As filed with the Securities and Exchange Commission on February 25, 2002
Registration No. 333-_____
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
--------------------
REGISTRATION STATEMENT
Under
The Securities Act of 1933
--------------------
CURATIVE HEALTH SERVICES, INC.
(Exact name of Registrant as specified in its charter)
-------------------
Minnesota 41-1503914
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5051 Highway 7, Suite 100
St. Louis Park, Minnesota 55416
(952) 922-0201
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
--------------------
Gary D. Blackford
Chief Executive Officer
Curative Health Services, Inc.
5051 Highway 7, Suite 100
St. Louis Park, Minnesota 55416
(952) 922-0201
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------
Copy to:
Timothy S. Hearn, Esq.
Dorsey & Whitney LLP
50 South Sixth Street, Suite 1500
Minneapolis, Minnesota 55402
(612) 340-2600
Facsimile: (612) 340-2868
------------------
Approximate date of commencement of proposed sale to the public: From time to
time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
--------------------------------------------------------------------------------
CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Title of each Proposed Proposed
Class of Amount to be Maximum Maximum
Securities registered Offering Price Aggregate Offering Amount of
registered (1) per share (2) Price (2) Registration Fee
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Common Stock, 1,059,000
$0.01 par value shares $19.08 $20,211,015.00 $1,860.00
--------------------------------------------------------------------------------
(1) This amount represents shares to be offered by the selling shareholders from
time to time after the effective date of this Registration Statement at
prevailing market prices at time of sale. In addition to the shares set forth
in this table, the number of shares to be registered includes an
indeterminable number of shares as may become issuable as a result of stock
splits, stock dividends and similar transactions in accordance with Rule 416
of the Securities Act of 1933, as amended.
(2) Estimated solely for the purposes of calculating the registration fee based
upon the average of the high and low sales prices of the Registrant's Common
Stock on February 22, 2002, as reported on the Nasdaq National Market.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment that specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
--------------------------------------------------------------------------------
Subject to completion, dated February 25, 2002
1,059,000 Shares
CURATIVE HEALTH SERVICES, INC.
Common Stock
--------------------------------------------------------------------------------
1,059,000 shares of the common stock, $.01 par value, of Curative Health
Services, Inc. are being offered by this prospectus. The shares will be sold
from time to time by the selling shareholders named in this prospectus. We will
not receive any of the proceeds from the sales.
Our common stock is traded on the Nasdaq National Market under the symbol
"CURE". On February 22, 2002, the last sale price of our common stock as
reported on the Nasdaq National Market was $18.77 per share.
----------------------
This investment involves risk. See "Risk Factors" beginning on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved of anyone's investment in these securities or determined
if this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
The date of this prospectus is , 2002.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC"). The prospectus relates to
1,059,000 shares of our common stock, which the selling shareholders named in
this prospectus may sell from time to time. We will not receive any of the
proceeds from these sales. We have agreed to pay the expenses incurred in
registering these shares, including legal and accounting fees.
These shares have not been registered under the securities laws of any state or
other jurisdiction as of the date of this prospectus. Brokers or dealers should
confirm the existence of any exemption from registration or effect a
registration in connection with any offer and sale of these shares.
This prospectus describes certain risk factors that you should consider before
purchasing these shares. See "Risk Factors" beginning on page 3. You should read
this prospectus together with the additional information described under the
heading "Where You Can Find More Information."
TABLE OF CONTENTS
Page
Summary........................................................................1
Risk Factors...................................................................3
Selling Shareholders..........................................................12
Plan of Distribution..........................................................12
Legal Matters.................................................................13
Experts.......................................................................13
Where You Can Find More Information...........................................13
SUMMARY
Business of Curative Health Services, Inc.
Curative Health Services, Inc. seeks to deliver high-quality clinical outcomes
and exceptional patient satisfaction for patients experiencing serious or
chronic medical conditions through two unique business units. Our Specialty
Pharmacy Services ("SPS") business unit provides patient-centric community-based
services that facilitate the health care management process and offers related
pharmacy products for chronic and critical disease states. Through our SPS
business unit, we purchase various biopharmaceutical products, which include
both pharmaceuticals (i.e., drugs) as well as biological products (e.g.,
hemophilia factor), from manufacturers and then contract with insurance
companies, government agencies and other payors to provide distribution,
administration and education in connection with these biopharmaceutical
products. In addition, as part of our SPS operations, we provide
biopharmaceutical product distribution, data and support services under contract
with retail pharmacies. The biopharmaceutical products distributed by us are
used by patients with chronic or severe conditions such as hemophilia, hepatitis
C, rheumatoid arthritis and multiple sclerosis. We have contracts with
approximately 170 payors and three retail pharmacies. SPS provides services
directly to patients and caregivers via mail order, retail pharmacy and having
our community-based representatives deliver the products.
Our Specialty Healthcare Services ("SHS") business unit is the industry leader
in chronic wound care management. Currently, our SHS business unit manages, on
behalf of hospital clients, a nationwide network of Wound Care Center(R)
programs that offer a comprehensive range of services for treatment of chronic
wounds. Our Wound Management Program(R) consists of diagnostic and therapeutic
treatment regimens and algorithms which are designed to meet each patient's
specific wound care needs on a cost effective basis. Our treatment regimens are
based on critical pathways designed to achieve the most probable positive
outcome for wound healing. We maintain a proprietary database of patient
outcomes that we have collected since 1988 containing over 350,000 patient
cases. Our data driven treatment regimens and algorithms have allowed us to
achieve an overall healing rate of approximately 80% for patients completing
therapy. Our Wound Care Center network consists of over 100 outpatient clinics
(operating or contracted to open), located on or near campuses of acute care
hospitals in more than 30 states.
Recent Developments
On February 8, 2002, we sold 1,059,000 newly issued shares of our common stock
in a private placement to institutional investors. The net proceeds of
approximately $16.9 million will be used to finance our recently announced
acquisition of Apex Therapeutic Care, Inc. ("Apex") and for additional
acquisitions and general operating purposes.
On January 31, 2002, we entered into a $25 million line of credit with
Healthcare Business Credit Corporation. We intend to use the funds for
additional acquisitions, to add new product offerings in our SPS business unit
and for general operating purposes.
On January 27, 2002, we entered into an agreement to acquire Apex, a leading
provider of biopharmaceutical products, therapeutic supplies and disease
management services to people with hemophilia and related bleeding disorders.
Apex is based near Los Angeles, California. The aggregate purchase price for
Apex is $60 million, approximately two-thirds of which is payable in shares of
our common stock with the remainder payable in cash and a promissory note. At
our discretion, we may substitute cash for any portion of the purchase price
otherwise payable in our common stock. We anticipate closing the Apex
transaction in the first quarter of 2002.
On January 7, 2002, we acquired Hemophilia Access, Inc., a provider of
pharmaceuticals, therapeutic supplies and disease management services to people
with hemophilia and related bleeding disorders. Hemophilia Access is based near
Nashville, Tennessee. The purchase price for Hemophilia Access was $2.65
million, substantially all of which was paid using 175,824 shares of our common
stock.
On December 28, 2001, we reached a comprehensive settlement with the United
States Department of Justice (the "DOJ"), the U.S. Department of Health and
Human Services, Office of the Inspector General (the "USHHS") and other related
parties in connection with all previously disclosed federal investigations and
legal proceedings against us in the United States District Court for the
Southern District of New York and the United States District Court for the
District of Columbia. Under the terms of the settlement, even though we
maintained that there was no basis for the imposition of liability, in order to
avoid the delay and expense of protracted litigation, we agreed to pay the
United States a total of $16.5 million, with an initial payment of $9 million
and the balance payable over four years. We are also required to fulfill certain
additional obligations including abiding by a five-year Corporate Integrity
Agreement we have executed with the USHHS (which incorporates much of our
existing compliance program), avoiding violations of law and providing certain
information to the DOJ from time to time.
General
We were incorporated in the State of Minnesota in 1984 under the name Curatech,
Inc. We changed our name to Curative Technologies, Inc. in March, 1990 and to
Curative Health Services, Inc. in June, 1996. Our principal executive offices
are located at 5051 Highway 7, Suite 100, St. Louis Park, Minnesota 55416,
telephone number (952) 922-0201. Wound Care Centers(R), Wound Management
Program(R) and our logo are our trademarks. This prospectus also includes trade
names and marks of other companies.
RISK FACTORS
You should carefully consider each of the following risks and all of the other
information included or incorporated by reference in this prospectus before
deciding to invest in shares of our common stock. Additional risks not presently
known to us or that we currently believe to be immaterial may also adversely
affect our business. The trading price of our common stock could decline due to
any of these risks, and you may lose all or part of your investment.
RISK RELATED TO OUR BUSINESS
We have been subject to government investigation and have entered into an
agreement with the federal government
On December 28, 2001, we entered into a settlement with the DOJ, the United
States Attorney for the Southern District of New York, the United States
Attorney for the Middle District of Florida and the USHHS in connection with all
federal investigations and legal proceedings related to the whistleblower
lawsuits previously pending against us in the United States District Court for
the Southern District of New York and the United States District Court for the
District of Columbia. The focus of the government investigation and resolution
was the allegation that we improperly caused our hospital customers to seek
reimbursement for a portion of our management fees that included costs related
to advertising and marketing activities by our personnel. Under the terms of the
settlement, we were released from certain claims associated with services we
provided to hospitals and we agreed to pay the United States a $9 million
initial payment, with an additional $7.5 million to be paid over the next four
years. Pursuant to the settlement, we will be required to fulfill certain
additional obligations, including abiding by a five-year Corporate Integrity
Agreement, avoiding violations of law and providing certain information to the
Department of Justice from time to time. If we fail or if we are accused of
failing to comply with the terms of the settlement, our business may be harmed.
We are involved in litigation which may harm the value of our business
Subsequent to the disclosure of the DOJ action, we and, in some cases, certain
of our officers were named in four shareholder lawsuits. All suits were filed in
the United States District Court for the Eastern District of New York. The four
shareholder lawsuits have been consolidated into one class-action lawsuit. The
lawsuits allege generally that we and our officers violated federal securities
laws by disseminating materially false and misleading statements and failing to
disclose material information relating to the contractual relationships with
Columbia/HCA Healthcare Corporation and other hospitals, and certain purported
misrepresentations in connection therewith. The suit seeks to recover
unspecified damages from us. The Court denied our motion to dismiss and
discovery is currently ongoing. An adverse result in this lawsuit could harm our
business.
Notwithstanding our belief that we have complied with the law and our intention
to defend ourselves vigorously, if it is determined to be in our best interests,
it is possible that we will choose to enter into a settlement with the
plaintiffs in the securities litigation lawsuit that could harm the value of our
business to our shareholders.
In addition to the securities litigation described above, we are currently in
dispute with some of the former shareholders of eBioCare.com, Inc. over a claim
for indemnification in connection with our acquisition of eBioCare.com, Inc. In
response to our indemnification claim, the former shareholders have filed a
lawsuit against us seeking damages and other remedies including the rescission
of our acquisition of eBioCare.com, Inc. Although we believe this lawsuit is
groundless and we intend to defend these claims vigorously, an adverse result in
this dispute could harm our business.
In addition, in the ordinary course of business, we are periodically the subject
of or party to various lawsuits, the outcome of which could harm our business.
Our acquisition strategy may not be successful, which could cause our business
and future growth prospects to suffer
As part of our growth strategy, we continue to evaluate acquisition
opportunities, but we cannot predict or provide assurance that we will complete
any future acquisitions. Acquisitions involve many risks, including:
o difficulty in identifying suitable candidates and negotiating and
consummating acquisitions on attractive terms;
o difficulty in assimilating the new operations;
o potential for loss of customers during the integration period;
o increased transaction costs;
o diversion of our management's attention from existing operations;
o dilutive issuances of equity securities that may negatively impact the
market price of our stock;
o increased debt; and
o increased amortization expense related to intangible assets that would
decrease our earnings.
We could also be exposed to unknown or contingent liabilities resulting from the
pre-acquisition operations of the entities we acquire, such as liability for
failure to comply with health care or reimbursement laws.
If we are unable to manage our growth effectively, our business will be harmed
Our growth strategy will likely place a strain on our resources, and if we
cannot effectively manage our growth, our business will be harmed. In connection
with our growth strategy, we will likely experience a large increase in the
number of our employees, the size of our programs and the scope of our
operations. Our ability to manage this growth and be successful in the future
will depend partly on our ability to retain skilled employees, enhance our
management team and improve our management information and financial control
systems.
We may need additional capital to finance our growth and capital requirements,
which could prevent us from fully pursuing our growth strategy
In order to implement our growth strategy, we will need substantial capital
resources and will incur, from time to time, short- and long-term indebtedness,
the terms of which will depend on market and other conditions. We cannot be
certain that existing or additional financing will be available to us on
acceptable terms, if at all. As a result, we could be unable to fully pursue our
growth strategy. Further, additional financing may involve the issuance of
equity securities that would reduce the percentage ownership of our then current
shareholders.
We could be adversely affected by an impairment of the significant amount of
goodwill on our financial statements
Our acquisitions of the specialty pharmacy companies, eBioCare.com, Inc. and
Hemophilia Access, Inc., resulted, and our pending acquisition of Apex
Therapeutic Care, Inc. may result, in the recording of a significant amount of
goodwill on our financial statements. The goodwill was recorded because the fair
value of the net assets acquired was less than the purchase price. We can not
assure you that we will realize the full value of this goodwill. We evaluate on
at least an annual basis whether events and circumstances indicate that all or
some of the carrying value of goodwill is no longer recoverable, in which case
we would write off the unrecoverable goodwill as a charge to our earnings.
Since our growth strategy will likely involve the acquisition of other
companies, we may record additional goodwill in the future. The possible
write-off of this goodwill could negatively impact our future earnings. We will
also be required to allocate a portion of the purchase price of any acquisition
to the value of any intangible assets that meet the criteria specified in the
Financial Accounting Standards Board Statement No. 141 such as marketing,
customer or contract-based intangibles. The amount allocated to these intangible
assets could be amortized over a fairly short period. As a result, our earnings
and the market price of our common stock could be negatively affected.
We are highly dependent on our relationships with a limited number of
biopharmaceutical and other suppliers and the loss of any of these relationships
could significantly affect our ability to sustain or grow our revenues
The biopharmaceutical industry is susceptible to product shortages. Some of the
products that we distribute, such as IVIG and blood- or blood plasma-related
products, are collected and processed from human donors. Accordingly, the supply
of these products is highly dependent on human donors and their availability has
been constrained from time to time. An industry wide recombinant factor VIII
product shortage has existed for some time, as a result of the manufacturers
being unable to increase production to meet rising global demand. Future
availability of product is unclear and we are not certain when the manufacturers
will return to normal product allocations. If these products, or any of the
other drugs or products that we distribute, are in short supply for long periods
of time, our business could be harmed.
If additional providers obtain access to favorably priced products we handle,
our business could be harmed
We are not eligible to participate directly in a federal pricing program
administered by the Federal Health Resources and Services Administration's
Public Health Service, commonly known as PHS, which allows certain entities with
PHS grants, such as certain hospitals and hemophilia treatment centers, to
obtain discounts on drugs, including certain biopharmaceutical products (e.g.,
hemophilia clotting factor) that we sell. The Federal Health Resources and
Services Administration issued a notice that we expect will broaden the number
of eligible PHS entities purchasing PHS priced hemophilia factor. Increased
competition from these particular hospitals and hemophilia treatment centers may
harm our business.
Recent investigations into reporting of average wholesale prices could reduce
our pricing and margins
Many government payors, including Medicare and Medicaid, as well as some private
payors, pay us directly or indirectly based upon the drug's average wholesale
price, or AWP. Biopharmaceutical products, including hemophilia factor, are
included as part of this drug reimbursement methodology. AWP for most drugs is
compiled and published by private companies such as First DataBank, Inc. Various
federal and state government agencies have been investigating whether the
reported AWP of many drugs, including some that we sell, is an appropriate or
accurate measure of the market price of the drugs. As reported in the Wall
Street Journal, there are also several whistleblower lawsuits pending against
various drug manufacturers in connection with the appropriateness of the
manufacturer's AWP for a particular drug. These government investigations and
lawsuits involve allegations that manufacturers reported artificially inflated
AWP prices of various drugs to First DataBank, which in turn reported these
prices to its subscribers including many state Medicaid agencies who then
included these AWP's in the state's reimbursement policies. In 2001, Bayer
Corporation, an occasional supplier of hemophilia factor to us, agreed to pay
$14 million in a settlement with the federal government and 45 states in order
to close an investigation regarding these charges. Bayer also entered into a
5-year corporate integrity agreement with the government, in which Bayer agreed
to provide information on the average sale price of its drugs to the government.
In February 2000, First DataBank published a Market Price Survey of 437 drugs,
which was significantly lower than the historic AWP for a number of the clotting
factor and IVIG products that we sell. Consequently, a number of state Medicaid
agencies have revised their payment methodology as a result of the Market Price
Survey. The Centers for Medicare and Medicaid Services ("CMS") had also
announced that Medicare fiscal agents should calculate the amount that they pay
for Medicare claims for certain drugs by using the lower prices on the First
DataBank Market Price Survey. Although, the proposal to include clotting factor
in the lower Medicare pricing was withdrawn. CMS has announced that it will seek
legislation that would establish payments to cover the administrative costs of
suppliers of clotting factor as a supplement to a lower AWP pricing for
hemophilia factor.
On September 21, 2001, the United States House Subcommittees on Health and
Oversight & Investigations held hearings to examine how Medicare reimburses
providers for the cost of drugs. In conjunction with that hearing, the United
States General Accounting Office issued its Draft Report recommending that
Medicare establish payment levels for part-B prescription drugs and their
delivery and administration that are more closely related to their costs, and
that payments for drugs be set at levels that reflect actual market transaction
prices and the likely acquisition costs to providers.
We cannot predict the eventual results of the government investigations and the
changes occurring in the reporting of AWP and its effects on Medicare and
Medicaid prices. If the reduced average wholesale prices published by First
DataBank for the drugs that we sell are ultimately adopted as the standard by
which we are paid by government payors or private payors, this could have an
adverse effect on our business, including reducing the pricing and margins on
certain of our products.
Our business would be harmed if demand for our products and services is reduced
Our SPS business focuses almost exclusively on a limited number of complex and
expensive drugs that serve relatively small customer populations. The loss of
even a few, key customers may harm our specialty pharmacy business. Reduced
demand for our products and services, in either our SPS or SHS businesses, could
be caused by a number of circumstances, including:
o customer shifts to treatment regimens other than those we offer;
o new treatments or methods of delivery of existing drugs that do not
require our specialty products and services;
o the recall of a drug;
o adverse reactions caused by a drug;
o the expiration or challenge of a drug patent;
o competing treatment from a new drug, a new use of an existing drug or
genetic therapy;
o drug companies cease to develop, supply and generate demand for drugs that
are compatible with the services we provide;
o drug companies stop outsourcing the services we provide or fail to support
existing drugs or develop new drugs;
o governmental or private initiatives that would alter how drug
manufacturers, health care providers or pharmacies promote or sell
products and services;
o the loss of a managed care or other payor relationship covering a number
of high revenue customers;
o the cure of a disease we service; or
o the death of a high-revenue customer.
Our business involves risks of professional, product and hazardous substance
liability and any inability to obtain adequate insurance may adversely affect
our business
The provision of health services entails an inherent risk of professional
malpractice, regulatory violations and other similar claims. Claims, suits or
complaints relating to health services and products provided by physicians or
nurses in connection with our SHS and SPS programs may be asserted against us in
the future.
Our operations involve the handling of bio-hazardous materials. Our employees,
like those of all companies that provide services dealing with human blood
specimens, may be exposed to risks of infection from AIDS, hepatitis and other
blood-borne diseases if appropriate laboratory practices are not followed.
Although we believe that our safety procedures for handling and disposing of
such materials comply with the standards prescribed by state and federal
regulations, the risk of accidental infection or injury from these materials
cannot be completely eliminated. In the event of such an accident, we could be
held liable for any damages that result, and such liability could harm our
business.
Our operations expose us to product and professional liability risks that are
inherent in managing the delivery of wound care services, and the provision and
marketing of biopharmaceutical products. We currently maintain professional and
product liability insurance coverage of $25 million in the aggregate. We can not
assure you that the coverage limits of our insurance would be adequate to
protect us against any potential claims, including claims based upon the
transmission of infectious disease, contaminated product or otherwise. In
addition, we can not be certain that we will be able to obtain or maintain
professional and product liability insurance in the future on acceptable terms
or with adequate coverage against potential liabilities.
We rely on a few key employees whose absence or loss could harm our business
Our success depends upon key management personnel as well as our community-based
representatives, and the loss of their services could adversely affect our
business and prospects. In addition, our success will depend, among other
things, upon the successful recruitment and retention of qualified personnel, we
can not assure you that we will be able to retain all of our key management
personnel or be successful in recruiting additional replacements should that
become necessary.
Our inability to maintain a number of important contractual relationships could
adversely affect our operations
Substantially all of the revenues of our SHS operations are derived from
management contracts with acute care hospitals. The contracts generally have
initial terms of three to five years and many have automatic renewal terms
unless specifically terminated. During the year ending December 31, 2002, the
contract terms of 33 of our management contracts will expire, including 15
contracts which provide for automatic one-year renewals. The contracts often
provide for early termination either by the client hospital if specified
performance criteria are not satisfied, or by us under various other
circumstances. Historically, some contracts have expired without renewal and
others have been terminated by us or the client hospital for various reasons
prior to their scheduled expiration. During 2001, 4 contracts expired without
renewal and an additional 22 contracts were terminated prior to their scheduled
expiration by the client hospital and in some cases by us. Our continued success
is subject to our ability to renew or extend existing management contracts and
obtain new management contracts. We can not assure you that any hospital will
continue to do business with us following expiration of its management contract,
or earlier if such management contract is terminable prior to expiration. In
addition, any changes in the Medicare program or third-party reimbursement
levels which generally have the effect of limiting or reducing reimbursement
levels for health services provided by programs managed by us could result in
the early termination of existing management contracts and could adversely
affect our ability to renew or extend existing management contracts and to
obtain new management contracts. The termination or non-renewal of a material
number of management contracts could harm our business.
In addition, a portion of the revenues of our SPS operations is derived from
contractual relationships with retail pharmacies. Our success is subject to the
continuation of these relationships and termination of one or more of these
relationships could harm our business.
Our business will suffer if we lose relationships with payors
We are highly dependent on reimbursement from non-governmental payors. For the
fiscal years ended December 31, 1999, 2000 and 2001 we derived approximately
34%, 40% and 40% respectively of our gross patient service revenue from
non-governmental payors. Many payors seek to limit the number of providers that
supply drugs to their enrollees. From time to time, payors with whom we have
relationships require that we and our competitors bid to keep their business,
and there can be no assurance that we will be retained or that our margins will
not be adversely affected when that happens. The loss of a payor relationship,
or an adverse change in the financial condition of a payor could result in the
loss of a significant number of patients and harm our business.
Changes in reimbursement rates may cause reductions in the revenues of our
operations
As a result of the Balanced Budget Act of 1997, CMS implemented the Outpatient
Prospective Payment System for all hospital outpatient department services
furnished to Medicare patients beginning August 2000. Under the system, a
predetermined rate is paid to hospitals for clinic services rendered, regardless
of the hospital's cost. The new payment system does not provide comparable
reimbursement for previously reimbursed services and the payment rates for many
services are insufficient for many of our hospital customers, resulting in
revenue and income shortfalls for the wound care center operations managed by us
on behalf of the hospitals. As a result, we have renegotiated and modified most
of our management contracts, which has resulted in reduced revenue and income to
us from the modified contracts and in numerous cases contract termination. We
expect that contract renegotiation and modification with many of our hospital
customers will continue and this could result in further reduced revenues and
income to us from those contracts and even contract terminations. These results
could harm our business.
The Wound Care Center programs we manage on behalf of acute care hospitals may
be treated as "provider based entities" for Medicare reimbursement purposes.
This designation is required for the hospital based program to be covered under
the Medicare outpatient reimbursement system. With the Outpatient Prospective
Payment System, the Health Care Financing Administration published criteria for
determining when programs may be designated "provider based entities." The
interpretation and application of these criteria are not entirely clear and
there is a risk that some of the programs managed by us could be found not to be
"provider based entities." A widespread denial of such designation would harm
our business.
The profitability of our SPS operations depends in large part on the
reimbursement we receive from third-party payors. In recent years, competition
for patients, efforts by traditional third-party payors to contain or reduce
healthcare costs, and the increasing influence of managed care payors, such as
health maintenance organizations, have resulted in reduced rates of
reimbursement. If these trends continue, they could harm our business. The
profitability of our specialty pharmacy operations also depends, indirectly, on
reimbursement from third-party payors because our customers seek reimbursement
from third-party payors for the cost of drugs and related medical supplies that
we distribute. Changes in reimbursement policies of private and governmental
third-party payors, including policies relating to the Medicare and Medicaid
programs, could reduce the amounts reimbursed to these customers for our
products and in turn, the amount these customers would be willing to pay for our
products and services. In addition, where we have direct relationships with
payors, changes in their reimbursement policies may reduce amounts payable
directly to us by such payors. Changes in those reimbursement policies could
affect our customers, which in turn could harm our business
We are subject to pricing pressures and other risks involved with commercial
payors
Commercial payors, such as managed care organizations and traditional indemnity
insurers increasingly are requesting fee structures and other arrangements
providing for health care providers to assume all or a portion of the financial
risk of providing care. The lowering of reimbursement rates, increasing medical
review of bills for services and negotiating for reduced contract rates could
harm our business. Pricing pressures by commercial payors may continue and our
business may be adversely affected by these trends.
Also, continued growth in managed care and capitated plans have pressured health
care providers to find ways of becoming more cost competitive. Managed care
organizations have grown substantially in terms of the percentage of the
population they cover and in terms of the portion of the health care economy
they control. Managed care organizations have continued to consolidate to
enhance their ability to influence the delivery of health care services and to
exert pressure to control health care costs. A rapid increase in the percentage
of revenue derived from managed care payors or under capitated arrangements
without a corresponding decrease in our operating costs could harm our business.
There is substantial competition in our industry and we may not be able to
compete successfully
The principal competition with our SHS business consists of specialty clinics
that have been established by some hospitals or physicians. Additionally, there
are a some private companies which provide wound care services through a
hyperbaric oxygen therapy program format. In addition, recently developed
technologies, or technologies that may be developed in the future, are or may be
the basis for products which compete with our chronic wound care services. There
can be no assurance that we will be able to enter into co-marketing arrangements
with respect to these products, or that we will be able to compete effectively
against such companies in the future. Our SPS business faces competition from
other disease management facilities, general health care facilities and service
providers, pharmaceutical companies, biopharmaceutical companies as well as
other competitors. Many of these companies have substantially greater capital
resources and marketing staffs and greater experience in commercializing
products and services than we have.
If we are unable to effectively adapt to changes in the healthcare industry,
our business will be harmed
Political, economic and regulatory influences are subjecting the health care
industry in the United States to fundamental change. Although Congress has
failed to pass comprehensive health care reform legislation thus far, we
anticipate that Congress and state legislatures will continue to review and
assess alternative health care delivery and payment systems and may in the
future propose and adopt legislation effecting fundamental changes in the health
care delivery system as well as changes to the Medicare Program's coverage and
payments of the drugs and services we provide. It is possible that future
legislation enacted by Congress or state legislatures will contain provisions
that may harm our business, or may change the operating environment for our
targeted customers (including hospitals and managed care organizations). Health
care industry participants may react to such legislation or the uncertainty
surrounding related proposals by curtailing or deferring expenditures and
initiatives, including those relating to our programs and services. It is also
possible that future legislation either could result in modifications to the
nation's public and private health care insurance systems, or coverage for
biopharmaceutical products, which could affect reimbursement policies in a
manner adverse to us, or could encourage integration or reorganization of the
health care delivery system in a manner that could materially and adversely
affect our ability to compete or to continue our operations without substantial
changes. We cannot predict what other legislation relating to our business or to
the health care industry may be enacted, including legislation relating to
third-party reimbursement, or what effect any such legislation may have on our
business.
Our industry is subject to extensive government regulation and noncompliance by
us or our suppliers, our customers or our referral sources could harm our
business
The marketing, labeling, dispensing, storage, provision and purchase of drugs,
health supplies and health services including the biopharmaceutical products we
provide, are extensively regulated by federal and state governments, and if we
fail or are accused of failing to comply with laws and regulations, our business
could be harmed. Our business could also be harmed if the suppliers, customer or
referral sources we work with are accused of violating laws or regulations. The
applicable regulatory framework is complex, and the laws are very broad in
scope. Many of these laws remain open to interpretation, and have not been
addressed by substantive court decisions. The federal government, or states in
which we operate, could, in the future, enact more restrictive legislation or
interpret existing laws and regulations in a manner that could limit the manner
in which we can operate our business and have a negative impact on our business.
There are a number of state and federal laws and regulations that apply to
our operations including, but not limited to:
o The federal "anti-kickback law" prohibits the offer or solicitation of
remuneration in return for the referral of patients covered by almost all
governmental programs, or the arrangement or recommendation of the purchase
of any item, facility or service covered by those programs. The Health
Insurance Portability and Accountability Act of 1996, or HIPAA, created new
violations for fraudulent activity applicable to both public and private
health care benefit programs and prohibits inducements to Medicare or
Medicaid eligible patients. The potential sanctions for violations of these
laws include significant fines, exclusion from participation in the
Medicare and Medicaid programs and criminal sanctions. Although some "safe
harbor" regulations attempt to clarify when an arrangement will not violate
the anti-kickback law, our business arrangements and the services we
provide may not fit within these safe harbors. Failure to satisfy a safe
harbor requires further analysis of whether the parties violated the
anti-kickback law. In addition to the anti-kickback law, many states have
adopted similar kickback and/or fee-splitting laws, which can affect the
financial relationships we may have with physicians, vendors, other retail
pharmacies and patients. The finding of a violation of the federal or one
of these state laws could harm our business.
o In 2000, the Department of Health and Human Services issued final
regulations implementing the Administrative Simplification provision of
HIPAA concerning the maintenance, transmission and security of electronic
health information, particularly individually identifiable information. The
regulations, when effective, will require the development and
implementation of security and transaction standards for all electronic
health information and impose significant use and disclosure obligations on
entities that send or receive individually identifiable electronic health
information. As a result of these regulations, we anticipate new
expenditures in ensuring that patient data kept on our computer networks
are in compliance with these regulations. While we believe that we will be
in compliance by the current February 2003 deadline, we can not assure you
that the cost of reaching compliance will not harm our business. Also,
failure to comply with these regulations, or wrongful disclosure of
confidential patient information could result in the imposition of
administrative or criminal sanctions, including exclusion from the Medicare
and state Medicaid programs. In addition, if we choose to distribute drugs
through new distribution channels such as the Internet, we will have to
comply with government regulations that apply to those distribution
channels, which could harm our business.
o The Ethics in Patient Referrals Act of 1989, as amended, commonly referred
to as the "Stark Law," prohibits physician referrals to entities with which
the physician or their immediate family members have a "financial
relationship." A violation of the Stark Law is punishable by civil
sanctions, including significant fines and exclusion from participation in
Medicare and Medicaid.
o State laws prohibit the practice of medicine, pharmacy and nursing without
a license. To the extent that we assist patients and providers with
prescribed treatment programs, a state could consider our activities to
constitute the practice of medicine. In addition, in some states,
coordination of nursing services for patients could necessitate licensure
as a home health agency and/or could necessitate the need to use licensed
nurses to provide certain patient directed services. If we are found to
have violated those laws, we could face civil and criminal penalties and be
required to reduce, restructure or even cease our business in that state.
o Pharmacies (retail, mail-order and wholesale) as well as pharmacists often
must obtain state licenses to operate and dispense drugs. Pharmacies must
also obtain licenses in some states in order to operate and provide goods
and services to residents of those states. If we are unable to maintain our
licenses or if states place burdensome restrictions or limitations on
non-resident pharmacies, this could limit or affect our ability to operate
in some states which could harm our business.
o Federal and state investigations and enforcement actions continue to focus
on the health care industry, scrutinizing a wide range of items such as
joint venture arrangements, referral and billing practices, product
discount arrangements, home health care services, dissemination of
confidential patient information, clinical drug research trials and gifts
for patients or referral sources.
o The federal False Claims Act encourages private individuals to file suits
on behalf of the government against health care providers such as us. Such
suits could result in significant financial sanctions or exclusion from
participation in the Medicare and Medicaid programs.
There is a delay between our performance of services and our reimbursement
The health care industry is characterized by delays that typically range from
three to nine months between when services are provided and when the
reimbursement or payment for these services is received. This makes working
capital management, including prompt and diligent billing and collection, an
important factor in our results of operations and liquidity. We cannot assure
you that trends in the industry will not further extend the collection period
and impact our working capital.
We rely heavily on a limited number of shipping providers, and our business
would be harmed if our rates are increased or our providers are unavailable
A significant portion of our revenues result from the sale of drugs we deliver
to our patients and a significant amount of our products are shipped by FedEx,
UPS or United States mail. We depend heavily on these outsourced shipping
services for efficient, cost effective delivery of our product. The risks
associated with this dependence include:
o any significant increase in shipping rates;
o strikes or other service interruptions by these carriers;
o spoilage of high cost drugs during shipment, since our drugs often
require special handling, such as refrigeration.
Disruption in New York City and in United States commercial activities generally
following the September 2001 terrorist attacks on the United States may
adversely impact our business
Our operations have been and may continue to be harmed by the terrorist attacks
on the United States. For example, transportation systems and couriers that we
rely upon to deliver our drugs have been and may continue to be disrupted,
thereby causing a decrease in our revenues. In addition, we may experience a
rise in operating costs, such as costs for transportation, courier services,
insurance and security. We also may experience delays in receiving payments from
payors that have been affected by the attacks, which, in turn, would harm our
cash flow. The United States economy in general may be adversely affected by the
terrorist attacks or by any related outbreak of hostilities. Any such economic
downturn could adversely impact our business, impair our ability to raise
capital or impede our ability to continue growing our business.
RISK RELATED TO OUR COMMON STOCK
Possible volatility of stock price in the public market
The market price of our common stock has experienced and may continue to
experience substantial volatility. Many factors have influenced the common stock
price in the past, including fluctuations in our earnings and changes in our
financial position, management changes, low trading volume, negative publicity
from the legal actions brought against us, announcements of technological
innovations or new products or services by us or our competitors, developments
or disputes concerning patents or proprietary rights, regulatory developments
and economic and other external factors. In addition, the securities markets
have from time to time experienced significant broad price and volume
fluctuations that may be unrelated to the operating performance of particular
companies. All of these factors could adversely affect the market price of our
common stock.
Some provisions of our charter documents have anti-takeover effects that could
discourage a change in control, even if an acquisition would be beneficial to
our shareholders
Our articles of incorporation, our bylaws and Minnesota law contain provisions
that could make it more difficult for a third party to acquire us, even if doing
so would be beneficial to our shareholders.
SELLING SHAREHOLDERS
We have agreed to register 1,059,000 shares of our common stock owned by the
selling shareholders. These shares were acquired by the selling shareholders
pursuant to stock purchase agreements effective as of February 8, 2002 between
each of the selling shareholders and us. The shares of common stock held by the
selling shareholders are being registered to permit public secondary trading of
these shares, and the selling shareholders may offer these shares for resale
from time to time. See "Plan of Distribution."
The following table presents certain information regarding the selling
shareholders' beneficial ownership of our common stock as well as the number of
shares of our common stock they may sell pursuant to this prospectus.
Name Number of Maximum Number of
Shares of Number of Shares of
Common Shares to Common Stock
Stock be Sold Beneficially
Beneficially Pursuant to Owned After
Owned this the
Prior to the Prospectus Offering (1)
Offering
--------------------------------------------------------------------------------
BlackRock Funds, Small Cap Growth 400,000 400,000 -0-
Equity Portfolio
Capital Ventures International 294,000 294,000 -0-
Formula Growth Fund 75,000 75,000 -0-
Formula Unit Fund 90,000 90,000 -0-
UBS O'Connor LLC f/b/o O'Connor PIPES
Corporate Strategies Ltd. 100,000 100,000 -0-
UBS O'Connor LLC f/b/o UBS Global
Equity Arbitrage Master Ltd. 100,000 100,000 -0-
--------------------------------------------------------------------------------
Total 1,059,000 1,059,000 -0-
(1) Assumes the sale of all of the shares offered by this prospectus
PLAN OF DISTRIBUTION
We are registering these shares on behalf of the selling shareholders. As used
in this prospectus, the term "selling shareholders" includes donees and pledgees
selling shares received from a named selling shareholder after the date of this
prospectus. The selling shareholders will offer and sell the shares to which
this prospectus relates for their own account. We will not receive any proceeds
from the sale of the shares. We will bear all fees and expenses in connection
with the registration of the shares.
The selling shareholders may offer and sell the shares from time to time, at
prices relating to prevailing market prices or at negotiated prices, in one or
more of the following methods: ordinary brokers' transactions, which may include
long sales or short sales effected after the effective date of the registration
statement of which this prospectus is a part; transactions involving cross or
block trades or otherwise on The Nasdaq National Market; purchases by brokers,
dealers or underwriters as principals and resale by the purchasers for their own
accounts pursuant to this prospectus; to or through market makers or into an
existing market for the shares; in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise); or any combination of the
foregoing, or by any other legally available means. Sales may be made to or
through brokers or dealers who may receive compensation in the form of
discounts, concessions or commissions from the selling shareholders or the
purchasers of the shares. As of the date of this prospectus, we are not aware of
any agreement, arrangement or understanding between any broker or dealer and the
selling shareholders regarding the sale of their shares, nor are we aware of any
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling shareholders. There is no assurance that the selling
shareholders will sell any or all of the shares that they offer.
The selling shareholders and any brokers or dealers who participate in the sale
of the shares may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commissions
received by them and any profits realized by them on the resale of shares may be
deemed to be underwriting discounts or commissions under the Securities Act.
Because the selling shareholders may be deemed to be "underwriters" within the
meaning of the Securities Act, the selling shareholders will be subject to the
prospectus requirements of the Securities Act. We have informed the selling
shareholders that their sales in the market must comply with the requirements of
the rules and regulations of the Exchange Act.
The selling shareholders may also resell all or a portion of these shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of that Rule.
Upon notification to us by a selling shareholder that any material arrangement
has been entered into with a broker or dealer for the sale of shares through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, a supplement to this prospectus will be
filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing
(i) the name of the selling shareholder and of the participating brokers or
dealers, (ii) the number of shares involved, (iii) the price at which such
shares were sold, (iv) the commissions paid or discounts or concessions allowed
to such brokers or dealers, where applicable, (v) that such brokers or dealers
did not conduct any investigation to verify the information set out or
incorporated by reference in this prospectus and (vi) other facts material to
the transaction. In addition, upon notification to us by a selling shareholder
that a donee or pledgee intends to sell more than 500 shares, a supplement to
this prospectus will be filed if required.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered by this
prospectus will be passed upon for us by Dorsey & Whitney LLP, Minneapolis,
Minnesota.
EXPERTS
The consolidated financial statements of Curative Health Services, Inc.
appearing in Curative Health Services, Inc.'s Annual Report (Form 10-K) for the
year ended December 31, 2000, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3 with respect to the common stock offered by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not include all of the information contained in the registration
statement. For further information about us and our common stock, you should
review the registration statement and its exhibits and schedules. You may read
and copy any document we file with the Commission at its public reference room
at 450 Fifth Street NW, Washington, DC 20549. Please call the Commission at
1-800-SEC-0330 for further information about its public reference facilities and
copy charges. Our filings are also available to the public from the Commission's
web site at http://www.sec.gov.
We file periodic reports, proxy statements and other information with the
Commission. These periodic reports, proxy statements and other information are
available for inspection and copying at the Commission's public reference room
and the regional offices listed above and can be obtained over the Internet
through the Commission's web site.
The Commission allows us to incorporate by reference information into this
prospectus. This allows us to disclose important information to you by referring
you to another document filed separately with the Commission. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superceded by information contained directly in this prospectus.
The documents that we are incorporating by reference are:
o our annual report on Form 10-K for the fiscal year ended December 31, 2000
filed on April 2, 2001;
o our quarterly report on Form 10-Q for the quarter ended March 31, 2001
filed on May 15, 2001;
o our quarterly report on Form 10-Q for the quarter ended June 30, 2001
filed on August 13, 2001;
o our quarterly report on Form 10-Q for the quarter ended September 30, 2001
filed on November 14, 2001;
o our current report on Form 8-K filed on April 13, 2001;
o our current report on Form 8-K/A filed on June 12, 2001; and
o our Registration Statement on Form 8-A filed on June 26, 1991, which
contains a description of our common stock.
We also are incorporating by reference any future filings made by us with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act until
the completion of this offering. The most recent information that we file with
the SEC automatically updates and supercedes more dated information.
You can obtain a copy of any documents which are incorporated by reference in
this prospectus (other than an exhibit to a filing unless that exhibit is
specifically incorporated by reference into that filing) at no cost, by writing
or telephoning David Lawson, at Curative Health Services, Inc., 5051 Highway 7,
Suite 100, St. Louis Park, MN 55416, (952) 922-0201.
---------------
You should rely only on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
II-2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized statement of the estimated amounts of expenses
payable by the Registrant, other than underwriting discounts and commissions, in
connection with the registration of the common stock offered hereby. All amounts
are estimates except the SEC registration fee.
SEC Registration Fee..................................... $ 1,860
Nasdaq Listing Fee....................................... 10,590
Legal Fees and Expenses.................................. 10,000
Accounting Fees and Expenses............................. 5,000
Miscellaneous............................................ 2,550
---------
TOTAL.............................................. $30,000
Item 15. Indemnification of Officers and Directors
Minnesota Statutes Section 302A.521 provides that a corporation shall indemnify
any person made or threatened to be made a party to a proceeding by reason of
the former or present official capacity of such person against judgments,
penalties, fines (including, without limitation excise taxes assessed against
such person with respect to any employee benefit plan), settlements and
reasonable expenses, including attorneys' fees and disbursements, incurred by
such person in connection with the proceeding, if, with respect to the acts or
omissions of such person complained of in the proceeding, such person (1) has
not been indemnified therefor by another organization or employee benefit plan;
(2) acted in good faith; (3) received no improper personal benefit and Section
302A.255 (with respect to director conflicts of interest), if applicable, has
been satisfied; (4) in the case of a criminal proceeding, had no reasonable
cause to believe the conduct was unlawful; and (5) reasonably believed that the
conduct was in the best interests of the corporation in the case of acts or
omissions in such person's official capacity for the corporation or reasonably
believed that the conduct was not opposed to the best interests of the
corporation in the case of acts or omissions in such person's official capacity
for other affiliated organizations. The bylaws of the company provide that the
company shall indemnify its officers and directors under such circumstances and
to the extent permitted by Section 302A.521 as now enacted or hereafter amended.
Item 16. Exhibits
Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------
5.1 Opinion of Dorsey & Whitney LLP*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
* Filed herewith
Item 17. Undertakings
(a) Rule 415 Offering. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the registration statement, or the most recent post-effective amendment
thereof, which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference. 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, that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and therefore is unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(c) Registration Statement Permitted by Rule 430A. The undersigned registrant
hereby undertakes that:
(1) For purposes of determining liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form or
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of St. Louis Park, State of Minnesota, on February 25,
2002.
CURATIVE HEALTH SERVICES, INC.
By:/s/Gary D. Blackford
--------------------------------------------
Gary D. Blackford
Chief Executive Officer and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Gary D. Blackford and Thomas Axmacher, and each
of them his attorney-in-fact, with the power of substitution, for him in any and
all capacities, to sign any amendment or post-effective amendment to this
Registration on Form S-3 or abbreviated registration statement (including,
without limitation, any additional registration filed pursuant to Rule 462 under
the Securities Act of 1933) with respect thereto and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed below by the following persons in the
capacities listed on February 25, 2002:
Signature Title
By: /s/ Gary D. Blackford Chief Executive Officer and Director
--------------------------- (principal executive officer)
Gary D. Blackford
By: /s/ Thomas Axmacher VP Finance and CFO (principal
--------------------------- financial and accounting officer)
Thomas Axmacher
By: /s/ Joseph Feshbach Chairman of the Board and Director
---------------------------
Joseph Feshbach
By: /s/ Paul S. Auerbach Director
---------------------------
Paul S. Auerbach
By: /s/ Daniel E. Berce Director
---------------------------
Daniel E. Berce
By: /s/ Lawrence P. English Director
Lawrence P. English
By: /s/ John C. Prior Director
---------------------------
John C. Prior
By: /s/ Gerard Moufflet Director
Gerard Moufflet
By: /s/ Timothy I. Maudlin Director
---------------------------
Timothy I. Maudlin
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
--------------------------------------------------------------------------------
5.1 Opinion of Dorsey & Whitney LLP*
23.1 Consent of Ernst & Young LLP*
23.2 Consent of Dorsey & Whitney LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included on signature page)
* Filed herewith
Exhibit 5.1
[LETTERHEAD OF DORSEY & WHITNEY LLP]
Dorsey & Whitney LLP
Suite 1500
50 South Sixth Street
Minneapolis, Minnesota 55402
Curative Health Services, Inc.
5051 Highway 7, Suite 100
St. Louis Park, MN 55416
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Curative Health Services, Inc., a Minnesota
corporation (the "Company"), in connection with a Registration Statement on Form
S-3, together with any subsequent amendments thereto (the "Registration
Statement"), relating to the sale by the selling shareholders identified in the
Registration Statement of up to 1,059,000 shares of the Company's common stock,
$.01 par value per share (the "Common Stock"). The Common Stock is to be sold
from time to time as set forth in the Registration Statement.
We have examined such documents, and have reviewed such questions of law,
as we have considered necessary and appropriate for the purposes of our opinion
set forth below. In rendering our opinion, we have assumed the authenticity of
all documents submitted to us as originals, the genuineness of all signatures
and the conformity to authentic originals of all documents submitted to us as
copies. We have also assumed the legal capacity for all purposes relevant hereto
of all natural persons and, with respect to all parties to agreements or
instruments relevant hereto other than the Company, that such parties had the
requisite power and authority (corporate or otherwise) to execute, deliver and
perform such agreements or instruments, that such agreements or instruments have
been duly authorized by all requisite action (corporate or otherwise), executed
and delivered by such parties and that such agreements or instruments are the
valid, binding and enforceable obligations of such parties. As to questions of
fact material to our opinion, we have relied upon certificates of officers of
the Company and of public officials.
Based on the foregoing, we are of the opinion that the Common Stock has
been duly authorized by all requisite corporate action and is validly issued,
fully paid and nonassessable.
Our opinion expressed above is limited to the laws of the State of
Minnesota.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and to the reference to our firm under the caption
"Legal Matters" contained in the prospectus included therein.
Dated: February 25, 2002
Very truly yours,
/s/ Dorsey & Whitney LLP
TSH
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-00000) and related Prospectus of
Curative Health Services, Inc. for the registration of 1,059,000 shares of its
common stock and to the incorporation by reference therein of our report dated
March 20, 2001, with respect to the consolidated financial statements and
schedule of Curative Health Services, Inc. included in its Annual Report (Form
10-K) for the year ended December 31, 2000, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Melville, New York
February 22, 2002