As filed with the Securities and Exchange Commission on February 14, 2001
Registration Statement No. 333-52470
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
Amendment No. 3
to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 36-4392754
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) 2401 Commerce Drive Identification No.)
Libertyville, Illinois 60048
(847) 680-3515
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
Glen E. Tullman
Chairman and Chief Executive Officer
2401 Commerce Drive
Libertyville, Illinois 60048
(847) 680-3515
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent For Service)
____________________________
Copies to:
Jeffrey Schumacher
Sachnoff & Weaver, Ltd.
30 S. Wacker Drive, 29th Floor
Chicago, Illinois 60606
(312) 207-6414
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Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement as determined by
the selling stockholders.
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, 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, 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. [_]
The registrant 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, as amended, or until the registration statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, Dated February 14, 2001.
1,398,303 Shares
Allscripts Healthcare Solutions, Inc.
Common Stock, $0.01 par value
The selling stockholders listed under the caption "Selling Stockholders" on
pages 21-26, or their successors, distributees or permitted assigns, are
offering 1,398,303 shares of our common stock. We will not receive any of the
proceeds from the sale of the shares.
There is an existing trading market for these shares. The last reported
sale price on January 25, 2001 was $7.625. The Nasdaq National Market symbol for
Allscripts Healthcare Solutions, Inc. is MDRX.
Investing in our common stock involves risk. See "Risk Factors" beginning on
page 6 of this prospectus for information that you should consider before
purchasing securities.
Neither the Securities and Exchange Commission nor any other regulatory
body has approved or disapproved of these securities or passed on the accuracy
or adequacy of this prospectus. Any representation to the contrary is
a criminal offense.
The date of this prospectus is _____________, 2001.
Table of Contents
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC...................................... 3
RECENT DEVELOPMENTS....................................................... 4
RISK FACTORS.............................................................. 6
USE OF PROCEEDS........................................................... 21
SELLING STOCKHOLDERS...................................................... 21
PLAN OF DISTRIBUTION AND OFFERING PRICE................................... 27
VALIDITY OF STOCK......................................................... 29
EXPERTS................................................................... 29
AVAILABLE INFORMATION..................................................... 29
INFORMATION INCORPORATED BY REFERENCE..................................... 30
2
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
Through our wholly owned subsidiaries, Allscripts, Inc. and Channelhealth
Incorporated, we provide physicians with Internet and client/server medication
management solutions designed to improve the quality and cost effectiveness of
pharmaceutical healthcare, and we sell to physicians Internet-based software
applications and services that automate many of the clinical and administrative
functions involved in the healthcare delivery process.
Allscripts Inc.'s technology-based approach focuses on the point of care,
where prescriptions and many other healthcare transactions originate, and
creates an electronic dialogue between physicians and other participants in the
healthcare delivery process, including patients, pharmacies, managed care
organizations and pharmaceutical manufacturers. Allscripts, Inc. currently
offers products in four categories: point-of-care medication management,
Internet products and services, including e-detailing, information products and
prepackaged medications. Its TouchScript software enables electronic
prescribing, routing of prescription information and capturing of prescription
data at the point of care. Allscripts, Inc.'s other e-commerce products and
services offer physicians and their patients medication-related education and
information services. Allscripts, Inc. also sells prepackaged medications to
physicians for dispensing to their patients.
Channelhealth's software is designed to help healthcare providers lower
healthcare costs and improve decision making by managing information flows in an
efficient and timely manner. Channelhealth's suite of applications, which are
known collectively as the "Physician Channel," consists of:
Application Key Applications and Services
- --------------------------------------------------------------------------------
Physician Homebase Access to practice management and
clinical functions (schedules, tasks,
patient lists, e-mail), personally
configured links to clinically relevant
content and continuing medical education
and non-clinical content
WebWorks Office automation and work-flow
integration software tools that create
task lists for the physicians and their
support teams
ChargeWorks Automated encounter form that includes
regulatory compliance decision support
DocWorks Electronic dictation and transcription
services with on-line tracking, viewing
and printing capabilities
MedWorks Medication management and prescription
communication for ambulatory patients
with drug utilization review and plan-
specific formulary checking
ResultWorks Display of clinical results and text
documents
OrderWorks Ordering of diagnostic tests, supplies
and other items for ambulatory patients
NoteWorks Structured clinical note creation and
editing
Channelhealth delivers its Physician Channel services through an
application services provider model and integrates them with a provider
organization's existing practice management system and databases. Channelhealth
has designed its services to be implemented on a modular basis. Thus, the
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Physician Channel services can be implemented incrementally with minimal
disruption and up-front investment.
Channelhealth has entered into strategic agreements with various providers
of on-line medical resources to better service the healthcare providers using
the Physician Channel. These agreements provide users of the Physician Channel
with access to continuing medical information courses, clinical reference and
health awareness information, as well as access to prescription benefit
management rules and eligibility, pertinent patient medication history and
network pharmacy listings.
Channelhealth's target customers are large healthcare provider
organizations, primarily consisting of large physician group practices,
hospitals and integrated delivery networks. Channelhealth competes for customers
with other providers of Internet-based healthcare solutions and clinical systems
for the key service offerings of connectivity, content, applications and the
browser-based desktop and personal digital assistant user interface. While
Channelhealth enjoys the advantage of access to a large installed base of
provider organizations in the United States and strong relationships with
executive management at prestigious healthcare organizations nationwide, we
expect Channelhealth's competitors to aggressively target that customer base.
Channelhealth distributes its software and services to clients under license
agreements that typically grant customers nonexclusive, nontransferable licenses
to use the software and services. To provide complete services for its clients,
Channelhealth provides technical service and support to its customers 24 hours a
day and seven days a week.
We were incorporated in Delaware on July 11, 2000 as "Allscripts Holding,
Inc." We changed our name to "Allscripts Healthcare Solutions, Inc." on
November 28, 2000. Our executive offices are at 2401 Commerce Drive,
Libertyville, Illinois 60048. Our telephone number is (847) 680-3515; our
Internet e-mail address is info@allscripts.com; and our web site is
www.allscripts.com. Information contained on our web site is not part of this
prospectus.
TouchScript(R) is a registered trademark of Allscripts, Inc.
In this prospectus, "we," "us" and "our" refer to Allscripts Healthcare
Solutions, Inc. and our wholly owned subsidiary and predecessor, Allscripts,
Inc., and our wholly owned subsidiary, Channelhealth Incorporated, unless the
context indicates otherwise. The term "selling stockholders" refers to those
persons described in the section titled "Selling Stockholders" beginning on page
21.
RECENT DEVELOPMENTS
Legal Proceedings
Four complaints, styled as shareholder class action complaints, have been
filed in the United States District Court for the Northern District of Illinois
against our wholly owned subsidiary, Allscripts, Inc., and its President and
Chief Financial Officer, David B. Mullen, alleging that the defendants failed to
disclose that revenue relating to our relationship with IMS Health was not
properly recorded in the second quarter of 2000. The complaints are captioned
Bredeson v. Allscripts, Inc. and David B. Mullen, Civ. No. 00C-6796 (N. D. Ill.,
filed on October 31, 2000), Karmazin v. Allscripts,
4
Inc. and David B. Mullen, Civ. No. 00C-6864 (N.D. Ill., filed on November 2,
2000), Mohr v. Allscripts, Inc. and David B. Mullen, Civ. No. 00C-6992 (N.D.
Ill., filed on November 6, 2000) and Joseph Nadav v. Allscripts, Inc. and David
B. Mullen, Civ. No. 00C-8126 (N.D. Ill., filed on December 29, 2000). The
complaints in these actions purport to be brought on behalf of individuals who
purchased common stock of Allscripts, Inc. during the period of July 27, 2000
through and including October 26, 2000. The plaintiffs allege violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and seek
unspecified damages. At this time, management is unable to determine the likely
outcome of this matter or to reasonably estimate the amount of loss with respect
to this matter.
Merger with Channelhealth
On January 8, 2001, we consummated a merger transaction involving
Channelhealth, formerly a majority-owned subsidiary of IDX Systems Corporation,
and Allscripts, Inc. Upon completion of the transaction:
. Allscripts, Inc. and Channelhealth each became a wholly owned
subsidiary of Allscripts Healthcare Solutions, Inc.;
. each outstanding share of Allscripts, Inc. common stock was converted
into one share of our common stock; and
. each outstanding share of Channelhealth common stock and each
outstanding share of Channelhealth preferred stock was converted into
the right to receive shares of our common stock representing
altogether about 21.9% of our common stock calculated on a fully
diluted basis and treating option holders and warrant holders as
stockholders.
Our common stock, including the shares issued to stockholders of
Channelhealth as a result of the merger transactions, is authorized for
quotation on the Nasdaq National Market under the trading symbol "MDRX,"
formerly the trading symbol for Allscripts, Inc.
The merger was approved by the stockholders of Channelhealth and
Allscripts, Inc., voting separately by class, at special meetings of their
respective stockholders in early January 2001.
5
RISK FACTORS
You should carefully consider the risks decribed below before making a
decision to invest in our common stock. The risks and uncertainties described
below are not the only ones that we face. Additional risks and uncertainties not
presently known to us or that we do not currently believe are important to an
investor may also harm our business operations. If any of the events,
contingencies, circumstances or conditions described in the following risks
actually occur, our business, financial condition or results of operations could
be seriously harmed. If that occurs, the trading price of our common stock could
decline, and you may lose part or all of your investment.
Risks Related to Allscripts Healthcare Solutions, Inc.
If physicians do not accept our products and services, our growth will be
impaired.
Our business model depends on our ability to sell the TouchScript
system and Physician Channel applications and services to physicians and other
healthcare providers and to generate usage by a large number of physicians. We
have not achieved this goal with previous or currently available versions of the
TouchScript system or the Physician Channel applications and services. Physician
acceptance of our products and services will require physicians to adopt
different behavior patterns and new methods of conducting business and
exchanging information. We cannot assure you that physicians will integrate our
products and services into their office work flow or that participants in the
pharmaceutical healthcare market will accept our products and services as a
replacement for traditional methods of conducting healthcare transactions.
Achieving market acceptance for our products and services will require
substantial marketing efforts and the expenditure of significant financial and
other resources to create awareness and demand by participants in the
pharmaceutical healthcare industry. If we fail to achieve broad acceptance of
our products and services by physicians and other healthcare participants or to
position our services as a preferred method for pharmaceutical healthcare
delivery and information management, our prospects for growth will be
diminished.
We are currently experiencing losses and we may not become profitable in the
future.
We are currently experiencing losses and cannot assure you that we
will become profitable in the foreseeable future, if ever. For the nine months
ended September 30, 2000 and the year ended December 31, 1999, Allscripts, Inc.
had net losses of $42.1 million and $11.2 million, respectively. Historically,
Channelhealth has also incurred significant net losses, and since Channelhealth
has only recently implemented its business strategy, we expect Channelhealth to
continue to incur losses at least through 2001. Additionally, Channelhealth has
spent significant amounts on research and development and sales and marketing
efforts, and we expect these costs to continue. We cannot be certain that we
will achieve profitability, and even if we do achieve profitability, we may be
unable to sustain or increase our profitability in the future.
6
Because our business model is new and unproven, our operating history is not
indicative of our future performance and our business is difficult to evaluate.
Because we have not yet successfully implemented our business model, we do
not have an operating history upon which you can evaluate our prospects, and you
should not rely upon our past performance to predict our future performance.
Allscripts, Inc. sold its pharmacy benefit management business in March
1999. Revenue from this discontinued operation was $44,719,000 in 1997,
$52,866,000 in 1998 and $14,292,000 in 1999. In each of 1997 and 1998, revenue
from this discontinued operation exceeded revenue from continuing operations.
For the year ended December 31, 1998, Allscripts, Inc. generated 93.4% of its
revenue from the sale of prepackaged medications to doctors for dispensing at
the point of care, without the use of the TouchScript system. For the year ended
December 31, 1999 and the nine months ended September 30, 2000, Allscripts, Inc.
generated 76.2% and 54.4% of its revenue, respectively, from these non-
TouchScript medication sales.
Since its inception as an independent company in September 1999,
Channelhealth's operating activities have consisted largely of developing the
software applications necessary to provide its services and Channelhealth has
only recently begun to sell its software and services to provider organizations.
In addition, Channelhealth's long-term success will depend largely on the
success of its strategic relationships and the strategic alliance between us and
IDX. Channelhealth is still in the early stages of its current strategic
relationships and we are unable to predict whether the goals of those
relationships will be achieved. Channelhealth's limited operating history and
limited experience with its strategic business partners make it difficult to
evaluate its business and its prospects. Channelhealth's financial statements,
which reflect the operations and net assets of the "Physician Channel" business
of Channelhealth and exclude the operations and net assets of the "Patient
Channel" business and the "eCommerce Channel" business retained by IDX, have
been derived from the consolidated financial statements of IDX using the
historical results of operations and historical bases of the assets and
liabilities of IDX. Accordingly, the historical financial information
incorporated by reference into this prospectus does not necessarily reflect what
Channelhealth's financial position, results of operations and cash flows would
have been as a separate, stand-alone entity during the periods presented. In
addition, such information may not necessarily be indicative of what
Channelhealth's financial position, results of operations and cash flows will be
as our wholly owned subsidiary. Its historical costs and expenses include
allocations from IDX for centralized administrative services and infrastructure
costs, including accounting, cash management, information management, property
management, human resources, legal services and purchasing of materials,
equipment and supplies. Channelhealth and IDX have determined these allocations
on bases that they consider to be reasonable reflections of Channelhealth's
utilization of services provided or the benefit Channelhealth received from such
services. Channelhealth has not made adjustments to its historical financial
information to reflect any significant changes that will occur in its cost
structure, funding and operations as a result of its separation from IDX.
Accordingly, our operating history is not indicative of our future
performance under our new business model. In attempting to implement our
business model, we are significantly changing our business operations, sales and
implementation practices, customer service and support operations and management
focus. We are also facing new risks and challenges, including a lack of
meaningful
7
historical financial data upon which to plan future budgets, the need to develop
strategic relationships and other risks described below.
We may face difficulties in integrating the operations and products of
Channelhealth and Allscripts, Inc.
Channelhealth and Allscripts, Inc. operated separately until January 8,
2001. Our management team does not have experience with the combined business.
Integration of product lines will involve consolidation of products with
duplicative functionality, coordination of research and development activities
and convergence of the technologies supporting the various products. We may not
be able to integrate the products, product development, information systems and
operations of Channelhealth and Allscripts, Inc. without a loss of key officers,
employees, customers or suppliers, a loss of revenues or an increase in net
loss, an increase in operating or other costs or other difficulties. In
addition, we may not be able to realize the operating efficiencies, the material
expansion of our customer base to IDX customers or the other benefits expected
from the merger and related transactions such as our strategic alliance with
IDX. Any unexpected costs or delays incurred in connection with such integration
could have an adverse effect on our business, results of operations or financial
condition.
The business separation of Channelhealth from IDX may impair assets.
The separation of Channelhealth from the rest of IDX's businesses, assets
and liabilities pursuant to the asset purchase agreement between IDX and
Channelhealth required the transfer of assets, including intellectual property
rights, between Channelhealth and IDX. Some of these transfers may have
triggered Channelhealth liabilities that are not yet payable by Channelhealth.
Generally, IDX will be responsible for these liabilities but IDX would not be
required to indemnify Channelhealth for any losses that are consequential, in
the nature of lost profits, diminution in value, damage to reputation or the
like, special or punitive damages or otherwise not actual losses.
If we are unable to maintain existing relationships and create new relationships
with managed care payers, our prospects for growth will suffer.
We rely on managed care organizations to reimburse our physician customers
for prescription medications dispensed in their offices. While many of the
leading managed care payers and pharmacy benefit managers currently reimburse
our physicians for in-office dispensing, none of these payers is under a long-
term obligation to do so. If we are unable to increase the number of managed
care payers that reimburse for in-office dispensing, or if some or all of the
payers who currently reimburse physicians decline to do so in the future,
utilization of our products and, therefore, our growth will be impaired.
Our growth and revenues could suffer if we are unable to enter into and maintain
relationships with IDX customers.
We seek to increase Channelhealth's subscriber base through targeting
provider organizations that use IDX practice management systems or other IDX
services, and affiliates of these organizations. Channelhealth's services use
the Web FrameWork technology, which it licenses from IDX, and which enables its
software applications and services to be tightly integrated with IDX practice
management systems and provide real-time synchronization of data. If
Channelhealth's relationship with IDX
8
terminates, its services might not be as attractive to IDX customers and
Channelhealth may not have access to this potential customer base, IDX might
enter into arrangements that would allow Channelhealth's competitors to utilize
IDX technology and IDX could compete against Channelhealth. If any of these
situations were to occur, our expected revenues may be lower, our business may
be harmed and our stock price may fall.
Our business will be harmed if we cannot maintain the strategic alliance
agreement and the cross license agreement with IDX.
Upon completion of the mergers, we entered into a 10-year strategic
alliance agreement with IDX pursuant to which we and IDX agreed to coordinate
product development and align our respective marketing processes. Under this
agreement IDX granted us the exclusive right to market, sell, license and
distribute ambulatory point-of-care and clinical application products to IDX
customers. This agreement does not, however, limit IDX's continued development
and distribution of its own "LastWord" or radiology products and services. Our
business strategy includes targeting current and prospective IDX customers and
their affiliates. If we fail to successfully implement that business strategy,
we may not be able to achieve projected results or support the price paid for
Channelhealth. If the strategic alliance agreement is terminated, we would lose
access to an important customer base. After the expiration or termination of the
strategic alliance agreement, we may not be able to align with another company
to market and distribute our products on as favorable a basis as that
represented by the IDX strategic alliance. This would harm our growth and
revenue. In addition, prior to the termination of this agreement, we cannot
allow certain specified IDX direct competitors to market, distribute or sell our
or Channelhealth's services, even if such an agreement would benefit our
business.
Also upon completion of the mergers, Channelhealth entered into an amended
and restated cross license and software maintenance agreement with IDX pursuant
to which Channelhealth granted IDX a license to use, market and sublicense its
products combined with IDX products, and IDX granted Channelhealth a license to
use, market and sublicense IDX software for use with Channelhealth products. If
this agreement is terminated, Channelhealth will not have access to IDX
software, which would harm our ability to integrate our services with IDX
systems and provide real-time data synchronization. This would make
Channelhealth's systems less desirable to IDX customers and would harm its
business.
If we are unable to successfully introduce new products, our business prospects
will be impaired.
The successful implementation of our business model depends on our ability
to introduce new products and to introduce these new products on schedule. We
cannot assure you that we will be able to introduce new products or our products
currently under development on schedule, or at all. In addition, early releases
of software often contain errors or defects. We cannot assure you that, despite
our extensive testing, errors will not be found in our new product releases and
services before or after commercial release, which would result in product
redevelopment costs and loss of, or delay in, market acceptance. A failure by us
to introduce planned products or other new products or to introduce these
products on schedule could have a material adverse effect on our business
prospects.
9
Our business will not be successful unless we establish and maintain strategic
relationships.
To be successful, we must establish and maintain strategic relationships
with leaders in a number of healthcare and Internet industry segments. This is
critical to our success because we believe that these relationships will enable
us to:
. extend the reach of our products and services to a larger number of
physicians and to other participants in the healthcare industry;
. develop and deploy new products;
. further enhance the Allscripts and Channelhealth brands; and
. generate additional revenue.
Entering into strategic relationships is complicated because some of our
current and future strategic partners may decide to compete with us in some or
all of our markets. In addition, we may not be able to establish relationships
with key participants in the healthcare industry if we have relationships with
their competitors. Moreover, many potential strategic partners have resisted,
and may continue to resist, working with us until our products and services have
achieved widespread market acceptance.
Once we have established strategic relationships, we will depend on our
partners' ability to generate increased acceptance and use of our products and
services. To date, we have established only a limited number of strategic
relationships, and these relationships, including our recently formed alliance
with IMS Health Incorporated, are in the early stages of development and may not
achieve the objectives that we seek. On June 8, 2000, Channelhealth and IDX
entered into agreements with Healtheon/WebMD Corp. pursuant to which
Healtheon/WebMD agreed to provide electronic transaction and content services to
Channelhealth and IDX. Pursuant to the agreement, Healtheon/WebMD's content is
to be integrated into Channelhealth's Physician Channel and Patient Channel
Internet services. Healtheon/WebMD further committed to a multi-million dollar
campaign promoting IDX and Channelhealth products and services that incorporate
Healtheon/WebMD content and transactions. Healtheon/WebMD has recently informed
IDX that it believes Channelhealth and IDX will be unable to perform their
obligations to Healtheon/WebMD now that a strategic alliance between IDX and us
has been consummated. Healtheon/WebMD also stated that it would seek to
terminate the Channelhealth agreement and would propose a "restructured"
relationship with IDX. Such proposal has not been received by IDX. We believe
that Channelhealth's and IDX's performance will not be impaired by the strategic
alliance with us and that Healtheon/WebMD does not have a basis for unilaterally
terminating the Channelhealth agreement or restructuring the IDX agreement. In
addition, pursuant to the strategic alliance agreement between IDX and us, we
and IDX each agree not to take any action which would cause a default under or
termination of the agreement between Channelhealth and Healtheon/WebMD.
We have limited experience in establishing and maintaining strategic
relationships with healthcare and Internet industry participants. If we lose any
of these strategic relationships or fail to establish additional relationships,
or if our strategic relationships fail to benefit us as expected, we may not be
able to execute our business plan, and our business will suffer. In the event
the Healtheon/WebMD agreement is terminated, our expected revenues for 2001 may
be significantly lower than currently anticipated, our business may be harmed
and our stock price may fall.
10
If potential customers take a long time to evaluate the purchase of our products
and services, we could incur additional selling expenses and require additional
working capital.
The length of the sales cycle for our current TouchScript product and
Physician Channel services depend on a number of factors, including the nature
and size of the potential customer and the extent of the commitment being made
by the potential customer, and is difficult to predict. Our marketing efforts
with respect to large healthcare organizations generally involve a lengthy sales
cycle due to these organizations' complex decision-making processes. If
potential customers take longer than we expect to decide whether to purchase our
solutions, our selling expenses could increase, and we may need to raise
additional capital sooner than we would otherwise need to.
If we cannot keep pace with advances in technology, our business could be
harmed.
If we cannot adapt to changing technologies, our products and services may
become obsolete, and our business could suffer. Because the Internet and
healthcare information markets are characterized by rapid technological change,
we may be unable to anticipate changes in our current and potential customers'
requirements that could make our existing technology obsolete. Our success will
depend, in part, on our ability to continue to enhance our existing products and
services, develop new technology that addresses the increasingly sophisticated
and varied needs of our prospective customers, license leading technologies and
respond to technological advances and emerging industry standards and practices
on a timely and cost-effective basis. The development of our proprietary
technology entails significant technical and business risks. We may not be
successful in using new technologies effectively or adapting our proprietary
technology to evolving customer requirements or emerging industry standards.
Our future success depends upon our ability to grow, and if we are unable to
manage our growth effectively, we may incur unexpected expenses and be unable to
meet our customers' requirements.
We will need to expand our operations if we successfully achieve market
acceptance for our products and services. We cannot be certain that our systems,
procedures, controls and existing space will be adequate to support expansion of
our operations. Our future operating results will depend on the ability of our
officers and key employees to manage changing business conditions and to
implement and improve our technical, administrative, financial control and
reporting systems. An unexpectedly large increase in the volume or pace of
traffic on our web site or the number of orders placed by customers may require
us to expand and further upgrade our technology. We may not be able to project
the rate or timing of increases in the use of our web site accurately or to
expand and upgrade our systems and infrastructure to accommodate such increases.
Difficulties in managing any future growth could have a significant negative
impact on our business because we may incur unexpected expenses and be unable to
meet our customers' requirements.
If we lose the services of our key personnel, we may be unable to replace them,
and our business could be negatively affected.
Our success depends in large part on the continued service of our
management and other key personnel and our ability to continue to attract,
motivate and retain highly qualified employees. In particular, the services of
Glen E. Tullman, our Chairman and Chief Executive Officer, and David B. Mullen,
our President and Chief Financial Officer, are integral to the execution of our
business
11
strategy. If one or more of our key employees leaves our employment we will have
to find a replacement with the combination of skills and attributes necessary to
execute our strategy. Because competition for skilled employees is intense, and
the process of finding qualified individuals can be lengthy and expensive, we
believe that the loss of the services of key personnel could negatively affect
our business, financial condition and results of operations.
If we are unable to implement our acquisition strategy successfully, our ability
to expand our product and service offerings and our customer base maybe limited.
We regularly evaluate acquisition opportunities. Acquisitions involve
numerous risks, including difficulties in the assimilation of the operations,
services, products and personnel of the acquired company, the diversion of
management's attention from other business concerns, entry into markets in which
we have little or no direct prior experience, the potential loss of key
employees of the acquired company and our inability to maintain the goodwill of
the acquired businesses. In order to expand our product and service offerings
and grow our business by reaching new customers, we may continue to acquire
businesses that we believe are complementary. The successful implementation of
this strategy depends on our ability to identify suitable acquisition
candidates, acquire companies on acceptable terms, integrate their operations
and technology successfully with our own and maintain the goodwill of the
acquired business. We are unable to predict whether or when any prospective
acquisition candidate will become available or the likelihood that any
acquisition will be completed. Moreover, in pursuing acquisition opportunities,
we may compete for acquisition targets with other companies with similar growth
strategies. Some of these competitors may be larger and have greater financial
and other resources than we have. Competition for these acquisition targets
could also result in increased prices of acquisition targets.
Future acquisitions may result in potentially dilutive issuances of equity
securities, the incurrence of additional debt, the assumption of known and
unknown liabilities, the write off of software development costs and the
amortization of expenses related to goodwill and other intangible assets, all of
which could have a material adverse effect on our business, financial condition,
operating results and prospects. We have taken, and in the future may take,
charges against earnings in connection with acquisitions. The costs and expenses
incurred may exceed the estimates upon which we based these charges.
Our business depends on our intellectual property rights, and if we are unable
to protect them, our competitive position will suffer.
Our business plan is predicated on our proprietary systems and technology,
including TouchScript and the Physician Channel applications and services. We
protect our proprietary rights through a combination of trademark, trade secret
and copyright law, confidentiality agreements and technical measures. We
generally enter into non-disclosure agreements with our employees and
consultants and limit access to our trade secrets and technology. We cannot
assure you that the steps we have taken will prevent misappropriation of
technology. Misappropriation of our intellectual property would have a material
adverse effect on our competitive position. In addition, we may have to engage
in litigation in the future to enforce or protect our intellectual property
rights or to defend against claims of invalidity, and we may incur substantial
costs as a result.
12
If we are deemed to infringe on the proprietary rights of third parties, we
could incur unanticipated expense and be prevented from providing our products
and services.
We could be subject to intellectual property infringement claims as the
number of our competitors grows and the functionality of our applications
overlaps with competitive products. While we do not believe that we have
infringed or are infringing on any valid proprietary rights of third parties, we
cannot assure you that infringement claims will not be asserted against us or
that those claims will be unsuccessful. We could incur substantial costs and
diversion of management resources defending any infringement claims.
Furthermore, a party making a claim against us could secure a judgment awarding
substantial damages, as well as injunctive or other equitable relief that could
effectively block our ability to provide products or services. In addition, we
cannot assure you that licenses for any intellectual property of third parties
that might be required for our products or services will be available on
commercially reasonable terms, or at all.
Factors beyond our control could cause interruptions in our operations, which
would adversely affect our reputation in the marketplace and our results of
operations.
To succeed, we must be able to operate our systems without interruption.
Certain of our communications and information services are provided through our
service providers. Our operations are vulnerable to interruption by damage from
a variety of sources, many of which are not within our control, including:
. power loss and telecommunications failures;
. software and hardware errors, failures or crashes;
. computer viruses and similar disruptive problems; and
. fire, flood and other natural disasters.
We have no comprehensive plans for these contingencies. Any significant
interruptions in our services would damage our reputation in the marketplace and
have a negative impact on our results of operations.
We may be liable for use of data we provide.
We provide data for use by healthcare providers in treating patients.
Third-party contractors provide us with most of this data. Although no claims
have been brought against us alleging injuries related to the use of our data,
claims may be made in the future. While we maintain product liability insurance
coverage in an amount that we believe is sufficient for our business, we cannot
assure you that this coverage will prove to be adequate or will continue to be
available on acceptable terms, if at all. A claim brought against us that is
uninsured or under-insured could materially harm our financial condition.
If our security is breached, we could be subject to liability, and people could
be deterred from using our services.
The difficulty of securely transmitting confidential information over the
Internet has been a significant barrier to conducting e-commerce and engaging in
sensitive communications over the
13
Internet. Our strategy relies on the use of the Internet to transmit
confidential information. We believe that any well-publicized compromise of
Internet security may deter people from using the Internet for these purposes,
and from using our system to conduct transactions that involve transmitting
confidential healthcare information.
It is also possible that third parties could penetrate our network security
or otherwise misappropriate patient information and other data. If this happens,
our operations could be interrupted, and we could be subject to liability. We
may have to devote significant financial and other resources to protect against
security breaches or to alleviate problems caused by breaches. We could face
financial loss, litigation and other liabilities to the extent that our
activities or the activities of third-party contractors involve the storage and
transmission of confidential information like patient records or credit
information. In addition, we could incur additional expenses if new regulations
regarding the use of personal information are introduced.
If we are unable to obtain additional financing for our future needs, our growth
prospects and our ability to respond to competitive pressures will be impaired.
We cannot be certain that additional financing will be available on
favorable terms, or at all. If adequate financing is not available or is not
available on acceptable terms, our ability to fund our expansion, take advantage
of potential acquisition opportunities, develop or enhance services or products,
or respond to competitive pressures would be significantly limited.
If our content and service providers fail to perform adequately, our reputation
in the marketplace and results of operations could be adversely affected.
We depend on independent content and service providers for many of the
benefits we provide through our TouchScript system and our Physician Channel
applications and services, including the maintenance of managed care pharmacy
guidelines, drug interaction reviews and the routing of transaction data to
third-party payers. Any problems with our providers that result in interruptions
of our services or a failure of our services to function as desired could damage
our reputation in the marketplace and have a material adverse effect on our
results of operations. We may have no means of replacing content or services on
a timely basis or at all if they are inadequate or in the event of a service
interruption or failure.
We also expect to rely on independent content providers for the majority of
the clinical, educational and other healthcare information that we plan to
provide on our web site. In addition, we will depend on our content providers to
deliver high quality content from reliable sources and to continually upgrade
their content in response to demand and evolving healthcare industry trends. Any
failure by these parties to develop and maintain high quality, attractive
content could impair the value of the Allscripts and Channelhealth brands and
our results of operations.
If third-party payers force us to reduce our prices, our results of operations
could suffer.
We expect to derive a significant portion of our revenue from the sale,
including over the Internet, of prepackaged medications to physicians. We may be
subject to pricing pressures with respect to our future sales of prepackaged
medications arising from various sources, including practices of managed care
organizations and any governmental action requiring or allowing
pharmaceutical
14
reimbursement under Medicare. If our pricing of prepackaged medications
experiences significant downward pressure, our business will be less profitable.
If we incur costs exceeding our insurance coverage in lawsuits pending against
us or that are brought against us in the future, it could materially adversely
affect our financial condition.
Allscripts, Inc. is a defendant in numerous multi-defendant lawsuits
involving the manufacture and sale of dexfenfluramine, fenfluramine and
phentermine. The plaintiffs in these cases claim injury as a result of ingesting
a combination of these weight-loss drugs. While we do not believe we have any
significant liability in these lawsuits, in the event we were found liable in
these lawsuits or in any other lawsuits filed against us in the future in
connection with these weight-loss drugs or otherwise, and if our insurance
coverage were inadequate to satisfy these liabilities, it could have a material
adverse effect on our financial condition.
If our principal supplier fails or is unable to perform its contract with us, we
may be unable to meet our commitments to our customers.
We currently purchase a majority of the medications that we repackage from
McKesson HBOC, Inc. We have an agreement with this supplier that expires in
September 2001. If we do not meet certain minimum purchasing requirements,
McKesson may increase the prices that we pay under this agreement, in which case
we would have the option to terminate the agreement. Although we believe that
there are a number of other sources of supply of medications, if McKesson fails
or is unable to perform under our agreement, particularly at certain critical
times during the year, we may be unable to meet our commitments to our
customers, and our relationships with our customers could suffer.
Because of anti-takeover provisions under Delaware law and in our certificate of
incorporation and by-laws, takeovers may be more difficult, possibly preventing
you from obtaining optimal share price.
Certain provisions of Delaware law and our certificate of incorporation and by-
laws could have the effect of making it more difficult for a third party to
acquire, or of discouraging a third party from attempting to acquire, control of
us. For example, our certificate of incorporation and by-laws provide for a
classified Board of Directors and allow us to issue preferred stock with rights
senior to those of the common stock without any further vote or action by the
stockholders. In addition, we are subject to the anti-takeover provisions of
Section 203 of the Delaware General Corporation Law, which could have the effect
of delaying or preventing a change in control of us.
Risks Related to Our Industry
If the healthcare environment becomes more restrictive, or we do not comply with
healthcare regulations, our existing and future operations may be curtailed, and
we could be subject to liability.
As a participant in the healthcare industry, our operations and
relationships are regulated by a number of federal, state and local governmental
entities. Because our business relationships with physicians are unique, and
the healthcare electronic commerce industry as a whole is relatively young, the
application of many state and federal regulations to our business operations is
uncertain. It is
15
possible that a review of our business practices or those of our customers by
courts or regulatory authorities could result in a determination that could
adversely affect us. In addition, the healthcare regulatory environment may
change in a way that restricts our existing operations or our growth.
. Electronic Prescribing. The use of our TouchScript software by
physicians to perform electronic prescribing, electronic routing of
prescriptions to pharmacies and dispensing is governed by state and
federal law. The application of these laws to our business is uncertain
because many existing laws and regulations, when enacted, did not
anticipate methods of e-commerce now being developed. The laws of many
jurisdictions neither specifically permit nor specifically prohibit
electronic transmission of prescription orders. Future regulation of
these areas may adversely affect us.
. Licensure. As a repackager and distributor of drugs, we are subject to
regulation by and licensure with the United States Food and Drug
Administration, the United States Drug Enforcement Administration and
various state agencies that regulate wholesalers or distributors. Among
the regulations applicable to our repackaging operation are the FDA's
"good manufacturing practice" regulations. Because the FDA's good
manufacturing practice regulations were designed to govern the
manufacture, rather than the repackaging, of drugs, we face legal
uncertainty concerning the application of some aspects of these
regulations and of the standards that the FDA will enforce. Both the FDA
and the DEA have the right, at any time, to inspect our facilities and
operations to determine if we are operating in compliance with the
requirements for licensure and all applicable laws and regulations.
Along with many other drug repackagers, we have received an FDA warning
letter alleging violations of FDA regulations, including the good
manufacturing practice regulations. We have implemented procedures
intended to address many of the concerns raised by the FDA in that
letter and believe that our compliance with FDA regulations meets or
exceeds the standard in the drug repackaging industry. We also believe
that we possess all licenses required to operate our business. If,
however, we do not maintain all necessary licenses, or the FDA decides
to substantially modify the manner in which it has historically enforced
its good manufacturing practice regulations against drug repackagers or
the FDA or DEA finds any violations during one of their periodic
inspections, we could be subject to liability, and our operations could
be shut down.
. Physician Dispensing. Physician dispensing of medications for profit is
allowed in all states except Utah and is prohibited, subject to
extremely limited exceptions, in Massachusetts, Montana and Texas. In
addition, New Jersey and New York allow physician dispensing of
medications for profit, but limit the number of days' supply of all
medications, subject to limited exceptions, that a physician may
dispense; several other states limit the number of days' supply of
controlled substances that a physician may dispense. Other states may
enact legislation or regulations prohibiting or restricting physician
dispensing.
The American Medical Association, through certain of its constituent
bodies, has historically taken inconsistent positions on physician
dispensing, alternately discouraging and supporting it. While the AMA's
Council on Ethical and Judicial Affairs in 1986 discouraged physicians
from regularly dispensing prescription pharmaceuticals, in 1987 the
16
AMA's House of Delegates adopted the following resolution: "Resolved,
that the American Medical Association support the physician's right to
dispense drugs and devices when it is in the best interest of the
patient and consistent with the AMA's ethical guidelines." This position
was reaffirmed by the AMA House of Delegates in January 1997. The AMA's
ethical guidelines provide in relevant part that "physicians may
dispense drugs within their office practices provided there is no
resulting exploitation of patients." While two recent Reports of the
Council on Ethical and Judicial Affairs oppose the in-office sale of
health-related products by physicians, these reports specifically
exclude the sale of prescription items from their scope, although they
do refer to the Council's 1986 Report.
. Stark II. Congress enacted significant prohibitions against physician
self-referrals in the Omnibus Budget Reconciliation Act of 1993. This
law, commonly referred to as "Stark II," applies to physician dispensing
of outpatient prescription drugs that are reimbursable by Medicare or
Medicaid. We believe that the physicians who use our TouchScript system
or dispense drugs distributed by us are doing so in material compliance
with Stark II, either pursuant to an in-office ancillary services
exception or another applicable exception. While our physician customers
currently do not, to any significant degree, dispense drugs that are
reimbursable by Medicare or Medicaid, if they were to and if it were
determined that the physicians who use our system or dispense
pharmaceuticals purchased from us were not in compliance with Stark II,
it could have a material adverse effect on our business, results of
operations and prospects.
. Drug Distribution. As a distributor of prescription drugs to physicians,
we and our customers are also subject to the federal anti-kickback
statute, which applies to Medicare, Medicaid and other state and federal
programs. The statute prohibits the solicitation, offer, payment or
receipt of remuneration in return for referrals or the purchase of
goods, including drugs, covered by the programs. The anti-kickback law
provides a number of exceptions or "safe harbors" for particular types
of transactions. We believe that our arrangements with our customers are
in material compliance with the anti-kickback statute and relevant safe
harbors. Many states have similar fraud and abuse laws, and we believe
that we are in material compliance with those laws. If, however, it were
determined that we were not in compliance with those laws, we could be
subject to liability, and our operations could be curtailed.
. Claims Transmission. As part of our services provided to physicians, our
system will electronically transmit claims for prescription medications
dispensed by a physician to many patients' managed care organizations
and payers for immediate approval and reimbursement. Federal law
provides that it is both a civil and a criminal violation for any person
to submit a claim to any payer, including, for example, Medicare,
Medicaid and all private health plans or managed care plans seeking
payment for any services or products that have not been provided to the
patient or overbilling for services or products provided. We have in
place policies and procedures that we believe assure that all claims
that are transmitted by our system are accurate and complete, provided
that the information given to us by our customer is also accurate and
complete. If, however, we do not follow those
17
procedures and policies, or they are not sufficient to prevent
inaccurate claims from being submitted, we could be subject to
liability.
. Patient Information. Existing federal and state laws and regulations
regulate the disclosure of confidential medical information, including
information regarding conditions like AIDS, substance abuse and mental
illness. In addition, the U.S. Department of Health and Human Services
recently published a rule regarding the disclosure of confidential
medical information. As part of the operation of our business, our
customers may provide to us patient-specific information related to the
prescription drugs that our customers prescribe to their patients. We
have policies and procedures that we believe assure compliance with all
federal and state confidentiality requirements for handling of
confidential medical information we receive. If, however, we do not
follow those procedures and policies, or they are not sufficient to
prevent the unauthorized disclosure of confidential medical information,
we could be subject to liability, fines and lawsuits, or our operations
could be shut down.
The Bush Administration has announced that it intends to propose broad
Medicare reform legislation that would make available to Medicare
recipients a subsidized prescription drug benefit. While no federal price
controls are included in the current version of the proposed legislation,
any legislation that reduces physician incentives to dispense medications
in their offices could adversely affect physician acceptance of our
products. We cannot predict whether or when future health care reform
initiatives at the federal or state level or other initiatives affecting
our business will be proposed, enacted or implemented or what impact such
initiatives may have on our business, financial condition or results of
operations.
If the new and rapidly evolving Internet and electronic healthcare information
markets fail to develop as quickly as expected, our business prospects will be
impaired.
The Internet and electronic healthcare information markets are in the early
stages of development and are rapidly evolving. A number of market entrants
have introduced or developed products and services that are competitive with one
or more components of the solutions we offer. In addition, several companies
have recently introduced or announced their intention to introduce electronic
prescribing products. We expect that additional companies will continue to
enter these markets. In new and rapidly evolving industries, there is
significant uncertainty and risk as to the demand for, and market acceptance of,
recently introduced products and services. Because the markets for our products
and services are new and evolving, we are not able to predict the size and
growth rate of the markets with any certainty. We cannot assure you that
markets for our products and services will develop or that, if they do, they
will be strong and continue to grow at a sufficient pace. If markets fail to
develop, develop more slowly than expected or become saturated with competitors,
our business prospects will be impaired.
Consolidation in the healthcare industry could adversely affect our business.
Many healthcare industry participants are consolidating to create
integrated healthcare delivery systems with greater market power. As provider
networks and managed care organizations consolidate, competition to provide
products and services like ours will become more intense, and the
18
importance of establishing relationships with key industry participants will
become greater. These industry participants may try to use their market power to
negotiate price reductions for our products and services. If we were forced to
reduce our prices, our business would become less profitable unless we were able
to achieve corresponding reductions in our expenses.
If the Internet infrastructure does not continue to improve, our ability to use
the Internet on a large scale could be compromised.
If the Internet continues to experience significant growth in the number of
users and the level of use, then the Internet infrastructure may not be able to
continue to support the demands placed on it. The Internet may not prove to be
a viable commercial medium because of inadequate development of the necessary
infrastructure, lack of timely development of complementary products like high
speed modems, delays in the development or adoption of new standards and
protocols required to handle increased levels of Internet activity or increased
government regulation. Because our business plan relies heavily on the
viability of the Internet, our business will suffer if growth of the Internet
does not meet our expectations.
Risks Related to This Offering and Our Stock
The public market for our common stock has been and may continue to be volatile.
The market price of our common stock is highly volatile and could fluctuate
significantly in response to various factors, including:
. actual or anticipated variations in our quarterly operating results;
. announcements of technological innovations or new services or products
by us or our competitors;
. changes in financial estimates by securities analysts;
. conditions and trends in the electronic healthcare information,
Internet, e-commerce and pharmaceutical markets; and
. general market conditions and other factors.
In addition, the stock markets, especially the Nasdaq National Market, have
experienced extreme price and volume fluctuations that have affected the market
prices of equity securities of many technology companies, and Internet-related
companies in particular. These fluctuations have often been unrelated or
disproportionate to operating performance. These broad market factors may
materially affect the trading price of our common stock. General economic,
political and market conditions like recessions and interest rate fluctuations
may also have an adverse effect on the market price of our common stock.
Volatility in the market price for our common stock may result in the
filing of securities class action litigation. On October 26, 2000, Allscripts,
Inc. announced that its previously reported revenues
19
for the second quarter of 2000 were being revised from $12.6 million to $12.1
million. Four complaints, styled as shareholder class action complaints, have
been filed in the United States District Court for the Northern District of
Illinois against Allscripts, Inc. and its President and Chief Financial Officer,
David B. Mullen, alleging that the defendants failed to disclose that revenue
relating to Allscripts, Inc.'s relationship with IMS Health was not properly
recorded in the second quarter of 2000. The complaints in these actions purport
to be brought on behalf of individuals who purchased Allscripts, Inc. common
stock during the period of July 27, 2000 through and including October 26, 2000.
The plaintiffs allege violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and seek unspecified damages. At this time, management is
unable to determine the likely outcome of this matter or to reasonably estimate
the amount of loss with respect to this matter. In addition, these actions could
result in substantial costs and the diversion of management's attention and
resources.
Our quarterly operating results may vary.
The quarterly operating results of our subsidiaries have varied in the
past, and we expect that our quarterly operating results will continue to vary
in future periods depending on a number of factors, including seasonal variances
in demand for our products and services, the sales, installation and
implementation cycles for our TouchScript system and Physician Channel
applications and services and other factors described in this "Risk Factors"
section of this prospectus. For example, all other factors aside, sales of our
prepackaged medications have historically been highest in the fall and winter
months. We expect to increase activities and spending in substantially all of
our operational areas. We base our expense levels in part upon our expectations
concerning future revenue, and these expense levels are relatively fixed in the
short term. If we have lower revenue, we may not be able to reduce our spending
in the short term in response. Any shortfall in revenue would have a direct
impact on our results of operations. For these and other reasons, we may not
meet the earnings estimates of securities analysts or investors, and our stock
price could suffer.
We may have substantial sales of our common stock after the offering that could
cause our stock price to fall.
Allscripts, Inc.'s common stock began trading on the Nasdaq National Market
on July 23, 1999; however, to date there have been a limited number of shares
trading in the public market. A substantial number of our shares will become
eligible for public sale at various times after the date of this prospectus.
Sales of a substantial number of shares of our common stock after the date of
this prospectus could cause our stock price to fall.
Because our executive officers and directors have substantial control of our
voting stock, takeovers not supported by them will be more difficult, possibly
preventing you from obtaining optimal share price.
The control of a significant amount of our stock by insiders could
adversely affect the market price of our common stock. Our executive officers
and directors beneficially own or control 18,184,741 shares or 48.3% of the
outstanding common stock. If our executive officers and directors choose to act
or vote together, they will have the power to influence significantly all
matters requiring the approval of our stockholders, including the election of
directors and the approval of significant
20
corporate transactions. Without the consent of these stockholders, we could be
prevented from entering into transactions that could be beneficial to us.
This prospectus contains forward-looking statements.
This prospectus contains forward-looking statements that involve risks and
uncertainties, including those discussed above and elsewhere in this prospectus.
We develop forward-looking statements by combining currently available
information with our beliefs and assumptions. These statements often contain
words like believe, expect, anticipate, intend, contemplate, seek, plan,
estimate or similar expressions.
Forward-looking statements do not guarantee future performance. Recognize
these statements for what they are and do not rely upon them as facts. Forward-
looking statements involve risks, uncertainties and assumptions, including, but
not limited to, those discussed above and elsewhere in this prospectus. We make
these statements under the protection afforded them by Section 21E of the
Securities Exchange Act of 1934, as amended. Because we cannot predict all of
the risks and uncertainties that may affect us, or control the ones we do
predict, these risks and uncertainties can cause our results to differ
materially from the results we express in our forward.
USE OF PROCEEDS
All of the shares of our common stock offered by this prospectus are being
offered by the selling stockholders. We will not receive any of the proceeds
from the sale of any of the shares by the selling stockholders.
SELLING STOCKHOLDERS
In connection with Allscripts, Inc.'s acquisition of Medifor, Allscripts,
Inc. issued an aggregate of 935,858 shares of common stock, all of which are
being registered for sale under this prospectus by the stockholders identified
as Medifor selling stockholders in the chart below. In connection with
Allscripts, Inc.'s acquisition of MasterChart, as of the effective date of the
registration statement of which this prospectus is a part, Allscripts, Inc.
issued an aggregate of 1,617,873 shares of common stock, 462,445 shares of which
are being registered for sale under this prospectus by the stockholders
identified as MasterChart selling stockholders in the chart below, who
collectively own an aggregate of 1,260,603 shares. Shares of common stock were
issued to the Medifor selling stockholders pursuant to a merger agreement, dated
as of April 12, 2000, among WebDoc Acquisition Corp., a wholly owned subsidiary
of Allscripts, Inc., Medifor, Inc., a Washington corporation, and certain
shareholders of Medifor, Inc., under which Allscripts, Inc. acquired the assets
and business operations of Medifor, Inc. Shares of our common stock were issued
to the MasterChart selling stockholders pursuant to a merger agreement, dated as
of March 13, 2000, among MC Acquisition Corp., a wholly owned subsidiary of
Allscripts, Inc., MasterChart, Inc., an Illinois corporation, and the
shareholders of MasterChart, Inc., under which Allscripts, Inc. acquired the
assets and business operations of MasterChart, Inc. None of the selling
stockholders has held any office or maintained any material relationship with us
or any of our predecessors for the three years prior to acquisition.
The following table sets forth for each selling stockholder the number of
shares beneficially owned by such selling stockholder as of January 9, 2001, the
maximum number of shares to be offered
21
by such selling stockholder and the number of shares beneficially owned by the
selling stockholder after this offering, assuming that all of the shares being
offered for sale are actually sold by the selling stockholder. Since the selling
stockholders may choose not to sell their shares, we are unable to state the
exact number of shares that actually will be sold. No selling stockholder
beneficially owns one percent or more of the shares of common stock outstanding
as of January 9, 2001.
- ---------------------------------------------------------------------------------------------------------------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- -------- ------- --------
- --------------------------------------------------------------------------------------------------------------
Kevin A. Hahn 327,319 130,928 196,391
- ---------------------------------------------------------------------------------------------------------------
Scott J. Hammack 327,319 130,928 196,391
- ---------------------------------------------------------------------------------------------------------------
Marc Lyerly 327,319 130,928 196,391
- ---------------------------------------------------------------------------------------------------------------
Paul Lazarre 68,217 17,054 51,163
- ---------------------------------------------------------------------------------------------------------------
Stuart Scholly 22,739 5,685 17,054
- ---------------------------------------------------------------------------------------------------------------
Gregory R. Hammack 56,848 14,212 42,636
- ---------------------------------------------------------------------------------------------------------------
Stephen Benjamin 7,733 1,933 5,800
- ---------------------------------------------------------------------------------------------------------------
Charles Carlin 12,373 3,093 9,280
- ---------------------------------------------------------------------------------------------------------------
John J. Jacksack 10,827 2,707 8,120
- ---------------------------------------------------------------------------------------------------------------
Erik A. Kins 3,093 773 2,320
- ---------------------------------------------------------------------------------------------------------------
John E. Lauraitis 7,733 1,933 5,800
- ---------------------------------------------------------------------------------------------------------------
Bhavik M. Modi 3,093 773 2,320
- ---------------------------------------------------------------------------------------------------------------
Alejandro Oviedo 12,373 3,093 9,280
- ---------------------------------------------------------------------------------------------------------------
David W. Zang 12,373 3,093 9,280
- ---------------------------------------------------------------------------------------------------------------
Zhixiong Zhao 7,733 1,933 5,800
- ---------------------------------------------------------------------------------------------------------------
Patrick J. Clawson 30,933 7,733 23,200
- ---------------------------------------------------------------------------------------------------------------
Duan Kui 1,546 387 1,159
- ---------------------------------------------------------------------------------------------------------------
Mark A. Matson 2,629 657 1,972
- ---------------------------------------------------------------------------------------------------------------
Kevin C. Mincemeyer 2,784 696 2,088
- ---------------------------------------------------------------------------------------------------------------
Soo Chin Ng 1,546 387 1,159
- ---------------------------------------------------------------------------------------------------------------
Timothy C. Nicholson 3,248 812 2,436
- ---------------------------------------------------------------------------------------------------------------
Bimal Shukla 1,546 387 1,159
- ---------------------------------------------------------------------------------------------------------------
Michael P. Stein 3,093 773 2,320
- ---------------------------------------------------------------------------------------------------------------
Zwei Tong 1,546 387 1,159
- ---------------------------------------------------------------------------------------------------------------
John Weir 4,640 1,160 3,480
- ---------------------------------------------------------------------------------------------------------------
American National Trust & Investment 1,469 1,469 0
Management Co., Trustee DCA, P.C.,
MPP fbo Garth A. Morgan, M.D.
- ---------------------------------------------------------------------------------------------------------------
Charles L. & Barbara M. Anderson 8,612 8,612 0
- ---------------------------------------------------------------------------------------------------------------
John D. Barrett, D.D.S. 4,477 4,477 0
- ---------------------------------------------------------------------------------------------------------------
Thomas W. Barwick 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
James Fraser & Deidre D. Black 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Curt Blake 7,838 7,838 0
- ---------------------------------------------------------------------------------------------------------------
William K. and Karen S. Bloemker 2,153 2,153 0
- ---------------------------------------------------------------------------------------------------------------
Geoffrey A. & Erin Boguch 11,764 11,764 0
- ---------------------------------------------------------------------------------------------------------------
David E. Boyle 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
22
- ---------------------------------------------------------------------------------------------------------------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- -------- ------- --------
- ---------------------------------------------------------------------------------------------------------------
John M. Brazier 1,722 1,722 0
- ---------------------------------------------------------------------------------------------------------------
John P. & Evelyn E. Bredeson 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
Britannia Holdings Limited 94,537 94,537 0
- ---------------------------------------------------------------------------------------------------------------
Thomas F. & Joyce S. Broderick 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
John A. Calhoun 6,196 6,196 0
- ---------------------------------------------------------------------------------------------------------------
Capital Growth Fund, Inc. Pension & 3,151 3,151 0
Profit Sharing Trust
- ---------------------------------------------------------------------------------------------------------------
H. Kennith & Tillie M. Carter 4,477 4,477 0
- ---------------------------------------------------------------------------------------------------------------
Sharon Carter, M.D. 4,296 4,296 0
- ---------------------------------------------------------------------------------------------------------------
Gary D. Coard 7,477 7,477 0
- ---------------------------------------------------------------------------------------------------------------
Leon & Linda Crawford 548 548 0
- ---------------------------------------------------------------------------------------------------------------
Cypress Partners Limited Partnership 18,907 18,907 0
- ---------------------------------------------------------------------------------------------------------------
James J. & Patricia F. David 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Karen and James S. Dempster 1,469 1,469 0
- ---------------------------------------------------------------------------------------------------------------
George C. Denniston, Jr., as Trustee 1,371 1,371 0
of the George C. Denniston, Jr.
Living Trust dated 5/22/96
- ---------------------------------------------------------------------------------------------------------------
Martha K. Denniston, as Trustee of 1,371 1,371 0
the Martha K. Denniston Living
Trust dated 5/22/96
- ---------------------------------------------------------------------------------------------------------------
Karl Dillon 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
James J. & Geri Dykeman 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Eagle Investments, Inc. 3,875 3,875 0
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 143 143 0
Anne L. Burns
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 2,939 2,939 0
Bobby E. Dubois
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 143 143 0
John D. Barret
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 8,955 8,955 0
Karen R. Erickson
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 2,939 2,939 0
Michael L. Yawman
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 1,469 1,469 0
Patricia C. Sussman
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 1,469 1,469 0
Peter Y. Sussman
- ---------------------------------------------------------------------------------------------------------------
Edward D. Jones & Co., Custodian FBO 6,000 6,000 0
William K. Bloemker, M.D.
- ---------------------------------------------------------------------------------------------------------------
Peter W. Eising 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
Thomas H. Elzey 3,573 3,573 0
- ---------------------------------------------------------------------------------------------------------------
David J. Fitterer 3,573 3,573 0
- ---------------------------------------------------------------------------------------------------------------
Leland W. & Judith A. Foote 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
George P. Futas 3,730 3,730 0
- ---------------------------------------------------------------------------------------------------------------
J. Peter Geerlofs, M.D. and Glenda 308,049 308,049 0
- ---------------------------------------------------------------------------------------------------------------
23
- ---------------------------------------------------------------------------------------------------------------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- -------- ------- --------
- ---------------------------------------------------------------------------------------------------------------
Hultman
- ---------------------------------------------------------------------------------------------------------------
Peter J. Geerlofs 3,445 3,445 0
- ---------------------------------------------------------------------------------------------------------------
Robert J. & Penelope W. Genise 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Donald L. and Anne George 2,939 2,939 0
- ---------------------------------------------------------------------------------------------------------------
Glenn W. Ison, as Trustee for the 2,153 2,153 0
Glenn W. Ison Revocable Living
Trust dated April 16, 1992
- ---------------------------------------------------------------------------------------------------------------
Goodman Family, LLC 4,306 4,306 0
- ---------------------------------------------------------------------------------------------------------------
Larry M. and Karen L. Gorman 3,919 3,919 0
- ---------------------------------------------------------------------------------------------------------------
Lynn K. Greenberg, as Trustee of the 2,743 2,743 0
Lynn K. Greenburg Trust dated
5/30/90
- ---------------------------------------------------------------------------------------------------------------
Keith and Kathleen Hallman 3,919 3,919 0
- ---------------------------------------------------------------------------------------------------------------
David Hanzlik 4,306 4,306 0
- ---------------------------------------------------------------------------------------------------------------
Daniel L. Hardman 945 945 0
- ---------------------------------------------------------------------------------------------------------------
Scott L. & Patricia P. Hardman 1,890 1,890 0
- ---------------------------------------------------------------------------------------------------------------
Helios Capital Management Corporation 720 720 0
- ---------------------------------------------------------------------------------------------------------------
Edith N. Hilliard 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Jack Holthaus 7,838 7,838 0
- ---------------------------------------------------------------------------------------------------------------
C. Russell, Jr. & Jessica L. Hoover 6,834 6,834 0
- ---------------------------------------------------------------------------------------------------------------
Charles R. Hoover, as Trustee UAD 4,477 4,477 0
2/12/93 for the Charles R. Hoover
Living Trust
- ---------------------------------------------------------------------------------------------------------------
Glenn W. Ison, as Trustee of the 6,716 6,716 0
Glenn W. Ison Revocable Living
Trust dated 4/16/92
- ---------------------------------------------------------------------------------------------------------------
Kent L. Johnson 14,167 14,167 0
- ---------------------------------------------------------------------------------------------------------------
Bradley S. & Michelle Keller 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
Jerry Keppler 10,696 10,696 0
- ---------------------------------------------------------------------------------------------------------------
Jerry E. & Ann Keppler 775 775 0
- ---------------------------------------------------------------------------------------------------------------
Charles and Judith Landau 1,175 1,175 0
- ---------------------------------------------------------------------------------------------------------------
Janice L. & William H. Lindeman 4,477 4,477 0
- ---------------------------------------------------------------------------------------------------------------
E.G. and Rosalie R. Lindquist 5,261 5,261 0
- ---------------------------------------------------------------------------------------------------------------
Chauncey F. & Elizabeth H. Lufkin 4,306 4,306 0
- ---------------------------------------------------------------------------------------------------------------
Ian B. MacCallum, Jr. 1,371 1,371 0
- ---------------------------------------------------------------------------------------------------------------
John McDonald 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
Michael E. Menashe 2,881 2,881 0
- ---------------------------------------------------------------------------------------------------------------
Mickel Development, LLC 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Stephen J. Mirande 1,088 1,088 0
- ---------------------------------------------------------------------------------------------------------------
James R. Moburg 6,976 6,976 0
- ---------------------------------------------------------------------------------------------------------------
David R. & Susan C. Moffett 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
N2 Partners 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
Daryl D. & Joan C. Nagel 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Renee J. Naness 1,890 1,890 0
- ---------------------------------------------------------------------------------------------------------------
Northwest Angel Investors-Medifor 6,302 6,302 0
L.L.C.
- ---------------------------------------------------------------------------------------------------------------
24
- ---------------------------------------------------------------------------------------------------------------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- -------- ------- --------
- ---------------------------------------------------------------------------------------------------------------
Frank J. & Brenda Owens 2,521 2,521 0
- ---------------------------------------------------------------------------------------------------------------
PAINEWEBBER as IRA Custodian for 4,477 4,477 0
James F. Grabicki
- ---------------------------------------------------------------------------------------------------------------
Jean Patterson 8,612 8,612 0
- ---------------------------------------------------------------------------------------------------------------
Profit Sharing Retirement Plan for 2,521 2,521 0
Partners, Non-Lawyer Employees of
Short Cressman Burgess, P.S.
- ---------------------------------------------------------------------------------------------------------------
Pruzan Building Company 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
John H. Pryor and Thalia Gould 5,878 5,878 0
- ---------------------------------------------------------------------------------------------------------------
Wesley O. Reed and Mary Griffith 8,955 8,955 0
- ---------------------------------------------------------------------------------------------------------------
Resources Trust Co., Custodian FBO 1,371 1,371 0
Anne Richardson IRA
- ---------------------------------------------------------------------------------------------------------------
Resources Trust Co., Custodian FBO 881 881 0
Charles Landau IRA
- ---------------------------------------------------------------------------------------------------------------
Resources Trust Co., Custodian FBO 3,919 3,919 0
Elizabeth Berman IRA
- ---------------------------------------------------------------------------------------------------------------
Resources Trust Co., Custodian FBO 489 489 0
Judith Landau IRA
- ---------------------------------------------------------------------------------------------------------------
Resources Trust Co., Custodian FBO 1,371 1,371 0
Rosemary Shirley IRA
- ---------------------------------------------------------------------------------------------------------------
Robert Bruce Robinson 2,449 2,449 0
- ---------------------------------------------------------------------------------------------------------------
RxRemedy, Inc. 78,205 78,205 0
- ---------------------------------------------------------------------------------------------------------------
Alan J. Searle, M.D. 4,296 4,296 0
- ---------------------------------------------------------------------------------------------------------------
Pankaj Sharma, M.D. 1,469 1,469 0
- ---------------------------------------------------------------------------------------------------------------
Michael A. Sherry 3,573 3,573 0
- ---------------------------------------------------------------------------------------------------------------
Terry R. Smith 2,521 2,521 0
- ---------------------------------------------------------------------------------------------------------------
Solomon Smith Barney, Custodian FBO 1,469 1,469 0
David C. Dover IRA
- ---------------------------------------------------------------------------------------------------------------
Richard T. Sorensen and Rita 2,939 2,939 0
Hollingsworth
- ---------------------------------------------------------------------------------------------------------------
Southwest Securities, Inc., FBO 2,645 2,645 0
Gareth A. Morgan, M.D., IRA
- ---------------------------------------------------------------------------------------------------------------
Parker Sroufe 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
John Staenberg 1,294 1,294 0
- ---------------------------------------------------------------------------------------------------------------
Paul & Linda Suzman 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
The Erickson Family Trust, dated 2,743 2,743 0
February 15, 1994
- ---------------------------------------------------------------------------------------------------------------
The Heidorn Trust, dated May 20, 1994 8,612 8,612 0
- ---------------------------------------------------------------------------------------------------------------
Kathleen and H. Wayne Tittle 2,939 2,939 0
- ---------------------------------------------------------------------------------------------------------------
Paul & Jeanne Tomlinson 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
Hugh E. & Mary M. Toomey 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
William W. Treverton 739 739 0
- ---------------------------------------------------------------------------------------------------------------
Richard W. & Karen J. Tschetter 3,151 3,151 0
- ---------------------------------------------------------------------------------------------------------------
William M. & Nancy L. Vieser 8,612 8,612 0
- ---------------------------------------------------------------------------------------------------------------
Katherine Voyles 315 315 0
- ---------------------------------------------------------------------------------------------------------------
25
- ---------------------------------------------------------------------------------------------------------------
Number of Number of Number of
--------- -------- ---------
Shares Shares Shares
------ ------ ------
Medifor MasterChart Owned Prior to Being After
------- ----------- -------------- ----- -----
Selling Stockholders Selling Stockholders Offering (1) Offered Offering
-------------------- -------------------- -------- ------- --------
- ---------------------------------------------------------------------------------------------------------------
Lauretta & Vaughn Webb 5,094 5,094 0
- ---------------------------------------------------------------------------------------------------------------
Nick N. & Carol R. Westlund 6,302 6,302 0
- ---------------------------------------------------------------------------------------------------------------
Michel R. Zelnick 4,306 4,306 0
- ---------------------------------------------------------------------------------------------------------------
_______________________________
(1) Approximately 20% of the total number of shares set forth in this column as
owned prior to this offering by Medifor selling stockholders are being held
in escrow pending the occurrence of certain events specified in a merger
agreement, dated as of April 12, 2000, among WebDoc Acquisition Corp., a
wholly owned subsidiary of Allscripts, Inc., Medifor, Inc., a Washington
corporation, and certain shareholders of Medifor, Inc.
26
PLAN OF DISTRIBUTION AND OFFERING PRICE
The selling stockholders listed on pages 21-26 of this prospectus are
offering for resale under this prospectus 1,398,303 shares of our common stock.
The selling stockholders, or their pledgees, assignees and successors-in-
interest may sell, from time to time, any or all of the shares of common stock
covered by this prospectus on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
.. Sales in the over-the-counter market or otherwise at prices and at terms then
prevailing or at prices related to the then current market price;
.. Underwritten offerings;
.. Ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
.. Block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
.. Purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;
.. An exchange distribution in accordance with the rules of the applicable
exchange;
.. Privately negotiated transactions;
.. Short sales;
.. Broker-dealers may agree with the selling stockholders to sell a specified
number of such shares at a stipulated price per share;
.. A combination of any such methods of sale; or
.. Any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
A selling stockholder may, together with any agent of the selling
stockholder, accept or reject in whole or in part any proposed purchase of the
shares of common stock offered by this prospectus. We will not receive any
proceeds from the offering of shares by the selling stockholders.
Under applicable rules and regulations under the Securities Exchange Act of
1934, any person engaged in a distribution of the shares of common stock covered
by this prospectus may be limited in its ability to engage in market activities
with respect to such shares. The selling stockholders, for example, will be
subject to applicable provisions of the Securities Exchange Act of 1934 and the
rules
27
and regulations under it, including, without limitation, Regulation M, which
provisions may restrict certain activities of the selling stockholders and limit
the timing of purchases and sales of any shares of common stock by the selling
stockholders. Furthermore, under Regulation M, persons engaged in a distribution
of securities are prohibited from simultaneously engaging in market making and
certain other activities with respect to such securities for a specified period
of time prior to the commencement of such distributions, subject to specified
exceptions or exemptions. The foregoing may affect the marketability of the
shares offered by this prospectus.
The selling stockholders may also engage in short sales against the box,
puts and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades. The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling stockholder defaults on a
margin loan, the broker may offer and sell, from time to time, the pledged
shares.
The selling stockholders may sell shares directly to market makers acting
as principals and/or broker-dealers acting as agents for themselves or their
customers. Broker-dealers engaged by the selling stockholders may arrange for
other broker-dealers to participate in sales. Broker-dealers may receive
commissions, concessions or discounts from the selling stockholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling stockholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved. Market makers and block purchasers that purchase the
shares will do so for their own account and at their own risk. It is possible
that the selling stockholders will attempt to sell shares in block transactions
to market makers or other purchasers at a price per share that may be below the
then-current market price. We cannot make assurances that all or any of the
shares of common stock will be sold by the selling stockholders.
The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be underwriters within the meaning of the
Securities Act of 1933 in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933.
We have not registered or qualified the shares of common stock offered by
this prospectus under the laws of any country, state or jurisdiction, other than
the United States.
We are required to pay all fees and expenses incident to the registration
of the shares. The selling stockholders will pay any sales commissions or other
seller's compensation applicable to these transactions. We have agreed to
indemnify the selling stockholders against certain losses, claims, damages and
liabilities under the Securities Act of 1933.
Our common stock is currently traded on the Nasdaq National Market. The
public offering price for any shares that are sold will be determined by the
price indicated on such system at the time such sale occurs, or at such price as
shall be determined through private negotiations between the buyers and the
selling stockholders, or their agents.
28
VALIDITY OF STOCK
The validity of the common stock offered by this prospectus will be passed
upon for us by Sachnoff & Weaver, Ltd., Chicago, Illinois.
EXPERTS
The consolidated financial statements of Allscripts, Inc. as of December
31, 1999 and 1998 and for each of the three years in the period ended December
31, 1999, incorporated in this registration statement by reference to the Annual
Report on Form 10-K of Allscripts, Inc. for the year ended December 31, 1999,
and the financial statements of MasterChart, Inc. as of December 31, 1999 and
1998 and the years then ended, incorporated in this registration statement by
reference to Allscripts, Inc.'s Current Reports on Form 8-K/A-1 dated May 17,
2000 and filed July 25, 2000 and Form 8-K/A-2 dated May 9, 2000 and filed July
25, 2000, have been so incorporated in reliance upon the reports of
PricewaterhouseCoopers LLP, independent public accountants, as indicated in
their report with respect hereto, and are included herein in reliance upon the
authority of said firm as experts in giving said reports.
The financial statements of Medifor, Inc. as of December 31, 1999 and 1998
and the years then ended, incorporated in this registration statement by
reference to Allscripts, Inc.'s Current Reports on Form 8-K/A-1 dated May 17,
2000 and filed July 25, 2000 and Form 8-K/A-2 dated May 9, 2000 and filed July
25, 2000, have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in giving said
reports.
Ernst & Young LLP, independent auditors, have audited the financial
statements of the Physician Channel business of Channelhealth Incorporated,
included in Amendment No. 1 to the Form S-4 (333-49568) of Allscripts Healthcare
Solutions, Inc., as set forth in their report, which is incorporated by
reference in this prospectus and elsewhere in the registration statement. The
financial statements of the Physician Channel business of Channelhealth
Incorporated are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Those reports, proxy statements and other information
may be obtained:
.. At the Public Reference Room of the Securities and Exchange Commission, Room
1024 - Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549;
.. At the public reference facilities at the Securities and Exchange Commission's
regional offices located at Seven World Trade Center, 13th Floor, New York,
New York 10048 or Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661;
29
.. By writing to the Securities and Exchange Commission, Public Reference
Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549;
.. At the offices of the National Association of Securities Dealers, Inc.,
Reports Section, 1735 K Street, N.W., Washington, DC 20006; or
.. From the Internet site maintained by the Securities and Exchange Commission at
http://www.sec.gov, which contains reports, proxy and information statements
and other information regarding issuers that file electronically with the
Securities and Exchange Commission.
Some locations may charge prescribed or modest fees for copies.
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 under the Securities Act covering the shares of common
stock offered by this prospectus. As permitted by the Securities and Exchange
Commission, this prospectus, which constitutes a part of the registration
statement, does not contain all the information included in the registration
statement. You may obtain such additional information from the locations
described above. Statements contained in this prospectus as to the contents of
any contract or other document are not necessarily complete. You should refer
to the contract or other document for all the details.
INFORMATION INCORPORATED BY REFERENCE
We have previously filed the following documents with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, and
they are incorporated into this prospectus by reference:
(a) Annual Report on Form 10-K of Allscripts, Inc. for the fiscal year
ended December 31, 1999, filed on March 30, 2000;
(b) Proxy Statement of Allscripts, Inc. for the Annual Meeting of
Stockholders held on May 10, 2000, filed on April 21, 2000;
(c) Quarterly Report on Form 10-Q of Allscripts, Inc. for the quarterly
period ended March 31, 2000, filed on May 15, 2000;
(d) Quarterly Report on Form 10-Q of Allscripts, Inc. for the quarterly
period ended June 30, 2000, filed on August 14, 2000, as amended on October 27,
2000;
(e) Quarterly Report of Allscripts, Inc. on Form 10-Q for the quarterly
period ended September 30, 2000, filed on November 14, 2000;
(f) The description of our common stock contained in Allscripts, Inc.'s
Registration of Certain Classes of Securities on Form 8-A, dated June 29, 1999;
30
(g) Current Reports of Allscripts, Inc. on Form 8-K dated February 8, 2000,
February 22, 2000, May 24, 2000 (as amended on July 24, 2000 and July 25, 2000),
May 31, 2000 (as amended on July 25, 2000), July 27, 2000, December 28, 2000 and
January 12, 2001; and
(h) The Form S-4 Registration Statement of Allscripts Healthcare Solutions,
Inc., filed on November 9, 2000, as amended on December 7, 2000.
All documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, after the date of this
prospectus and before the termination of this offering are incorporated by
reference and become a part of this prospectus from their date of filing. Any
statements contained in this prospectus or in a document incorporated by
reference are modified or superseded for purposes of this prospectus to the
extent that a statement contained in any such document modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
On request, we will provide anyone who receives a copy of this prospectus
with a copy of any or all of the documents incorporated in this prospectus by
reference. Written or telephone requests for such copies should be directed to
our principal office: Allscripts Healthcare Solutions, Inc., Investor Relations
Department, 2401 Commerce Drive, Libertyville, Illinois 60048, (847) 680-3515.
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. If anyone provides you with different or inconsistent
information, you should not rely on it. The selling stockholders are offering
to sell, and seeking offers to buy, shares of our common stock only in
jurisdictions where offers and sales are permitted. You should not assume that
the information in this prospectus or any supplement is accurate as of any date
other than the date on the cover page of such documents. Our business,
financial condition, results of operations and prospects may have changed since
that date.
31
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses payable by us in
connection with the sale of our common stock being registered hereby. All the
amounts shown are estimated, except the Securities Exchange Commission
registration fee.
SEC registration fee...................... $ 2,538
Printing expenses......................... 15,000
Legal fees and expenses................... 25,000
Accounting fees and expenses.............. 3,000
Miscellaneous expenses.................... 5,000
Total.............................. $ 50,538
---------
Item 15. Indemnification of Directors and Officers.
We are a Delaware corporation, subject to the applicable indemnification
provisions of the General Corporation Law of the State of Delaware (the "DGCL").
Section 145 of the DGCL empowers a Delaware corporation to indemnify, subject to
certain prescribed standards, any person in connection with any action, suit or
proceeding brought or threatened because such person is or was a director,
officer, employee or agent of the corporation or was serving as such with
respect to another corporation or other entity at the request of such
corporation.
Section 102 of the DGCL permits a Delaware corporation to include in its
certificate of incorporation a provision eliminating or limiting a director's
liability to a corporation or its stockholders for monetary damages for breaches
of fiduciary duty. The enabling statute provides, however, that liability for
breaches of the duty of loyalty, acts or omissions not in good faith or
involving intentional misconduct, or knowing violations of the law, and the
unlawful purchase or redemption of stock or payment of unlawful dividends or the
receipt of improper personal benefits cannot be eliminated or limited in this
manner. Our Certificate of Incorporation includes a provision that eliminates,
to the fullest extent permitted, director liability for monetary damages for
breach of fiduciary duty.
Our certificate of incorporation, as amended, provides that a director will
not be personally liable to us or our stockholders for monetary damages for
breach of fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to us or our stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
II-1
Our certificate of incorporation, as amended, provides that each person who
has been or is made a party or is threatened to be made a party to or is
involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a director or officer of our company, or is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by the registrant to the fullest
extent uthorized by the DGCL, or any other applicable law, as the same exists or
may hereafter be amended (but, in case of any such amendment, only to the extent
that such amendment permits us to provide broader indemnification rights than
said law permitted us to provide prior to such amendment), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators.
We have a duty to indemnify any person seeking indemnification pursuant to
our certificate of incorporation in connection with a proceeding (or part
thereof) initiated by that person only if the proceeding (or part thereof) was
authorized by our board of directors. We may, by action of our board of
directors, provide indemnification to our employees or agents to the fullest
extent of the foregoing indemnification of directors and officers.
We may maintain insurance, at our expense, to protect us and any of our
directors, officers, employees or agents or another corporation, partnership,
joint venture, trust or other enterprise against any expense, liability or loss,
whether or not we would have the power to indemnify such person against expense,
liability or loss under the DGCL, or any other applicable law.
Item 16. Exhibits.
2.1 Agreement and Plan of Merger, dated as of March 13, 2000, among MC
Acquisition Corp., MasterChart, Inc. and the shareholders of
MasterChart, Inc. (1)
2.2 Agreement and Plan of Merger, dated as of April 12, 2000, among WebDoc
Acquisition Corp., Medifor, Inc. and certain shareholders of Medifor,
Inc. (2)
2.3 Agreement and Plan of Merger, dated as of July 13, 2000, by and among
Allscripts Holding, Inc., Allscripts, Inc., Bursar Acquisition, Inc.,
Bursar Acquisition No. 2, Inc., IDX Systems Corporation and
Channelhealth Incorporated. (3)
II-2
2.4 First Amendment to Agreement and Plan of Merger, dated November 29,
2000, by and among Allscripts Holding, Inc., Allscripts, Inc., Bursar
Acquisition, Inc., Bursar Acquisition No. 2, Inc., IDX Systems
Corporation and Channelhealth Incorporated. (4)
4 Specimen common stock certificate*
5 Opinion of Sachnoff & Weaver, Ltd. regarding the legality of the
securities being registered*
23.1 Consent of PricewaterhouseCoopers LLP, independent auditors
23.2 Consent of Ernst & Young LLP, independent auditors
23.3 Consent of Arthur Andersen LLP, independent auditors
23.4 Consent of Sachnoff & Weaver, Ltd. (included in Exhibit 5)*
24 Powers of Attorney (included on the signature page)*
* Previously filed
(1) Incorporated by reference from the Current Report on Form 8-K of
Allscripts, Inc. as filed with the Securities and Exchange Commission on May 24,
2000 (File No. 000-26537), as amended on July 24, 2000 and July 25, 2000.
(2) Incorporated by reference from the Current Report on Form 8-K of
Allscripts, Inc. as filed with the Securities and Exchange Commission on May 31,
2000 (File No. 000-26537), as amended on July 25, 2000.
(3) Incorporated by reference from the Current Report on Form 8-K of
Allscripts, Inc. as filed with the Securities and Exchange Commission on July
27, 2000 (File No. 000-26537).
(4) Incorporated by reference from the Registrant's Amendment No. 1 to the Form
S-4 Registration Statement as filed with the Securities and Exchange Commission
on December 7, 2000 (File No. 333-49568).
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
II-3
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and Exchange Commission pursuant to Rule 424(b)
under the Securities Act of 1933, as amended, if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) 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 Securities Exchange Act of 1934 that
are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) 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, as amended, that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In
the event that a claim for the indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
II-4
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 Amendment
No. 3 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Libertyville, State of
Illinois, on February 14, 2001.
ALLSCRIPTS HEALTHCARE SOLUTIONS, INC.
By: /s/ David B. Mullen
------------------------------------------
David B. Mullen, President and Chief
Financial Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED.
Signature Title Date
------------- --------- --------
* Chairman and Chief Executive Officer February 14, 2001
- -------------------------------------- (Principal Executive Officer)
Glen E. Tullman
/s/ David B. Mullen President, Chief Financial Officer and February 14, 2001
- -------------------------------------- Director
David B. Mullen
* Senior Vice President, Finance, and February 14, 2001
- -------------------------------------- Secretary (Principal Accounting Officer)
John G. Cull
* Director February 14, 2001
- --------------------------------------
Philip D. Green
* Director February 14, 2001
- --------------------------------------
M. Fazle Husain
* Director February 14, 2001
- --------------------------------------
Michael J. Kluger
* Director February 14, 2001
- --------------------------------------
L. Ben Lytle
* Director February 14, 2001
- --------------------------------------
Edward M. Philip
/s/ Richard E. Tarrant Director February 14, 2001
- --------------------------------------
Richard E. Tarrant
* /s/ David B. Mullen
------------------------------------------------
David B. Mullen, attorney in fact