SEC Filings

10-12G/A
AMSURG CORP filed this Form 10-12G/A on 11/03/1997
Entire Document
 
<PAGE>   24
 
   
individuals with diabetes while improving clinical outcomes for these
individuals. While AHC believes that it can reduce the healthcare costs and
improve clinical outcomes for individuals with diabetes through effective
management of the disease, AHC's ability to produce the anticipated improvements
in care and cost savings and thus operate these contracts in a manner that will
produce profitability for AHC has not yet been established, because AHC's
comprehensive healthcare management contracts for people with diabetes are
believed to be the first of this type in the industry and have only been
recently implemented or are in the process of being implemented. During fiscal
1996, 13 DTCA contracts for hospital services were discontinued or not renewed,
and during fiscal 1997, nine DTCA contracts were discontinued or not renewed.
Certain hospitals faced with pressures to make immediate cost reductions have
decided to eliminate DTCA's treatment programs. While AHC believes this business
is stabilizing, the general uncertainties associated with changes taking place
in the healthcare industry and DTCA's client hospitals' reactions to the changes
in the industry may continue to adversely affect revenues and contract retention
in future periods. See "BUSINESS OF AHC AFTER DISTRIBUTION."
    
 
     Other risks associated with the business of AHC include regulatory risks
for the healthcare industry as a whole, efforts by hospitals and third party
payors to reduce costs, unusual and unforeseen patterns of healthcare
utilizations by individuals with diabetes in the managed care organizations with
which DTCA has executed an agreement, the ability or inability of such managed
care organizations to maintain the covered lives in the plans serviced by DTCA
and the ability or inability of DTCA to attract, retain and effectively manage
the employees required to implement the agreements with managed care
organizations.
 
     Following the Distribution, for a period of two years, Thomas G. Cigarran,
the Chairman and Chief Executive Officer of AHC and Henry D. Herr, the Chief
Financial Officer and a director of AHC, will provide advisory services to
AmSurg. The services, while limited in scope, may impact the amount of time
Messrs. Cigarran and Herr are able to devote to the business of AHC during this
period. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS -- Advisory
Agreements."
 
   
     EFFECT OF THE DISTRIBUTION ON THE AHC COMMON STOCK.  After the
Distribution, the AHC Common Stock will continue to be traded on the Nasdaq
National Market. As a result of the Distribution, AHC will no longer own any
AmSurg Common Stock and accordingly its balance sheet and income statement will
no longer reflect the assets and operation of AmSurg. AHC will be entirely
dependent upon the operation of DTCA and AOCC for its earnings and, as a result,
the trading prices of AHC Common Stock are expected to be lower than the trading
prices of AHC Common Stock immediately prior to the Distribution and such
trading prices may also be more volatile than they were prior to the
Distribution. The combined trading prices of AHC Common Stock, Class A Common
Stock and Class B Common Stock after the Distribution may be less than, equal to
or greater than the trading prices of AHC Common Stock prior to the
Distribution.
    
 
   
     CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.  AHC has conditioned the
Distribution on the receipt of either (i) a ruling from the IRS or (ii) the Tax
Opinions to the effect that, among other things, the Distribution will be
substantially tax-free under Section 355 of the Code. It should be noted that if
a ruling from the IRS is not obtained and instead the Distribution is made in
reliance on the Tax Opinions, the Tax Opinions are not binding on the IRS, and
no assurance can be given that the IRS will not challenge the substantially
tax-free nature of the proposed transaction. In addition, the Tax Opinions, if
issued, would be based upon the representations of the management and
stockholders of AHC and the management of AmSurg and would be qualified by
reference to existing law and other matters. Approximately 1.5% of the shares of
AmSurg Common Stock distributed in the Distribution will be subject to federal
income taxation as a dividend taxable under Section 302 of the Code. In
addition, cash received in lieu of fractional share interests in the AmSurg
Common Stock will generally be taxable to recipients. The continuing validity of
the IRS ruling will be subject to certain factual representations and
assumptions. If such factual representations and assumptions were incorrect in a
material respect, the ruling would be jeopardized. AHC is not aware of any facts
or circumstances which should cause the representations and assumptions to be
untrue. If the Distribution were taxable, then (i) corporate level income taxes
would be payable by the consolidated group of which AHC is the common parent,
based upon the amount by which the fair market value of the AmSurg Common Stock
distributed in the Distribution exceeds AHC's basis therein and (ii) each holder
of AHC Common Stock who received shares of AmSurg Common Stock in the
Distribution would be treated as if the
    
 
                                       17