissions
under the Securities Act. Selling stockholders may have other business
relationships with the Company and its subsidiaries or affiliates in the
ordinary course of business.
From time to time one or more of the selling stockholders may transfer,
pledge, donate or assign selling stockholders' shares to lenders, family members
and others and each of such persons will be deemed to be a selling stockholder
for purposes of this prospectus. The number of selling stockholders' shares
beneficially owned by those selling stockholders who so transfer, pledge, donate
or assign selling stockholders' shares will decrease as and when they take such
actions. The plan of distribution for selling stockholders' shares sold
hereunder will otherwise remain unchanged, except that the transferees,
pledgees, donees or other successors will be selling stockholders hereunder.
Including and without limiting the foregoing, in connection with
distributions of our common stock, a selling stockholder may enter into hedging
transactions with broker-dealers and the broker-dealers may engage in short
sales of our common stock in the course of hedging the positions they assume
with such selling stockholder. A selling stockholder may also enter into option
or other transactions with broker-dealers that involve the delivery of our
common stock to the broker-dealers, who may then resell or otherwise transfer
such common stock. A selling stockholder may also loan or pledge such common
stock to a broker-dealer and the broker-dealer may sell the common stock so
loaned or upon a default may sell or otherwise transfer the pledged common
stock.
We are bearing all costs relating to the registration of the shares
(other than the fees and expenses, if any, of counsel or other advisors to the
selling stockholders). Any commissions, discounts, concessions or fees payable
to underwriters, broker-dealers or agents in connection with any sale of the
shares will be borne by the selling stockholder selling such shares.
We entered into a registration rights agreement for the benefit of the
selling stockholders to register our common stock under applicable federal and
state securities laws. The registration rights agreement provides for
cross-indemnification of the selling stockholders and us and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the common stock, including liabilities
under the Securities Act. We will pay substantially all of the expenses incurred
incident to the offering and sale of the common stock.
21
LEGAL MATTERS
The validity of the issuance of shares of common stock offered by us in
this offering will be passed upon for us by Dorsey & Whitney LLP, New York, New
York.
EXPERTS
The financial statements incorporated in this prospectus by reference
to the Annual Report on Form 10-K for the year ended December 31, 2001 have been
so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
22
325,600 Shares
IntegraMed America, Inc.
Common Stock
---------------
Prospectus
---------------
_____________ 2002
Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with the distribution of the
securities being registered, all of which are to be paid by the Registrant, are
as follows:
Securities and Exchange Commission Registration Fee............ $ 191
Printing and Engraving Expenses................................ 5,000
Legal Fees and Expenses........................................ 25,000
Accounting Fees and Expenses................................... 15,000
Miscellaneous Fees and Expenses................................ 5,000
-------
Total................................................. $50,191
=======
Item 15. Indemnification of Directors and Officers
Article VII of the Company's Amended and Restated Certificate of
Incorporation provides that the Company shall to the fullest extent permitted by
Section 145 of the Delaware General Corporation Law (the "DGCL") indemnify any
and all persons whom it shall have power to indemnify under said Section from
and against any and all of the expenses, liabilities or other matters referred
to in or covered by said Section. Article VII also provides that no director
shall be personally liable to the Company or its stockholders for any monetary
damages for breach of fiduciary duty as a director; provided, however, that
nothing contained in such Article shall eliminate the liability of a director
(i) for any breach of such director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions that are not in good faith or involve
intentional misconduct or a knowing violation of the law, (iii) under Section
174 of the DGCL, or (iv) for any transaction from which such director derived an
improper personal benefit.
Article VII of the Company's Bylaws, as amended, and the Company's
Directors' and Officers' Liability Insurance Policy provide for indemnification
of the directors and officers of the Company against certain liabilities.
Section 145 of the DGCL empowers a corporation to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he or she is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
II-1
corporation as a director, officer, employee or agent of another corporation or
other enterprise, against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
Section 145 also empowers a corporation to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she acted under similar standards,
except that no indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless, and only to the extent that, the Delaware Court of Chancery
or the court in which such action was brought shall determine that despite the
adjudication of liability such person is fairly and reasonably entitled to
indemnity, for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to above or in the defense of any claim,
issue or matter therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith, that indemnification provided for by Section 145 shall not
be deemed exclusive of any other rights to which the indemnified party may be
entitled; and that the corporation is empowered to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation against any liability asserted against him or her in
any such capacity or arising out of his or her status as such, whether or not
the corporation would have the power to indemnify him or her against such
liability under Section 145.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
The following exhibits are filed as part of this Registration
Statement:
Exhibit
Number Description
------ -----------
4.1 Form of Specimen Common Stock Certificate of Registrant.
4.2 Form of Warrant Agreement issued by the Registrant to
certain persons and entities on July 30, 2002(1).
4.3 Registration Rights Agreement dated as of July 30, 2002
between IntegraMed America, Inc. and the entities listed
therein(2).
5.1 Opinion of Dorsey & Whitney LLP regarding the validity of
the securities being registered.
23.1 Consent of PricewaterhouseCoopers LLP, independent auditors.
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1).
24.1 Powers of Attorney (included in the signature page hereof).
(b) Financial Statement Schedules
Schedules are omitted because they are either not required, are not
applicable or because equivalent information has been included in the financial
statements, the notes thereto or elsewhere herein.
-----------------------------
1 Filed as exhibit 4.14(a) to the Registrant's Report on Form 10-Q for the
period ended June 30, 2002 and incorporated herein by reference thereto.
2 Filed as exhibit 4.14 to the Registrant's Report on Form 10-Q for the
period ended June 30, 2002 and incorporated herein by reference thereto.
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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:
To include any prospectus required by Section 10(a)(3) of the
Securities Act;
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;
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; provided,
however, that paragraphs (1)(a) and (1)(b) above do not apply if the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 by 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 provisions described under "Item 15.
Indemnification of Directors and Officers" above, 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 Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment to 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 is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
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The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus 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.
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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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Purchase, State of New York on the 29th day of
August, 2002.
INTEGRAMED AMERICA, INC.
By: /s/John W. Hlywak, Jr.
-----------------------------------------------
Name: John W. Hlywak, Jr.
Title: Senior Vice President and Chief
Financial Officer (principal financial
and accounting officer)
KNOWN ALL MEN BY THESE PRESENTS, that each person whose signature
appears below does hereby constitute and appoint Gerardo Canet and John W.
Hlywak, Jr., and each of them, with full power to act without the other, his
true and lawful attorney-in-fact and agent for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement including without limitation any registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises in order to
effectuate the same, as fully, for all intents and purposes, as he could or
might do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
---------- ----- ----
/s/ GERARDO CANET President, Chief Executive Officer August 29, 2002
------------------------- and Director
Gerardo Canet
/s/JOHN W. HLYWAK, JR. Senior Vice President and Chief August 29, 2002
------------------------- Financial Officer (principal
John W. Hlywak, Jr. financial and accounting officer)
/s/ MICHAEL J. LEVY, M.D. Director August 29, 2002
-------------------------
Michael J. Levy, M.D.
/s/ SARASON D. LIEBLER Director August 29, 2002
-------------------------
Sarason D. Liebler
II-5
/s/ AARON S. LIFCHEZ, M.D Director August 29, 2002
-------------------------
Aaron S. Lifchez, M.D.
Director August 29, 2002
/s/ WAYNE R. MOON
-------------------------
Wayne R. Moon
Director August 29, 2002
/s/ LAWRENCE J. STUESSER
-------------------------
Lawrence J. Stuesser
Director August 29, 2002
/s/ ELIZABETH E. Tallett
-------------------------
Elizabeth E. Tallett
II-6
Exhibit 5.1
[DORSEY & WHITNEY LLP LETTERHEAD]
August 29, 2002
IntegraMed America, Inc.
One Manhattanville Road
Purchase, New York 10577
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
You have requested our opinion with respect to the registration by
IntegraMed America, Inc. (the "Company") pursuant to a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Act"), relating to the registration of an aggregate of 325,600
shares of the Company's common stock, $.01 par value per share (the "Common
Stock"), consisting of: (i) 220,000 outstanding shares of Common Stock (the
"Outstanding Shares") and (ii) 105,600 shares of Common Stock issuable upon the
exercise of warrants (the "Warrants"), which may be sold from time to time by
the selling stockholders named therein.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed relevant and necessary to
form a basis for the opinions hereinafter expressed. In conducting such
examination, we have assumed (i) that all signatures are genuine, (ii) that all
documents and instruments submitted to us as copies conform with the originals,
and (iii) the due execution and delivery of all documents where due execution
and delivery are a prerequisite to the effectiveness thereof. As to any facts
material to this opinion, we have relied upon statements and representations of
officers and other representatives of the Company and certificates of public
officials and have not independently verified such facts.
Based solely upon the foregoing, it is our opinion that: The
Outstanding Shares have been validly issued and are fully paid and
non-assessable. The shares of Common Stock issuable upon the exercise of the
Warrants have been duly authorized and reserved for issuance and, when issued in
accordance with the terms of the applicable Warrants against payment therefor,
will be validly issued, fully paid and non-assessable.
Our opinions expressed above are limited to the law of the State of New
York, the Delaware General Corporation Law, and the federal laws of the United
States of America.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the heading
"Legal Matters" in the Prospectus constituting part of the Registration
Statement relating to the registration of the Shares.
Very truly yours,
/s/ DORSEY & WHITNEY LLP
Dorsey & Whitney LLP
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-3 of our report dated March 21, 2002 relating
to the financial statements, which appears in IntegraMed America, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2001. We also consent to the
references to us under the heading "Experts" in such Registration Statement.
/s/ PRICEWATERHOUSECOOPERS LLP
-----------------------------------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 29, 2002