As filed with the Securities and Exchange Commission on October 31, 2014

Registration No. 333-    

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

 

MERGEWORTHRX CORP.

(Exact name of registrant as specified in its charter)

 

Delaware		6770		46-1970047
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

3123 McDonald Street
Miami, Florida, 33133
(305) 785-3900

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

Charles F. Fistel
Chief Executive Officer
c/o MergeWorthRx Corp.
3123 McDonald Street
Miami, Florida, 33133
(305) 785-3900

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

Robert H. Cohen, Esq. Meir A. Lewittes, Esq. Elliott M. Smith, Esq. McDermott Will & Emery LLP 340 Madison Avenue New York, New York 10173 (212) 547-5400		Jocelyn M. Arel, Esq. Stuart L. Rosenthal, Esq. Goodwin Procter LLP 620 Eighth Avenue New York, New York 10018 (212) 813-8800

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and after all conditions under the Merger Agreement and proposed merger are satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. o

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. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) 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. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer: o		Accelerated filer: o
Non-accelerated filer: o (Do not check if a smaller reporting company)		Smaller reporting company: x

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) o

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) o

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CALCULATION OF REGISTRATION FEE

Title of each class of securities to be registered		Amount to be Registered(1)				Proposed maximum offering price per share				Proposed maximum aggregate offering price				Amount of registration fee(2)
Common Stock, par value $0.0001			15,396,232				N/A			$	9,567,224	(3)		$	1,111.71
Total			15,396,232							$	9,567,224			$	1,111.71

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 which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED OCTOBER 31, 2014

PROXY STATEMENT FOR SPECIAL MEETING IN LIEU OF 2014 ANNUAL MEETING OF
STOCKHOLDERS AND PROSPECTUS FOR
15,396,232 SHARES OF COMMON STOCK OF MERGEWORTHRX CORP.

Dear MergeWorthRx Corp. Stockholders:

You are cordially invited to attend the special meeting in lieu of the 2014 annual meeting of stockholders of MergeWorthRx Corp., which we refer to as “we,” “us,” “our,” “MWRX” or the “Company,” on [           ], 2014, at [    ], Eastern time, at the offices of McDermott Will & Emery LLP, 340 Madison Avenue, New York, New York.

At the special meeting, our stockholders will be asked to consider and vote upon a proposal, which we refer to as the “Business Combination Proposal,” to approve an agreement and plan of merger and reorganization (the “Merger Agreement”) providing for the acquisition by us of AeroCare Holdings, Inc., which we refer to as “AeroCare,” and which acquisition we refer to as the “AeroCare Merger” or the “Business Combination.” Pursuant to the Merger Agreement, the aggregate consideration to be paid to AeroCare equity holders, based on the current AeroCare capitalization, will consist of 11,296,079 shares of MWRX common stock and 511,636 options to purchase MWRX common stock, subject to adjustment in accordance with the terms of the Merger Agreement. In addition, AeroCare’s existing equity holders will be entitled to receive up to an aggregate of 3,588,517 additional shares of MWRX common stock (the “earnout shares”) upon the achievement of certain financial targets by the combined company during the three fiscal years following the Business Combination. A copy of the Merger Agreement is attached to the accompanying proxy statement/prospectus as Annex A.

It is anticipated that, upon completion of the Business Combination, MWRX’s existing stockholders, including our sponsors, will retain an ownership interest of approximately 47.45% of the post-merger company and the former stockholders of AeroCare will own approximately 52.55% of the outstanding common stock of the post-merger company. These percentages are calculated based on a number of assumptions and are subject to adjustment in accordance with the terms of the Merger Agreement. These relative percentages assume that none of our public stockholders exercise their conversion rights. If our public stockholders exercise their conversion rights, the percentage ownership retained by MWRX’s existing stockholders will be different. These percentages also do not take into account (i) up to 3,588,517 earnout shares that may be issued in the future and (ii) 511,636 options to purchase shares of MWRX common stock that will be issued to former holders of AeroCare stock options in connection with the Business Combination (the “assumed options”). You should read “Summary — Ownership After Business Combination” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

Our stockholders will also be asked to consider and vote upon proposals (a) to approve and adopt our second amended and restated certificate of incorporation, a copy of which is attached as Annex B to the accompanying proxy statement/prospectus, which we refer to as the “Certificate Proposal,” (b) to elect two directors to serve on our board of directors, subject to the closing of the Business Combination, which we refer to as the “Director Election Proposal,” (c) to approve and adopt the AeroCare Holdings, Inc. 2014 Stock Option and Incentive Plan (an equity-based incentive plan), a copy of which is attached to the accompanying proxy statement/prospectus as Annex C, which we refer to as the “Incentive Plan Proposal, and (d) to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote, which we refer to as the “Adjournment Proposal.”

Each of these proposals is more fully described in the accompanying proxy statement/prospectus.

Our common stock is currently listed on The NASDAQ Capital Market under the symbol “MWRX.” We have applied to continue the listing of our common stock on The NASDAQ Capital Market under the symbol “AERX” upon the closing of the Business Combination.

Pursuant to our amended and restated certificate of incorporation, we are providing our public stockholders with the opportunity to convert their shares of our common stock for cash equal to their pro rata share of the aggregate amount on deposit in the trust account which holds the proceeds of our initial public offering as of two business days prior to the consummation of the Business Combination upon the consummation of the Business Combination. For illustrative purposes, based on funds in the trust account of approximately $63,457,168 on June 30, 2014, the estimated per share conversion price would have been approximately $8.36. Public stockholders may elect to convert their shares even if they vote for the Business Combination Proposal. A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from converting his, her or its shares with respect to more than an aggregate of 25% of the public shares without our prior written consent. Our founders have agreed to waive their conversion rights with respect to 1,897,500 shares issued to them prior to our initial public offering, which we refer to as “founder shares,” and 713,450 shares issued to them in a private placement simultaneously with the completion of our initial public offering, which we refer to as “sponsor shares”, and any other shares they may hold in connection with the consummation of the Business Combination, and the founder shares and sponsor shares will be excluded from the pro rata calculation used to determine the per-share conversion price.

We are providing this proxy statement/prospectus and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements of the special meeting. Whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (and any

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documents incorporated into this proxy statement/prospectus by reference) carefully. Please pay particular attention to the section entitled “Risk Factors.”

Our board of directors has approved and adopted the Merger Agreement and recommends that our stockholders vote FOR all of the proposals presented to our stockholders. When you consider our board’s recommendation to vote to approve these proposals, you should keep in mind that our directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “Proposal No. 1 — Approval of the Business Combination — Certain Benefits of MWRX’s Directors and Officers and Others in the Business Combination.”

Approval of the Business Combination Proposal, Incentive Plan Proposal and Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of our common stock that are present in person or by proxy and entitled to vote thereon at the special meeting. Approval of the Certificate Proposal requires the affirmative vote of holders of a majority of our outstanding shares of common stock. Approval of the Director Election Proposal requires the affirmative vote of the holders of a plurality of the shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. The board of directors of AeroCare has approved the AeroCare Merger.

We have no specified maximum conversion threshold under our charter. It is a condition to closing under the Merger Agreement, however, that the aggregate amount of funds in the trust account that holds the proceeds of our initial public offering, after giving effect to the payment for all public shares properly submitted for conversion, the advisory fee to EarlyBirdCapital, Inc. and other specified costs set forth in the Merger Agreement, plus any proceeds from the issuance of additional shares of our common stock at the closing of the Business Combination and any available cash of the Company (net of any indebtedness), equals at least $30,000,000. Each conversion of shares by our public stockholders will decrease the amount in our trust account and thus decrease the amount of cash available to satisfy this closing condition. Therefore, assuming (i) we do not obtain financing through the issuance of additional shares of our common stock at the closing of the Business Combination and (ii) transaction costs and other specified deductions to the trust account do not exceed $4.4 million, the maximum number of public shares that may be converted into cash from the trust account for us to be able to complete the Business Combination would be 3,475,167. In no event, however, will we convert public shares in an amount that would cause our net tangible assets to be less than $5,000,001.

Your vote is very important. If you are a registered stockholder, please vote your shares, as soon as possible using one of the following methods to ensure that your vote is counted, regardless of whether you expect to attend the special meeting in person: (1) call the toll-free number specified on the enclosed proxy card and follow the instructions when prompted, (2) access the Internet website specified on the enclosed proxy card and follow the instructions provided to you, or (3) complete, sign, date and return the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting. A failure to vote your shares is the equivalent of a vote “AGAINST” the Certificate Proposal but will have no effect on the other proposals for the special meeting.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted in favor of each of the proposals presented at the special meeting. If you fail to return your proxy card or fail to submit your proxy by telephone or over the Internet, or fail to instruct your bank, broker or other nominee how to vote, and do not attend the special meeting in person, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and, if a quorum is present, will have the same effect as a vote against the Certificate Proposal but will have no effect on the other proposals. If you are a stockholder of record and you attend the special meeting and wish to vote in person, you may withdraw your proxy and vote in person.

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On behalf of our board of directors, I thank you for your support and look forward to the successful completion of the Business Combination.

Sincerely,

[           ], 2014

Charles F. Fistel
Chief Executive Officer, Chief Financial Officer and
Treasurer

This proxy statement/prospectus is dated [           ], 2014, and is first being mailed to stockholders of the Company on or about [           ], 2014.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE BUSINESS COMBINATION, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

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MergeWorthRx Corp.
3123 McDonald Street
Miami, Florida, 33133

NOTICE OF SPECIAL MEETING IN LIEU OF 2014 ANNUAL MEETING
OF STOCKHOLDERS OF MERGEWORTHRX CORP.
 
To Be Held On [           ], 2014

To the Stockholders of MergeWorthRx Corp.:

NOTICE IS HEREBY GIVEN that a special meeting in lieu of the 2014 annual meeting of stockholders (the “special meeting”) of MergeWorthRx Corp., a Delaware corporation (“MWRX” or the “Company”), will be held at [    ] a.m., Eastern time, on [           ], 2014, at the offices of McDermott Will & Emery LLP, 340 Madison Avenue, New York, New York. You are cordially invited to attend the special meeting for the following purposes:

(1) The Business Combination Proposal — to consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger and Reorganization, dated as of October 14, 2014, 2014, as it may be amended (the “Merger Agreement”), by and among the Company, Anvil Merger Sub, Inc., a Delaware corporation (“Merger Sub”), AeroCare Holdings, Inc., a Delaware corporation (“AeroCare”) and FFC Aerocare SR, LLC, a Delaware limited liability company, and the transactions contemplated thereby (the “Business Combination Proposal”);

(2) The Certificate Proposal — to consider and vote upon a proposal to approve our second amended and restated certificate of incorporation to, among other things:

(3) The Director Election Proposal — to consider and vote upon a proposal to elect two directors to serve on MWRX’s board of directors upon consummation of the Business Combination (the “Director Election Proposal”);

(4) The Incentive Plan Proposal — to consider and vote upon a proposal to approve and adopt the AeroCare Holdings, Inc. 2014 Stock Option and Incentive Plan (the “Incentive Plan Proposal”);

(5) The Adjournment Proposal — to consider and vote upon a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve one or more proposals presented to stockholders for vote (the “Adjournment Proposal”); and

(6) to consider and transact such other procedural matters as may properly come before the special meeting or any adjournment or postponement thereof.

Only holders of record of our common stock at the close of business on [           ], 2014 are entitled to notice of the special meeting and to vote at the special meeting and any adjournments or postponements of the special meeting. A complete list of our stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at our principal executive offices for inspection by stockholders during ordinary business hours for any purpose germane to the special meeting.

Pursuant to our amended and restated certificate of incorporation, we will provide our public stockholders with the opportunity to convert their shares of our common stock for cash equal to their pro rata share of the aggregate amount on deposit in the trust account which holds the proceeds of our initial public offering as of two business days prior to the consummation of the transactions contemplated by the Merger Agreement, upon the closing of the transactions contemplated by the Merger Agreement. For illustrative purposes, based on funds in the trust account of approximately $63,457,168 on June 30, 2014, the estimated per share redemption price would have been approximately $8.36. Public stockholders may elect to convert their shares even if

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they vote for the Business Combination Proposal. A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from converting his, her or its shares with respect to more than an aggregate of 25% of the public shares without our prior written consent. The holders of our shares issued in a private placement (i) prior to our initial public offering (“founder shares”) and (ii) simultaneously with the completion of our initial public offering (“sponsor shares”) have agreed to waive their conversion rights with respect to their founder shares, sponsor shares and any other shares they may hold in connection with the consummation of the Business Combination, and the founder shares and sponsor shares will be excluded from the pro rata calculation used to determine the per-share conversion price. Our founders currently own approximately 25.6% of our issued and outstanding shares of common stock.

The transactions contemplated by the Merger Agreement will be consummated only if a majority of the outstanding shares of common stock of the Company present in person or by proxy and entitled to vote at the special meeting of the stockholders are voted in favor of the Business Combination Proposal and the Director Election Proposal and a majority of our outstanding shares of common stock are voted in favor of the Certificate Proposal. We have no specified maximum conversion threshold under our charter. It is a condition to closing under the Merger Agreement, however, that the aggregate amount of funds in the trust account, after giving effect to the payment for all public shares properly submitted for conversion, the $1.848 million advisory fee to EarlyBirdCapital, Inc. (“EBC”) and other specified costs set forth in the Merger Agreement, plus any proceeds from the issuance of additional shares of our common stock at the closing of the Business Combination and any available cash of the Company (net of any indebtedness), equals at least $30,000,000. Each conversion of shares by our public stockholders will decrease the amount in our trust account and thus decrease the amount of cash available to satisfy this closing condition. Therefore, assuming (i) we do not obtain financing through the issuance of additional shares of our common stock at the closing of the Business Combination and (ii) transaction costs and other specified deductions to the trust account do not exceed $4.4 million, the maximum number of public shares that may be converted into cash from the trust account in order for us to be able to complete the Business Combination would be 3,475,167. In no event, however, will we convert public shares in an amount that would cause our net tangible assets to be less than $5,000,001.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the annexes thereto) for a more complete description of the proposed business combination and related transactions and each of our proposals. We encourage you to read this proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow & Co., LLC, at (800) 662-5200.

By Order of the Board of Directors,

[           ], 2014

Stephen B. Cichy
President, Chief Operating Officer and Secretary

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ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about MWRX from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available for you to review at the public reference room of the Securities and Exchange Commission, or SEC, located at 100 F Street, N.E., Washington, D.C. 20549, and through the SEC’s website at www.sec.gov. You can also obtain the documents incorporated by reference into this proxy statement/prospectus free of charge by requesting them in writing (including by electronic mail) or by telephone from the company at the following address and telephone number:

MergeWorthRx Corp.
3123 McDonald Street
Miami, Florida, 33133
(305) 785-3900
Attention: Stephen B. Cichy
E-mail: scichy@monarchsp.com
or
Morrow & Co., LLC
470 West Avenue
Stamford, CT 06902
Telephone: (800) 662-5200
Email: MWRX.info@morrowco.com

If you would like to request any documents, please do so by [           ], 2014 in order to receive them before the special meeting.

You also may obtain additional proxy cards and other information related to the proxy solicitation by contacting the appropriate contact listed above. You will not be charged for any of these documents that you request.

For a more detailed description of the information incorporated by reference in this proxy statement/prospectus and how you may obtain it, see “Where You Can Find More Information” beginning on page 169.

ABOUT THIS DOCUMENT

This document, which forms part of a registration statement on Form S-4 filed with the SEC by MWRX, constitutes a prospectus of MWRX under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of common stock of MWRX to be issued to AeroCare stockholders under the Merger Agreement. This document also constitutes a proxy statement of MWRX under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither the mailing of this proxy statement/prospectus to MWRX stockholders nor the issuance by MWRX of its common stock in connection with the AeroCare Merger will create any implication to the contrary.

Information contained in this proxy statement/prospectus regarding MWRX has been provided by MWRX and information contained in this proxy statement/prospectus regarding AeroCare has been provided by AeroCare.

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		Page
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			iv
FREQUENTLY USED TERMS			v
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS			1
SUMMARY OF THE PROXY STATEMENT/PROSPECTUS			10
SELECTED CONDENSED COMBINED FINANCIAL DATA			17
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			18
COMPARATIVE SHARE INFORMATION			19
RISK FACTORS			20
INFORMATION ABOUT MWRX			48
MWRX MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			60
INFORMATION ABOUT AEROCARE			63
AEROCARE MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			79
MANAGEMENT AFTER THE BUSINESS COMBINATION			92
SPECIAL MEETING IN LIEU OF 2014 ANNUAL MEETING OF MWRX STOCKHOLDERS			97
PROPOSAL NO. 1 — APPROVAL OF THE BUSINESS COMBINATION			102
The Merger Agreement			102
Structure of the Merger			102
Company Shares and Options to be Issued at Closing of the Merger			102
Treatment of AeroCare Options			103
Conversion of Shares of Merger Sub			103
Earnout Shares			103
Lock-Up Provisions			105
Material Adverse Effect			106
Closing and Effective Time of the Merger			106
Conditions to Closing of the Merger			106
Representations and Warranties			109
Covenants of the Parties			110
Board of Directors following the Merger			114
Termination			114
Effect of Termination			115
Fees and Expenses			116
Amendment			116
Exchange of Certificates			116
Appraisal Rights			117
Tax Consequences			117

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		Page
Survival and Indemnification			117
Additional Agreements			119
Background of the Business Combination			120
MWRX’s Board of Directors’ Reasons for the Approval of the Business Combination			128
Certain Benefits of MWRX’s Directors and Officers and Others in the Business Combination			131
Potential Purchases of Public Shares			131
Total MWRX Shares to be Issued in the Business Combination			131
Board of Directors of MWRX following the AeroCare Merger			132
Certificate of Incorporation; Bylaws			132
Name; Headquarters			132
Conversion Rights			132
Appraisal Rights			132
Accounting Treatment			132
Material U.S. Federal Income Tax Considerations for Stockholders Exercising Conversion Rights			131
Vote Required for Approval			136
Recommendation of the Board			137
PROPOSAL NO. 2 — APPROVAL OF THE SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION			138
Vote Required for Approval			145
Recommendation of the Board			145
PROPOSAL NO. 3 — ELECTION OF DIRECTORS TO THE BOARD			146
Vote Required for Approval			146
Recommendation of the Board			146
PROPOSAL NO. 4 — APPROVAL AND ADOPTION OF THE AEROCARE HOLDINGS CORPORATION 2014 STOCK OPTION AND INCENTIVE PLAN			147
2014 Stock Option and Incentive Plan			147
New Plan Benefits			150
Securities Authorized for Issuance Under Equity Compensation Plans			146
Vote Required for Approval			150
Recommendation of the Board			150
PROPOSAL NO. 5 — THE ADJOURNMENT PROPOSAL			151
Consequences if the Adjournment Proposal is Not Approved			151
Required Vote			151
Recommendation of the Board			151
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION			152
BENEFICIAL OWNERSHIP OF SECURITIES			158
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			161
DESCRIPTION OF MWRX SECURITIES			163
PRICE RANGE OF SECURITIES AND DIVIDENDS			167
LEGAL MATTERS			168

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		Page
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS			168
APPRAISAL RIGHTS			168
DELIVERY OF DOCUMENTS TO STOCKHOLDERS			168
TRANSFER AGENT AND REGISTRAR			168
SUBMISSION OF STOCKHOLDER PROPOSALS			168
FUTURE STOCKHOLDER PROPOSALS			168
WHERE YOU CAN FIND MORE INFORMATION			169
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS			F-1
ANNEXES
ANNEX A — AGREEMENT AND PLAN OF MERGER AND REORGANIZATION			A-1
ANNEX B — SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION			B-1
ANNEX C — AEROCARE HOLDINGS, INC. 2014 STOCK OPTION AND INCENTIVE PLAN			C-1

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this proxy statement/prospectus. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for our business, and the timing and ability for us to complete the Business Combination. Specifically, forward-looking statements may include statements relating to:

These forward-looking statements are based on information available as of the date of this proxy statement, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

You should not place undue reliance on these forward-looking statements in deciding how to grant your proxy or instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

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FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms “we,” “us,” “our,” the “Company” and “MWRX” refer to MergeWorthRx Corp., and the terms “combined company” and “post-merger company” refer to MWRX and AeroCare together following the consummation of the Business Combination.

In this document:

“AeroCare” means AeroCare Holdings, Inc.

“AeroCare Merger” means the merger of Merger Sub with and into AeroCare, with AeroCare surviving the merger as a wholly-owned subsidiary of MWRX.

“assumed options” means the 511,636 options to purchase MWRX common stock that will be issued to former holders of AeroCare stock options in connection with the Business Combination, subject to adjustment per the terms of the Merger Agreement.

“Business Combination” means the transactions contemplated by the Merger Agreement.

“DME” means durable medical equipment.

“DMEPOS” means Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies.

“DRA” means the Deficit Reduction Act of 2005.

“earnout shares” means up to 3,588,517 shares that will be issued to former AeroCare stockholders upon the achievement of certain financial targets by the post-merger company during the three fiscal years after completion of the Business Combination.

“founder shares” means the 1,897,500 shares of MWRX common stock issued prior to MWRX’s initial public offering.

“founders” means holders of the founder shares.

“Merger Agreement” means the Agreement and Plan of Merger and Reorganization, dated as of October 14, 2014, as it may be amended, by and among the Company, Merger Sub, AeroCare and FFC Aerocare SR, LLC, a Delaware limited liability company.

“Merger Sub” means Anvil Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of the Company.

“MIPPA” means Medicare Improvements for Patients and Providers Act of 2008.

“MMA” means the Medicare Prescription Drug Improvement and Modernization Act of 2003.

“MWRX” means MergeWorthRx Corp.

“MWRX common stock” means common stock, par value $0.0001 per share, of MWRX.

“public shares” means shares of MWRX Common Stock issued in MWRX’s initial public offering.

“Reform Package” means the Affordable Care Act and Education Reconciliation Act of 2010.

“sponsors” means our stockholders prior to our initial public offering.

“sponsor shares” means the 713,450 shares of MWRX common stock issued to our sponsors in a private placement simultaneously with our initial public offering.

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS
FOR STOCKHOLDERS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting, including with respect to the proposed Business Combination. The following questions and answers may not include all the information that is important to our stockholders. We urge stockholders to read carefully this entire proxy statement/prospectus, including the annexes and the other documents referred to herein.

Our stockholders are being asked to consider and vote upon a proposal to approve and adopt the Merger Agreement, among other proposals.

Our common stock is currently listed on The NASDAQ Capital Market, or NASDAQ, under the symbol “MWRX.” We have applied to continue the listing of our common stock on NASDAQ under the symbol “AERX” upon the closing of the Business Combination.

This proxy statement/prospectus and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the special meeting. You should read this proxy statement/prospectus and its annexes carefully and in their entirety.

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its annexes.

In July 2013, we consummated our initial public offering of 7,590,000 shares of common stock for an offering price of $8.00 per share, generating gross proceeds of $60,720,000. Concurrently therewith, we issued an aggregate of 713,450 sponsor shares in a private placement to our sponsors and their designees

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at a price of $8.00 per share, generating gross proceeds of $5,707,600. Approximately $63,452,400 of the net proceeds from our initial public offering and the private placement of sponsor shares was placed in a trust account and, in accordance with our amended and restated certificate of incorporation, will be released upon the consummation of the Business Combination. See the question entitled “What happens to the funds held in the trust account upon consummation of the Business Combination?”

There currently are 10,200,950 shares of our common stock issued and outstanding, consisting of 7,590,000 shares originally sold in the initial public offering, 1,897,500 founder shares that were issued prior to the initial public offering to our founders and 713,450 sponsor shares sold to our sponsors concurrently with our initial public offering.

Under our amended and restated certificate of incorporation, in conjunction with a stockholder vote, we must provide all holders of public shares with the opportunity to have their public shares converted into cash upon the consummation of the Business Combination.

The following table illustrates varying ownership levels based on the assumptions described above but assuming varying levels of conversions by MWRX stockholders:

		Assumed% of MWRX Shares Converted (rounded)
		0.0%				25.0%				3,475,167 (maximum under Merger Agreement)
MWRX public stockholders			35.31	%			29.04				22.83
MWRX founders			12.14	%			13.32				14.49
Former AeroCare stockholders			52.55	%			57.63				62.68

See “Summary — Ownership After Business Combination” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

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The approval of the Certificate Proposal requires the affirmative vote of the holders of a majority of the outstanding shares of our common stock. Accordingly, an MWRX stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting or a broker non-vote will have the same effect as a vote “AGAINST” the Certificate Proposal.

Directors are elected by a plurality of all of the votes cast by holders of shares of our common stock represented in person or by proxy and entitled to vote thereon at the special meeting. This means that the nominees will be elected if they receive more affirmative votes than any other nominee for the same position. Stockholders may not cumulate their votes with respect to the election of directors. Abstentions and broker non-votes will have no effect on the election of directors.

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Any demand for conversion, once made, may be withdrawn at any time until the deadline for exercising conversion requests and thereafter, with our consent, until the vote is taken with respect to the Business Combination. If you delivered your shares for conversion to our transfer agent and decide within the required timeframe not to exercise your conversion rights, you may request that our transfer agent return the shares (physically or electronically). You may make such request by contacting our transfer agent at the phone number or address listed under the question “Who can help answer my questions?”

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If, as a result of the termination of the Merger Agreement or otherwise, we are unable to complete the Business Combination or another business combination transaction by December 26, 2014, our amended and restated certificate of incorporation provides that we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In the event of liquidation, there will be no distribution with respect to the Company’s founder shares and sponsor shares.

We expect that the amount of any distribution our public stockholders will be entitled to receive upon our dissolution will be approximately the same as the amount they would have received if they had converted their shares in connection with the Business Combination, subject in each case to MWRX’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. See the section entitled “Risk Factors — Risks Related to MWRX and the Business Combination” — If we are unable to complete the Business Combination by December 26, 2014, our amended and restated certificate of incorporation provides that our corporate existence will automatically terminate and we will dissolve and liquidate. In such event, third parties may bring claims against the Company and, as a result, the proceeds held in trust could be reduced and the per share liquidation price received by stockholders could be less than $8.36 per share.” Holders of our founder shares and sponsor shares have waived any right to any liquidation distribution with respect to those shares.

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For a description of the conditions to the completion of the Business Combination, see the section entitled “Proposal No. 1 — Approval of the Business Combination.”

A failure to vote in person or by proxy or a failure to instruct your broker, bank or nominee how to vote will have no effect on the Business Combination Proposal, the Director Election Proposal, the Incentive Plan Proposal or the Adjournment Proposal, but will have the same effect as a vote “AGAINST” the Certificate Proposal.

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Stephen B. Cichy, President, Chief Operating Officer and Secretary
MergeWorthRx Corp.
3123 McDonald Street
Miami, Florida, 33133
Tel: 305-785-3900
Email: scichy@monarchsp.com

You may also contact our proxy solicitor at:
Morrow & Co., LLC
470 West Avenue
Stamford, CT 06902
Telephone: (800) 662-5200
Email: MWRX.info.morrowco.com

To obtain timely delivery, our stockholders must request the materials no later than five business days prior to the special meeting.

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You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to our transfer agent prior to the special meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attn: Mark Zimkind
mzimkind@continentalstock.com

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RISK FACTORS

The following risk factors apply to the business and operations of the Company and will also apply to the business and operations of the combined company following the completion of the Business Combination. These risk factors are not exhaustive and investors are encouraged to perform their own investigation with respect to the business, financial condition and prospects of the Company and the combined company following the completion of the Business Combination. You should carefully consider the following risk factors, in addition to the other information included in this proxy statement, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We may have additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business. The following discussion should be read in conjunction with the consolidated financial statements and notes to the financial statements included herein.

Risks Relating to AeroCare’s Business

Continued reductions in Medicare and Medicaid reimbursement rates could have a material adverse effect on AeroCare’s business, results of operations and financial condition.

There are ongoing legislative and regulatory efforts to reduce or otherwise adversely affect Medicare and Medicaid reimbursement rates for products and services AeroCare provides. For example, the regulations implementing the mandates under the Medicare Prescription drug Improvement and Modernization Act of 2003 (“MMA”), the Deficit Reduction Act of 2005 (“DRA”), the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), the Affordable Care Act and Education Reconciliation Act of 2010 (“Reform Package”), the Budget Control Act of 2011 and the American Taxpayer Relief Act of 2012 reduced the reimbursement for a number of products and services AeroCare provides and established or expanded a competitive bidding program for certain durable medical equipment under Medicare Part B. The Medicare Durable Medical Equipment, Prosthetics, Orthotics and Supplies (“DMEPOS”) competitive bidding program is intended to further reduce reimbursement for certain products and to decrease the number of companies permitted to serve Medicare beneficiaries. As an example, in July 2008, MIPPA was passed and included a delay to the competitive bidding program. In order to ensure that the delay would achieve the same level of savings projected for the DMEPOS competitive bidding program, Congress adopted a nationwide average payment reduction of 9.5% in the DMEPOS fee schedule for those product categories included in Round 1, effective January 1, 2009.

Rebidding for the nine Metropolitan Statistical Areas included in Round 1 of the competitive bidding program was conducted in 2009, and contracts for that round went into effect on January 1, 2011. The average reduction in payment amounts from the DMEPOS fee schedule was 32%. The Round 2 competition covered 91 MSAs. Bids for Round 2 were submitted in 20110, with contracts going into effect on July 1, 2013. The average payment reduction from the DMEPOS fee schedule under the Round 2 contracts was 45%.

In April 2012, CMS announced the timeline and product categories for the “recompete” of the Round 1 Rebid contracts and an associated schedule. New rates for the Round 1 Recompete were announced in early October 2013 and represent, on average, a 37% reduction from the prevailing Medicare fee schedule. However, certain product categories and products will absorb greater reductions that are more analogous to Round 2 rates. The Recompete and its new rates took effect on January 1, 2014. AeroCare estimates the impact of the Round 1 Recompete’s new rates translate to an incremental $0.3 million reduction in revenues as compared to the Round 1 Rebid. The Reform Package also made changes to the competitive bidding program and requires that all areas of the country are subject either to DMEPOS competitive bidding or payment rate adjustments using competitive bid pricing by 2016. However, the Secretary of Health and Human Services is also required to publish a proposed rule outlining the methodology to be used for such a program expansion. At this time, AeroCare cannot quantify what negative impact, if any, future program revisions will have upon AeroCare’s revenue or operations, but such impact would likely be material.

Further, the DRA resulted in reduced reimbursement rates for certain durable medical equipment, including the home oxygen equipment and services AeroCare provides, a reduced period for rental revenue, and potential increased costs to AeroCare associated with replacement of certain patient-owned equipment. There have been various administrative and legislative proposals to further reduce the maximum capped rental

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period for oxygen equipment below the 36-month level mandated by the DRA to 13 and 18 months, respectively, and/or to reduce the monthly payment rates for oxygen equipment.

There are also ongoing state and federal legislative and regulatory efforts to reduce or otherwise adversely affect Medicaid reimbursement rates for products and services AeroCare provides. For a number of years, some states have adopted alternative pricing methodologies for certain drugs, biologicals and home medical equipment reimbursed under the Medicaid program. In a number of states, the changes reduced the level of reimbursement AeroCare receives for these items without a corresponding offset or increase to compensate for the service costs AeroCare incurred. AeroCare periodically evaluates the possibility of stopping or reducing AeroCare’s Medicaid business in a number of states with reimbursement policies that make it difficult for AeroCare to conduct operations profitably.

Moreover, the Reform Package increases Medicaid enrollment over a number of years and imposes additional requirements on states, which could further strain state budgets and therefore result in additional policy changes or rate reductions. In June 2012, the United States Supreme Court upheld the Reform Package provision expanding Medicaid eligibility to new populations as constitutional, but only so long as the expansion of the Medicaid program is optional for the states. States that choose not to expand their Medicaid programs to newly eligible populations can only lose the new federal Medicaid funding included in the Reform Package but cannot lose their eligibility for existing federal Medicaid matching payments. In addition, changes to the federal regulations pertaining to prescription drug pricing may also impact the Medicare and Medicaid reimbursement available to us. The President’s 2013 and 2014 fiscal budget proposals would limit the state Medicaid reimbursement levels for certain durable medical equipment services and products to Medicare reimbursement rates for the same products and services in the same state, including those impacted by the Medicare DMEPOS competitive bidding program. In view of the Supreme Court decision, some states have announced plans to reduce their Medicaid enrollments, which may have a negative impact on AeroCare’s revenues. AeroCare cannot currently predict the adverse impact, if any, that any such changes to or reduction in AeroCare’s Medicaid business might have on AeroCare’s operations, cash flow and capital resources, but such impact could be material. In addition, AeroCare cannot predict whether other states will consider similar or other reimbursement reductions or whether any such changes could have a material adverse effect on AeroCare’s results of operations, cash flow and capital resources.

We cannot estimate the ultimate impact of all legislated and contemplated Medicare and Medicaid reimbursement changes or provide assurance to investors that additional reimbursement reductions will not be made or will not have a material adverse effect on AeroCare’s business, financial condition, results of operations, cash flow, capital resources and liquidity. However, given the recent significant increases in industry audit volume, auditors’ interpretation and enforcement of documentation requirements and the increasing regulatory burdens associated with responding to those audits, it is likely that the negative pressures from legislative and regulatory changes will continue and accelerate.

For further information, see “Information About AeroCare — Government Regulation.”

A significant percentage of AeroCare’s business is derived from the sale and rental of Medicare-covered oxygen and DME items, and recent legislative acts impose substantial changes in the Medicare payment methodologies and reductions in the Medicare payment amounts for these items.

DRA changed the reimbursement methodology for oxygen equipment from continuous monthly payment for as long as the equipment is in use by a Medicare beneficiary, which includes payment for oxygen contents, related disposable supplies and accessories and maintenance of equipment, to a capped rental arrangement whereby payment for oxygen equipment may not extend over a period of continuous use of longer than 36 months. Thereafter, the supplier must continue to furnish the equipment without additional rental payments until the end of the equipment’s 60-month useful life. Separate payments for oxygen contents continue to be made for the period of medical need beyond the 36^th month. Additionally, payment for routine maintenance and service of an oxygen concentrator (but not gaseous or liquid oxygen equipment) may be made following each six-month period after the 36-month rental period ends. The oxygen provisions contained in DRA became effective on January 1, 2006. In the case of beneficiaries receiving oxygen equipment prior to the effective date, the 36-month period of continuous use began on January 1, 2006. Accordingly, the first month in which the new payment methodology impacted AeroCare’s net revenues was January 2009. AeroCare

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anticipates that the new oxygen payment rules will continue to negatively affect AeroCare’s net revenues on an ongoing basis, as each month additional customers reach the 36-month capped rental period, resulting in up to two or more years without rental income from these customers. During 2013, AeroCare estimates that AeroCare’s sequential net revenues were reduced as a result of additional customers reaching the payment cap by approximately $1.2 million when compared to the prior year period.

On July 15, 2008, Congress enacted the MIPPA legislation which reduced Medicare payment rates nationwide for certain DME items, including oxygen equipment, by 9.5% beginning in 2009. In addition to the 9.5% reduction, CMS subjected the monthly payment amount for stationary oxygen equipment to additional cuts of 2.3% in 2009, thereby reducing the monthly payment rate from $199.28 in 2008 to $175.79 in 2009. The monthly payment amount was reduced by 1.5% in 2010, to $173.17. AeroCare estimates that this reduction negatively impacted AeroCare’s revenues in 2010 by approximately $1.0 million when compared to the prior year period. The monthly payment amounts for 2011 and 2012 were $173.31 and $176.06, respectively. The stationary oxygen payment rate for 2013 was increased to $177.36 per month, an increase of 0.7% over 2012, and was not material to AeroCare’s operating results in 2013. The stationary oxygen payment rate for 2014 has been established by CMS at $178.24 per month, an increase of 0.5%. AeroCare estimates that this increase will favorably impact AeroCare’s revenues in 2014 by approximately $0.2 million.

Federal regulatory changes subject the Medicare reimbursement rates for AeroCare’s equipment and services to additional reductions and to potential discretionary adjustment by CMS, which could reduce AeroCare’s revenues, net income and cash flows.

In February 2006, a final rule governing CMS’s Inherent Reasonableness, or IR, authority became effective. The IR rule establishes a process for adjusting fee schedule amounts for Medicare Part B services when existing payment amounts are determined to be either grossly excessive or deficient. The rule describes the factors that CMS or its contractors will consider in making such determinations and the procedures that will be followed in establishing new payment amounts. To date, no payment adjustments have occurred or have been proposed as a result of the IR rule.

The effectiveness of the IR rule itself did not trigger payment adjustments for any items or services. Nevertheless, the IR rule puts in place a process that could eventually have a significant impact on Medicare payments for AeroCare’s equipment and services. AeroCare cannot predict whether or when CMS will exercise its IR authority with respect to payment for AeroCare’s equipment and services, or the effect that such payment adjustments would have on AeroCare’s financial position or operating results.

The comprehensive healthcare reform law and other federal and state legislative efforts could have a material adverse effect on AeroCare’s business, results of operations and financial condition.

Federal and state legislative and regulatory activities may materially affect reimbursement policies and rates for other items and services AeroCare provides and may otherwise materially affect AeroCare’s business results of operations and financial condition. For example, in March 2010, Congress enacted the Reform Package which includes comprehensive healthcare reform. Among many other provisions, the Reform Package expands the Medicaid program, mandates extensive insurance market reforms, creates new health insurance access points (e.g., insurance exchanges), provides certain insurance subsidies (e.g., premiums and cost sharing), imposes individual and employer health insurance requirements and makes a number of other changes to United States law.

There are various provisions in the Reform Package that impact AeroCare’s business. For example, the Reform Package requires certain pharmaceutical and medical device manufacturers to pay an excise tax to the government, which may, in turn, increase AeroCare’s costs for these products. Legislation aimed at repealing the medical device excise tax, the “Protect Medical Innovation Act of 2013,” was introduced in the House in February 2013, but little progress has been made toward passing that legislation. The Reform Package also provides for cuts in some Medicare payments made to certain providers and substantial cuts to Medicare Advantage plans, through which AeroCare contracts to provide services to Medicare beneficiaries. Also included in the Reform Package are (i) an expansion of the Recovery Audit Contractor Program, (ii) certain fraud and abuse prevention measures, and (iii) expanded regulatory authority concerning the types of conduct

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that can result in additional fines and penalties for those healthcare providers who do not comply with applicable laws and regulations. Furthermore, the Reform Package grants the Secretary of Health and Human Services authority to set a date by which certain providers and suppliers will be required to establish a compliance program.

The Reform Package makes a number of changes to how certain of AeroCare’s products will be reimbursed by Medicare. As discussed above, the Reform Package made changes to the Medicare durable medical equipment CPI adjustment for 2011 and each subsequent year based upon the CPI-U reduced by a new multi-factor productivity adjustment which may result in negative updates. The Administration’s 2015 fiscal budget proposal would change the way the government calculates measures of inflation for government programs, among other things. As compared to the current CPI method, the switch in the inflation formula would cut spending on government programs by $130 billion over 10 years. At this time, it is unclear how this change, if implemented, would impact annual DMEPOS payment updates. It is possible that such a change, if implemented, could have an adverse impact on AeroCare’s business, financial condition, results of operations, cash flow, capital resources and liquidity.

In an effort to further strengthen the integrity of the Medicare program, the Reform Package includes additional requirements concerning physician enrollment and certain mandatory face-to-face patient/physician visits in conjunction with the ordering of durable medical equipment not currently subject to such requirements. These provisions have been and will continue to be the subject of rulemaking and are a high priority for the American Association for Homecare and other industry representative organizations. AeroCare expects the current Administration to continue to enhance its oversight efforts and AeroCare strives to incorporate any necessary changes into its overall policies, procedures, corporate compliance and internal audit programs on a regular basis.

The effective dates of the various provisions within the Reform Package are staggered over several years. Much of the interpretation of what the Reform Package requires will be subject to administrative rulemaking, the development of agency guidance and court interpretations. AeroCare cannot currently predict the full impact of the Reform Package on AeroCare’s operations, cash flow and capital resources, but such impact could be material. In addition, other legislative and regulatory changes could have a material adverse effect on AeroCare’s business, financial condition, results of operations, cash flow, capital resources and liquidity.

Also, the number of the uninsured in the United States and the advent of additional high deductible health plans offered by employers has had an impact on certain healthcare services and products that may be more discretionary in nature. This has resulted in a slowing down of certain growth rates due to the patients’ more limited ability to pay the associated out-of-pocket fees. This could continue as the number of uninsured persons remains high even after the Reform Package becomes more fully implemented.

Continued pressure to reduce healthcare costs could have a material adverse effect on AeroCare.

As a result of continuing reductions in payor reimbursement, AeroCare, like many other healthcare companies, is making substantial efforts to reduce AeroCare’s costs in providing healthcare services and products. Many managed care organizations and insurers also regularly attempt to seek reductions in the prices at which AeroCare provides services to them and their patients. Some managed care organizations and insurers also propose to limit coverage for AeroCare’s products and services and implement onerous payment rules, policies, administrative burdens, audits and other requirements that adversely impact AeroCare’s reimbursements and increase AeroCare’s costs of providing services and products. In addition to this increasing pressure to reduce costs, the use by managed care payors of benefit managers and other intermediaries is also increasing and may adversely impact us, including for example by imposing burdensome reimbursement or utilization management policies AeroCare must comply with, and adverse changes in AeroCare’s participation status with managed care organizations and insurers. AeroCare has a large number of contractual arrangements with managed care organizations and other parties, which represented approximately 35% of AeroCare’s total net revenues for the six months ended June 30, 2014 and 2013, and AeroCare expects that it will continue to enter into more of these contractual arrangements. Many of these contracts allow, usually after due notice, for payors to alter their payment policies (or newly enforced policies that were previously enacted). AeroCare could be materially adversely affected by adverse payment policy practices. Also, the Reform Package significantly reduces the government’s payment rates to Medicare Advantage plans.

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Other provisions impose minimum medical-loss ratios, state and federal premium review procedures and benefit requirements on insurers. Mandatory sequestration and its associated price reductions will accelerate the risk of further pricing pressure on managed care payors and on us. These public policy changes have unpredictable effects on the insurance industry on which AeroCare relies. There can be no assurance that AeroCare will retain or obtain Medicare Advantage or other such managed care contracts or that such plans will not attempt to further reduce the rates they pay to providers. In addition, if AeroCare is unable to successfully reduce AeroCare’s costs, AeroCare may be unable to continue to provide services directly to patients of certain payors or through these contractual arrangements. This would have a material adverse effect on AeroCare’s business, financial condition, results of operations, cash flow, capital resources and liquidity.

The segment of the healthcare market in which AeroCare operates is highly competitive. In each of AeroCare’s service lines, there are a number of national providers and numerous regional and local providers. Other types of healthcare providers, including individual hospitals and hospital systems, home health agencies, health maintenance organizations and certain retailers, have entered and may continue to enter the market to compete with AeroCare’s various service lines. With access to significantly greater financial and market resources than what is available to us, some of these competitors may be better positioned to compete in the market. This may increase pricing pressure and limit AeroCare’s ability to maintain or increase AeroCare’s market share and may have a material adverse effect on AeroCare’s business, financial condition, results of operations, cash flow, capital resources and liquidity.

Non-compliance with laws and regulations applicable to AeroCare’s business and future changes in or interpretations of those laws and regulations could have a material adverse effect on AeroCare.

AeroCare is subject to many stringent and frequently changing laws and regulations, and interpretations thereof, at both the federal and state levels, requiring compliance with burdensome and complex billing and payment, substantiation and record-keeping requirements. Examples of such documentation requirements are contained in the DME Medicare Administrative Contractor (“MAC”) supplier manuals, which provide that clinical information from the “patient’s medical record” is required to justify the medical necessity for the provision of DME. Some DME MACs and other government auditors have recently taken the position, among other things, that the “patient’s medical record” refers not to documentation maintained by the DME supplier but instead to documentation maintained by the patient’s physician, healthcare facility, or other clinician, and that clinical information created by the DME supplier’s personnel and confirmed by the patient’s physician is not sufficient to establish medical necessity. It may be difficult, and sometimes impossible, for AeroCare to obtain such documentation from other healthcare providers. Also, auditors’ interpretations of these policies are inconsistent and subject to individual interpretations leading to high supplier and industry error rates. In fact, DME MACs have continued to conduct significant pre-payment reviews across the DME industry and have determined a wide range of error rates. For example, error rates for CPAP claims have ranged from 50% to 80%. DME MACs have repeatedly cited medical necessity documentation insufficiencies as the primary reason for claim denials. In addition, certain states have established unique documentation requirements concerning direct patient care activities provided by DME suppliers’ staff. In the absence of such documentation, CMS and its contractors may request a refund or impose sanctions such as civil monetary penalties. If these or other challenging positions continue to be adopted by auditors, DME MACs, states, CMS or its contractors in administering the Medicare program, AeroCare has the right to contest these positions as being contrary to law. Such appeal processes may be protracted and costly, even when the initial determinations are overturned. If these interpretations of the documentation requirements are ultimately upheld, it could result in AeroCare’s making significant refunds and other payments to Medicare and/or Medicaid and AeroCare’s future revenues from Medicare and/or Medicaid would likely be reduced. AeroCare cannot currently predict the adverse impact, if any, that these new, more onerous interpretations of the Medicare and/or Medicaid documentation requirements, or revised internal operational policies to address them, might have on AeroCare’s relationships with referral sources, operations, cash flow and capital resources, but such impact could be material.

The federal False Claims Act imposes civil and criminal liability on individuals or entities that submit false or fraudulent claims for payment to the government. The federal government and a number of courts also have taken the position that claims presented in violation of certain other statutes, including the federal anti-kickback statute and the Ethics in Patient Referrals Act (the “Stark Law”), can be considered a violation

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of the federal False Claims Act. The Reform Package amended the anti-kickback statute to provide that a violation of the statute constitutes a false claim for purposes of the False Claims Act. Violations of the federal civil False Claims Act may result in treble damages, civil monetary penalties and exclusion from the Medicare, Medicaid and other federally funded healthcare programs. If certain criteria are satisfied, the federal civil False Claims Act allows a private individual to bring a qui tam suit on behalf of the government and, if the case is successful, to share in any recovery. Federal False Claims Act suits brought directly by the government or private individuals against healthcare providers, like us, are increasingly common and are expected to continue to increase.

The Reform Package also includes certain fraud and abuse prevention measures and expands regulatory authorities concerning the types of conduct that can result in additional fines and penalties for those healthcare providers who do not comply with applicable laws and regulations. The federal government also announced that it will apply real-time monitoring technologies to the Medicare claim management process, similar to technologies used in other industries. Although AeroCare cannot quantify at this time what, if any, impact such processes might have on AeroCare’s relationships with referral sources, operations, cash flow and capital resources, such impact could be material.

Financial relationships between AeroCare and physicians and other referral sources are also subject to strict limitations under laws such as the Stark Law and anti-kickback laws. In addition, strict licensure, accreditation, safety and marketing requirements apply to the provision of services, pharmaceuticals and medical equipment.

Violations of these laws and regulations could subject AeroCare to civil and criminal enforcement actions; licensure revocation, suspension or non-renewal; severe fines; facility shutdowns; repayment of amounts received from third party payors and possible exclusion from participation in federal healthcare programs such as Medicare and Medicaid. AeroCare cannot assure you that AeroCare is in compliance with all applicable existing laws and regulations or that AeroCare will be able to comply with any new laws or regulations that may be enacted in the future. In addition, from time to time, AeroCare may be the subject of investigations or audits or be a party to qui tam or other False Claims Act litigation which alleges violations of law. If any of those matters were successfully asserted against us, there could be a material adverse effect on AeroCare’s business, financial condition, results of operations, cash flow, capital resources, liquidity or prospects.

Changes in public policy, healthcare law, new interpretations of existing laws, or changes in payment methodology may have a material effect on AeroCare’s business, financial condition, results of operations, cash flow, capital resources and liquidity.

A Majority of AeroCare’s Customers have Primary Health Coverage under Medicare Part B, and Recently Enacted and Future Changes in the Reimbursement Rates or Payment Methodologies under the Medicare Program Could Materially and Adversely Affect AeroCare’s Business.

As a provider of oxygen, respiratory and other chronic therapy services for the home health care market, AeroCare has historically depended heavily on Medicare reimbursement as a result of the high proportion of elderly persons suffering from respiratory disease. Medicare Part B, the Supplementary Medical Insurance Program, provides coverage to eligible beneficiaries for DME, such as oxygen equipment, respiratory assistance devices, continuous positive airway pressure devices, nebulizers and associated inhalation medications, hospital beds and wheelchairs for the home setting. Approximately 54.2% of AeroCare’s customers have primary coverage under Medicare Part B. There are increasing pressures on Medicare to control health care costs and to reduce or limit reimbursement rates for home medical equipment and services. Medicare reimbursement is subject to statutory and regulatory changes, retroactive rate adjustments, administrative and executive orders and governmental funding restrictions, all of which could materially decrease payments to AeroCare for the services and equipment AeroCare provides.

Recent legislation, including the Reform Package, MIPPA, the Medicare, Medicaid and SCHIP Extension Act of 2007, the DRA and MMA, contain provisions that directly impact reimbursement for the primary respiratory and other DME products provided by AeroCare. The Reform Package, is a comprehensive health care reform law that contains a large number of health-related provisions to take effect over the next several years, including various cost containment and program integrity changes that will apply to the home

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medical equipment industry. MIPPA delayed the implementation of a Medicare competitive bidding program for oxygen equipment and certain other DME items that was scheduled to begin on July 1, 2008 and instituted a 9.5% price reduction nationwide for these items as of January 1, 2009. The SCHIP Extension Act reduced Medicare reimbursement amounts for covered Part B drugs, including inhalation drugs that AeroCare provides, beginning April 1, 2008. DRA provisions negatively impacted reimbursement for oxygen equipment beginning in 2009 through the implementation of a capped rental arrangement. MMA changed the pricing formulas used to establish payment rates for inhalation drug therapies resulting in significantly reduced reimbursement beginning in 2005, established a competitive acquisition program for DME, established a Recovery Audit Contractors (“RAC”) program, which implemented a new method for recovery of Medicare overpayments by utilizing private companies operating on a contingent fee basis to identify and recoup Medicare overpayments, and implemented quality standards and accreditation requirements for DME suppliers. These legislative provisions, as currently in effect and when fully implemented, have had and will continue to have a material adverse effect on AeroCare’s business, financial condition, operating results and cash flows. See “Information about AeroCare — Medicare Reimbursement” for a full discussion of the PPACA, MIPPA, SCHIP Extension Act, DRA and MMA provisions.

Future reductions in reimbursement rates under Medicaid could reduce AeroCare’s revenues, net income and cash flows.

Due to budgetary shortfalls, many states are considering, or have enacted, cuts to their Medicaid programs, including funding for AeroCare’s equipment and services. These cuts have included, or may include, elimination or reduction of coverage for some or all of AeroCare’s equipment and services, amounts eligible for payment under co-insurance arrangements, or payment rates for covered items. State Medicaid programs fund approximately 5.0% of AeroCare’s payments from primary and secondary insurance benefits. Continued state budgetary pressures could lead to further reductions in funding for the reimbursement for AeroCare’s equipment and services which, in turn, could have a material adverse effect on AeroCare’s financial position and operating results.

Future reductions in reimbursement rates from private payors could have a material adverse effect on AeroCare’s financial condition and operating results.

Payors such as private insurance companies and employers are under pressure to increase profitability and reduce costs. In response, certain payors are limiting coverage or reducing reimbursement rates for the equipment and services AeroCare provides. Approximately 36.5% of AeroCare’s primary and secondary payments are derived from private payors. Continued financial pressures on these entities could lead to further reimbursement reductions for AeroCare’s equipment and services that could have a material adverse effect on AeroCare’s financial condition and operating results.

AeroCare depends upon reimbursement from third-party payors for a significant majority of AeroCare’s revenues, and if AeroCare fails to manage the complex and lengthy reimbursement process, AeroCare’s business and operating results could suffer.

AeroCare derives a significant majority of its revenues from reimbursement by third-party payors. AeroCare accepts assignment of insurance benefits from customers and, in most instances, invoices and collects payments directly from Medicare, Medicaid and private insurance carriers, as well as from customers under co-payment provisions. Approximately 54.2% of AeroCare’s revenues are derived from Medicare, 36.5% from private insurance carriers, 5.0% from Medicaid and the balance directly from individual customers and commercial entities.

AeroCare’s financial condition and results of operations may be affected by the reimbursement process, which in the health care industry is complex and can involve lengthy delays between the time that services are rendered and the time that the reimbursement amounts are settled. Depending on the payor, AeroCare may be required to obtain certain payor-specific documentation from physicians and other health care providers before submitting claims for reimbursement. Certain payors have filing deadlines and they will not pay claims submitted after such time. AeroCare is also subject to extensive pre-payment and post-payment audits by governmental and private payors that could result in material refunds of monies received or denials of claims submitted for payment under such third-party payor programs and contracts. AeroCare cannot ensure that

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AeroCare will be able to continue to effectively manage the reimbursement process and collect payments for AeroCare’s equipment and services promptly.

AeroCare is subject to burdensome and complex billing and record-keeping requirements in order to substantiate AeroCare’s claims for payment under federal, state and commercial health care reimbursement programs, and AeroCare’s failure to comply with existing requirements, or changes in those requirements or interpretations thereof, could have a material adverse effect on AeroCare’s business and results of operations.

AeroCare is subject to many comprehensive and frequently changing laws and regulations, and interpretations thereof, at both the federal and state levels, requiring compliance with burdensome and complex billing and record-keeping requirements in order to substantiate AeroCare’s claims for payment under federal, state and commercial health care reimbursement programs. On an ongoing basis, AeroCare has implemented policies and procedures designed to meet the various documentation requirements of government payors as they have been interpreted and applied. Examples of such documentation requirements are contained in the DME MAC Supplier Manuals which provide that clinical information from the “patient’s medical record” is required to justify the medical necessity for the provision of DME. Auditors working on behalf of the DME MACs have recently taken the position, among other things, that the “patient’s medical record” refers not to documentation maintained by the DME supplier but instead to documentation maintained by the patient’s physician, health care facility, or other clinician, and that clinical information created by the DME supplier’s personnel and confirmed by the patient’s physician is not sufficient to establish medical necessity. Other government auditors have recently taken the same or a similar position. It may be difficult, and sometimes impossible, for AeroCare to obtain such documentation from other health care providers. If these or other burdensome positions continue to be adopted by auditors, DME MACs, other contractors or CMS in administering the Medicare program, AeroCare has the right to challenge these positions as being contrary to law. If these interpretations of the documentation requirements are ultimately upheld, however, it could result in AeroCare’s making significant refunds and other payments to Medicare and AeroCare’s future revenues from Medicare would likely be substantially reduced. AeroCare has also experienced a significant increase in pre-payment reviews of AeroCare’s claims by the DME MACs, which has caused substantial delays in the collection of AeroCare’s Medicare accounts receivable as well as related amounts due under supplemental insurance plans. AeroCare cannot currently predict the adverse impact that these new, more burdensome interpretations of the Medicare documentation requirements might have on AeroCare’s financial position or operating results, but such impact could be material.

Expanded government auditing and oversight of Medicare and Medicaid suppliers and more stringent interpretations by those auditors of regulations and rules concerning billing for AeroCare’s services and products could have a material adverse effect on Aerocare.

Current law, including the recent Reform Package and an executive order signed by the President, provides for a significant expansion of the government’s auditing and oversight of suppliers who care for patients covered by various government healthcare programs. Examples of this expansion include audit programs being implemented by the DME MACs, the Zone Program Integrity Contractors (“ZPICs”), the Recovery Audit Contractors (“RACs”) and the Comprehensive Error Rate Testing contractors (“CERTs”) operating under the direction of CMS. AeroCare works cooperatively with these auditors and has long maintained a process for centrally tracking and managing AeroCare’s responses to their audit requests. However, unlike other government programs that are subject to a formal rulemaking process, there are only limited publicly-available guidelines and methodologies for determining errors or for providing clear and timely communications to DMEPOS suppliers in connection with these new types of audits. As a result, there is significant lack of clarity regarding the authority of the auditors, their expectations for document production requested during audits and the methodology for determining errors and calculating error rates.

Along with other healthcare providers and suppliers, AeroCare has recently been subject to a significant increase in the number of audits conducted under these new programs. Many of these audits have ascribed error rates to AeroCare’s audited locations that are significantly higher than AeroCare, and others in the industry, have experienced in the past. In some cases, these high error rates appear to be based on the auditors’ incomplete or erroneous review of AeroCare’s submitted documentation, AeroCare’s inability to

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retrieve physician or hospital documentation from their records, the auditors’ enforcement of requirements for documentation for patients begun on service during a time period when lesser levels of documentation were accepted practice, or unclear scoring methodologies used by the auditors, among other factors. In other instances, high error rates have resulted from the auditors’ use of more stringent interpretations of the types of medical necessity documentation required for CMS to pay for the services AeroCare provides. AeroCare has appealed the results of certain of these audits and made changes to AeroCare’s operating policies and procedures, but cannot predict the ultimate impact that the government’s expanded and more stringent auditing, or AeroCare’s policies, may have on AeroCare’s business, financial conditions or results of operations.

AeroCare has been informed by these auditors that other healthcare providers and all suppliers of certain DMEPOS product categories are expected to experience further increased scrutiny from these audit programs. When a government auditor ascribes a high error rate to one or more of AeroCare’s locations, it generally results in protracted pre-payment claims review, payment delays, refunds and other payments to the government and/or AeroCare’s need to request more documentation from referral sources than has historically been required. It may also result in additional audit activity in other locations of AeroCare’s in that state or DME MAC jurisdiction. AeroCare’s error rate, aggregated with other DMEPOS suppliers in the industry, is then reported to Medicare contractors and Congress. According to the CERT contractors utilizing the more stringent interpretations of the medical necessity documentation requirements, the DMEPOS industry error rate in 2012 was 66% and was over 58% in 2013. Further, DME MACs have continued to conduct extensive pre-payment reviews across the DME industry and, for example, have found that error rates for CPAP claims have ranged from 50% to 80%. AeroCare cannot currently predict the adverse impact, if any, that these new audits, methodologies and interpretations might have on AeroCare’s operations, cash flow and capital resources, but such adverse impact could be material.

Compliance with regulations under the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”) and related rules, relating to the transmission, security and privacy of health information could impose additional significant costs on AeroCare’s operations.

Numerous federal and state laws and regulations, including HIPAA and the HITECH Act, govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information. HIPAA and the HITECH Act require AeroCare to comply with standards for the use and disclosure of health information within AeroCare’s company and with third parties. HIPAA and the HITECH Act also include standards for common health care electronic transactions and code sets, such as claims information, plan eligibility, payment information and the use of electronic signatures, and privacy and electronic security of individually identifiable health information.

HIPAA requires health care providers, including us, in addition to health plans and clearinghouses, to develop and maintain policies and procedures with respect to protected health information that is used or disclosed. The HITECH Act expands the notification requirement for breaches of patient-identifiable health information, restricts certain disclosures and sales of patient-identifiable health information and provides a tiered system for civil monetary penalties for HIPAA violations.

If AeroCare does not comply with existing or new laws and regulations related to patient health information, AeroCare could be subject to criminal or civil sanctions. New health information standards, whether implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the manner in which AeroCare handles health care related data and communicates with payors, and the cost of complying with these standards could be significant.

Increases in AeroCare’s costs could erode AeroCare’s profit margins and substantially reduce AeroCare’s EBITDA, net income and/or cash flows.

Cost containment in the health care industry, fueled, in part, by federal and state government budgetary shortfalls, is likely to result in constant or decreasing reimbursement amounts for AeroCare’s equipment and services. As a result, AeroCare must control AeroCare’s operating cost levels, particularly labor and related costs, which account for a significant component of AeroCare’s operating costs and expenditures. AeroCare

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competes with other health care providers to attract and retain qualified or skilled personnel. AeroCare also competes with various industries for administrative and service employees. Since reimbursement rates are established by fee schedules mandated by Medicare, Medicaid and private payors, AeroCare is not able to offset the effects of general inflation in labor and related cost components, if any, through increases in prices for AeroCare’s equipment and services. Consequently, such cost increases could erode AeroCare’s profit margins and reduce AeroCare’s EBITDA, net income and/or cash flows.

AeroCare’s failure to successfully design, modify and implement computer and other process changes to maximize productivity and ensure compliance could ultimately have a significant negative impact on AeroCare’s results of operations and financial condition.

AeroCare has identified a number of areas throughout AeroCare’s operations where AeroCare intends to modify the current processes or systems in order to attain a higher level of productivity or ensure compliance. The ultimate cost savings expected from the successful design and implementation of such initiatives will be necessary to help offset the impact of Medicare and Medicaid reimbursement reductions and continued downward pressure on pricing. Additionally, Medicare and Medicaid often change their documentation requirements. The standards and rules for health care transactions, code sets and unique identifiers also continue to evolve, such as ICD 10 and HIPAA 5010. Moreover, government programs and/or commercial payors may have difficulties administering new standards and rules for health care transactions and this may adversely affect timelines of payment or payment error rates. The DMEPOS competitive bidding program also imposes new reporting requirements on contracted providers. From time to time, AeroCare’s outsourced contractor for certain information systems functions, Perot Systems Corporation (now Dell Services), makes operational, leadership or other changes that could impact AeroCare’s plans and cost-savings goals. AeroCare’s failure to successfully design and implement system or process modifications could have a significant impact on AeroCare’s operations and financial condition. The implementation of many of the new standards and rules will require AeroCare to make substantial investments. Further, the implementation of these system or process changes could have a disruptive effect on related transaction processing and operations.

AeroCare’s failure to maintain controls and processes over billing and collections or to execute the outsourcing of such processes effectively, the deterioration of the financial condition of AeroCare’s payors or disputes with third parties could have a significant negative impact on AeroCare’s results of operations and financial condition.

The collection of accounts receivable is one of AeroCare’s most significant challenges and requires constant focus and involvement by management and ongoing enhancements to information systems and billing center operating procedures. For example, AeroCare experienced an increase in accounts receivable attributable, among other things, to transitioning of some of AeroCare’s billing and collection functions to AeroCare’s outsourcing contractor and to changes in payment practices by some of AeroCare’s payors and their intermediaries. Despite an adjustment to AeroCare’s outsourcing initiative in this area and the return of many of those functions to AeroCare’s personnel in the United States, there can be no assurance that AeroCare will be able to return to AeroCare’s historic levels or maintain AeroCare’s current levels of collectability and days sales outstanding in future periods. Further, some of AeroCare’s payors and/or patients may experience financial difficulties, or may otherwise not pay accounts receivable when due, resulting in increased write-offs. If AeroCare is unable to properly bill and collect AeroCare’s accounts receivable, AeroCare’s results will be adversely affected. In addition, from time to time AeroCare is involved in disputes with various parties, including AeroCare’s payors and their intermediaries regarding their performance of various contractual or regulatory obligations. These disputes sometimes lead to legal and other proceedings and cause AeroCare to incur costs or experience delays in collections, increases in AeroCare’s accounts receivable or loss of revenue. In addition, in the event such disputes are not resolved in AeroCare’s favor or cause AeroCare to terminate AeroCare’s relationships with such parties, there may be an adverse impact on AeroCare’s results of operations or financial condition.

AeroCare’s failure to maintain accreditation could impact AeroCare’s operations.

Accreditation is required by most of AeroCare’s managed care payors and became a mandatory requirement for all Medicare DMEPOS providers effective October 1, 2009. In March 2012, AeroCare completed a nationwide independent triennial accreditation renewal process conducted by the Accreditation

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Commission for Health Care (“ACHC”), and ACHC renewed AeroCare’s accreditation for another three years. The ACHC accreditation encompasses AeroCare’s full complement of services including home health, home medical equipment, clinical respiratory, ambulatory infusion services, pharmacy dispensing, and clinical consultant pharmacist services. AeroCare has more than 9 years of continuous accreditation by ACHC. If AeroCare or its subsidiaries loses accreditation, or if any of AeroCare’s new branches are unable to become accredited, AeroCare’s failure to maintain accreditation or become accredited could have a material adverse effect on AeroCare’s business, financial condition, results of operations, cash flow, capital resources and liquidity.

AeroCare’s inability to maintain or continue increasing sales of its products and services due to changes in market demand could adversely affect results of operations.

AeroCare currently depends on sales of AeroCare’s products and services for the support of persons living with respiratory illness, particularly chronic obstructive pulmonary disease (“COPD”), cystic fibrosis, and breathing disorders that lead to low levels of oxygen in the blood, such as sleep apnea and late stage heart failure. All of AeroCare’s services to help treat these illnesses involve AeroCare’s delivery and clinical support to the patient of portable oxygen for use in the home. Should the treatment paradigm for these illnesses change, causing oxygen therapy to fall out of favor, or if AeroCare is unable to maintain or continue increasing new patient census due to predicted or unforeseen changes in market demand, AeroCare’s results of operations would likely suffer and AeroCare would likely need to scale back AeroCare’s operations, including planned or active acquisition efforts.

AeroCare is highly dependent upon information technology systems and infrastructure.

AeroCare regularly backs up its data and maintains detailed disaster recovery plans. However, a major physical disaster or other calamity that causes significant damage to information systems could adversely affect AeroCare’s business. Additionally, loss of information systems for a sustained period of time could have a negative impact on AeroCare’s performance and ultimately on cash flow in the event AeroCare was unable to process transactions and/or provide services to AeroCare’s customers.

Changes in AeroCare’s relationships with medical equipment manufacturers and suppliers, including changes in product availability or pricing, could adversely affect AeroCare’s business and financial results.

AeroCare maintains contractual relationships with medical equipment manufacturers and wholesaler suppliers to purchase the equipment and ancillary products that AeroCare delivers and supports on behalf of the patient. Any changes to these relationships, including, but not limited to, loss of a supplier relationship, product recall or changes in pricing, could have an adverse effect on AeroCare’s business and financial results.

AeroCare’s strategic growth plan, which involves the acquisition of other companies, may not succeed.

AeroCare’s strategic growth plan involves, in part, the acquisition of other companies such as AeroCare’s. In addition to identifying qualified acquisition candidates, accurately assessing the value of such acquisition candidates is often very challenging. Also, suitable acquisitions may not be available due to unfavorable terms. Further, the cost of an acquisition could result in a dilutive effect on AeroCare’s results of operations, depending on various factors, including the amount paid for in an acquisition, the acquired entity’s results of operations, the fair value of assets acquired and liabilities assumed, effects of subsequent legislation and limits on rate increases.

Upon successful close of qualified acquisition candidate, AeroCare must integrate its acquisitions with its existing operations. This process includes the integration of the various components of AeroCare business and of the businesses AeroCare have acquired or may acquire in the future, including:

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Integrating an acquisition could be expensive and time consuming and could disrupt AeroCare’s ongoing business, negatively affect cash flow and distract management and other key personnel from day-to-day operations. AeroCare may not be able to combine successfully the operations of recently acquired companies with AeroCare’s operations, and, even if such integration is accomplished, AeroCare may never realize the potential benefits of the acquisition. The integration of acquisitions requires significant attention from management, may impose substantial demands on AeroCare’s operations or other projects and may impose challenges on the combined business including, but not limited to, consistencies in business standards, procedures, policies and business cultures. If AeroCare fails to complete ongoing integration efforts, it may never fully realize the potential benefits of the related acquisitions.

Specific integration risks relating to the acquisition of other companies by AeroCare may include:

AeroCare may undertake acquisitions that could subject AeroCare to unanticipated liabilities and that could fail to achieve expected benefits.

A principal element of AeroCare’s business strategy has been to grow by acquiring other companies and assets in the home respiratory and oxygen equipment businesses.

This growth, especially rapid growth, through acquisitions exposes AeroCare to a variety of operational and financial risks including inaccurate assessment of disclosed liabilities, the existence of undisclosed liabilities, regulatory compliance issues associated with the acquired business, entry into markets in which AeroCare may have limited or no experience, diversion of management’s attention and human resources from

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AeroCare’s underlying business, difficulties in integrating the operations of an acquired business or in realizing anticipated efficiencies and cost savings, failure to retain key management or operating personnel of the acquired business, and an increase in indebtedness and a limitation in the ability to access additional capital on favorable terms. The successful integration of an acquired business may be dependent on the size of the acquired business, condition of the customer billing records, and complexity of system conversions and execution of the integration plan by local management. If AeroCare does not successfully integrate the acquired business, the acquisition could fail to achieve its expected revenue contribution or there could be delays in the billing and collection of claims for services rendered to customers, which may have a material adverse effect on AeroCare’s financial position and operating results.

AeroCare may not be able to realize anticipated cost savings, revenue enhancements or synergies from AeroCare’s acquisitions.

When evaluating potential acquisition targets, AeroCare identifies potential synergies and cost savings that AeroCare expects to realize upon the successful completion of the acquisition and the integration of the related operations. In 2013 alone, AeroCare acquired the business of 23 local and regional companies with operations in 13 states generating annual revenue of approximately $43.1 million. AeroCare may, however, be unable to achieve or may otherwise never realize the expected benefits from AeroCare’s acquisitions, and the costs of achieving these benefits may be higher than, and the timing may differ from, what AeroCare expects. AeroCare’s ability to realize anticipated cost savings, synergies and revenue enhancements may be affected by a number of business and economic uncertainties and contingencies, including, but not limited to, the following:

In addition, estimated cost savings are only estimates and may not actually be achieved in the timeframe anticipated or at all. If AeroCare fails to realize anticipated cost savings, synergies or revenue enhancements, AeroCare’s financial results will be adversely affected, and AeroCare may not generate the cash flow from operations that AeroCare anticipated, or that is sufficient to repay AeroCare’s indebtedness.

AeroCare may be subject to claims arising from investigations and legal proceedings, which could have a significant negative impact on AeroCare’s results of operations and profitability.

The nature of AeroCare’s business subjects AeroCare to investigations and litigation in the ordinary course of AeroCare’s business. In addition, companies that AeroCare acquires may have unknown or contingent liabilities, including, but not limited to, liabilities for failure to comply with healthcare laws and regulations. Accordingly, AeroCare may incur material liabilities for the past activities of acquired operations. Such liabilities and related legal or other costs and/or resulting damage to AeroCare’s reputation could negatively impact AeroCare’s business through lower-than-expected operating results, charges for impairment of acquired intangible assets or otherwise. Furthermore, AeroCare is from time to time involved in other legal proceedings. While management does not believe that any lawsuit AeroCare is a party to, if resolved adversely, would have a material adverse effect on AeroCare’s financial condition or results of operations, investigations and litigation could arise in the future which could have a significant negative impact on AeroCare’s results of operations and profitability. Further, since the date of confirmation of the plan of reorganization, AeroCare has not received any correspondence from a state challenging the pre-petition discharge of claims.

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AeroCare experiences competition from numerous other home respiratory/home medical equipment and home infusion therapy service providers, and other providers, and this exposes us to competition for acquisition candidates and other competition risk that could adversely affect AeroCare’s revenues and AeroCare’s business.

The home respiratory/home medical equipment and home infusion therapy markets are highly fragmented and competitive, and include a large number of providers, some of which have greater resources than AeroCare does. As a result, AeroCare may pay more to acquire a target business or may agree to less favorable deal terms than AeroCare would have otherwise. In addition, in certain markets, competitors may have more effective technical and professional staff, sales, and marketing activities. AeroCare’s largest national home respiratory/home medical equipment provider competitors include Apria Healthcare, Lincare Holdings, Inc. and Rotech Healthcare Inc. The rest of the homecare market in the United States consists of several medium-size competitors, as well as numerous small (under $3.5 million in annual revenues) local operations. There are relatively few barriers to entry in local home healthcare markets. Hospitals and health systems are routinely looking to provide coverage and better control of post-acute health care services, including homecare services of the types AeroCare provides. These trends may continue as new payment models evolve, including bundled payment models, shared savings programs, value based purchasing and other payment systems. For example, the Reform Package introduced various new payment and delivery system models, including Accountable Care Organizations (“ACOs”). ACOs can share in savings, assuming certain quality metrics are met or exceeded. The shared savings feature in ACOs cause them to reduce the amount of services they refer to us. ACOs may be formed by a variety of providers and/or suppliers, including hospitals and health systems, as well as home respiratory, home medical equipment and home infusion therapy service providers. Although participation in an ACO is voluntary, participation by AeroCare’s competitors in an ACO in certain markets may force AeroCare to participate as well or face a loss of business from ACO participants who are unwilling to refer to non-ACO participants. Even when AeroCare does participate, AeroCare may lose business if AeroCare does not meet the quality metrics that ACOs must earn to share in any savings they achieve. Moreover, commensurate with the formation of an ACO, physicians and/or hospitals may decide to provide home healthcare services through a new developed capacity owned and/or controlled by themselves. Similar programs may be adopted by other governmental, state and commercial payors, and AeroCare cannot predict the impact, if any, of such new models on AeroCare’s business. In addition, some managed care payors are developing their own pharmacy benefit managers (“PBMs”) or are expanding their contractual relationships with PBMs, and those PBMs then expand their scope of services into new areas such as specialty infusion and compete with us. AeroCare cannot assure you that these and other industry changes and the competitive environment will not have an adverse effect on AeroCare’s revenues and AeroCare’s business.

AeroCare’s business operations are labor intensive. Difficulty hiring enough additional management and other employees, increasing costs of compensation or employee benefits, and the potential impact of unionization and organizing activities could have an adverse effect on AeroCare’s costs and results of operations.

The success of AeroCare’s business depends upon AeroCare’s ability to attract and retain highly motivated, well-qualified management and other employees. One of AeroCare’s largest costs is in the payment of salaries and benefits to AeroCare’s approximately 1,425 employees. AeroCare faces significant competition in the recruitment of qualified employees, which has caused increased salary and wage rates among certain employee groups. If AeroCare is unable to recruit or retain a sufficient number of qualified employees, or if the costs of compensation or employee benefits increase substantially, AeroCare’s ability to deliver services effectively could suffer and AeroCare’s profitability would likely be adversely affected. The Reform Package may materially increase AeroCare’s cost of providing health benefits to AeroCare’s employees and their dependents. In addition, union organizing activities have occurred in the past and may occur in the future, and the adverse impact of unionization and organizing activities on AeroCare’s costs and operating results could be substantial.

AeroCare is highly dependent upon senior management; AeroCare’s failure to attract and retain key members of senior management could have a material adverse effect on Aerocare.

AeroCare is highly dependent on its senior management, and its Chairman and Chief Executive Officer, Stephen Griggs, in particular. Mr. Griggs’ employment agreement with us contains a non-competition

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provision the period for which is 12 months, or shorter if determined by our board of directors. AeroCare’s future success depends in large part on its continued ability to attract and retain its executive officers, senior management personnel, as well as highly-qualified personnel with experience and expertise in the oxygen therapy and clinical service businesses. AeroCare faces competition for personnel from other companies and other organizations. Competition for qualified personnel in the clinical services field is intense, and there is a limited pool of qualified potential employees to recruit. AeroCare may not be able to attract and retain quality personnel on acceptable terms. If AeroCare is unsuccessful in AeroCare’s recruitment and retention efforts, or if Mr. Griggs were to depart from and/or compete with AeroCare, AeroCare’s business may be harmed.

AeroCare has recently reorganized AeroCare’s operating and associated management structure as described under Business — Recent Developments. AeroCare cannot predict what effect this will have on AeroCare’s ability to retain management.

If AeroCare does not maintain effective internal controls over financial reporting, AeroCare could fail to accurately report AeroCare’s financial results.

As a result of AeroCare restating its stockholders’ equity balances in its consolidated financial statements as of January 1, 2012, AeroCare’s independent auditors identified a material weakness over the Company’s financial statement close process, specifically with respect to accounting for business combinations, income tax accounting and stock based compensation. AeroCare has implemented additional controls with respect to independent review procedures and the use of outside specialists to assist it with the accounting for these areas. There can be no assurance that this or other material weaknesses will not be identified in later periods.

It is possible that additional control deficiencies could be identified by AeroCare’s management or by AeroCare’s independent auditing firm in the future or may occur without being identified. Such a failure could result in regulatory scrutiny, cause investors to lose confidence in AeroCare’s reported financial condition, lead to a default under AeroCare’s indebtedness and otherwise materially adversely affect AeroCare’s business and financial condition.

If additional material weaknesses in AeroCare’s internal controls are discovered in the future, they may adversely affect AeroCare’s ability to record, process, summarize and report financial information timely and accurately and, as a result, AeroCare’s financial statements may contain material misstatements or omissions. A material weakness is defined by the standards issued by the Public Company Accounting Oversight Board as a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected.

AeroCare has completed over 36 acquisitions since 2010, and intends to continue to pursue growth through strategic acquisitions. Among the risks associated with acquisitions are the risks of control deficiencies that result from the integration of the acquired business.

AeroCare may be required to take significant write downs in connection with impairment of AeroCare’s goodwill, intangible or other long-lived assets.

On an ongoing basis, AeroCare evaluates whether facts and circumstances indicate any impairment of value of intangible assets. If AeroCare determines that a significant impairment has occurred, AeroCare would be required to write-off the impaired portion of the unamortized intangible assets, which could have a material adverse effect on AeroCare’s results of operations in the period in which the write-off occurs.

If the coverage limits on AeroCare’s insurance policies are inadequate to cover AeroCare’s liabilities or AeroCare’s insurance costs continue to increase, then AeroCare’s financial condition and results of operations would likely decline.

Participants in the health care industry, including AeroCare, are subject to substantial claims and litigation in the ordinary course, often involving large claims and significant defense costs. As a result of the liability risks inherent in AeroCare’s lines of business, AeroCare maintains liability insurance intended to cover such claims. However, AeroCare may be subject to liability claims for damages and other expenses that are not covered by insurance. Furthermore, AeroCare’s insurance policies are subject to annual renewal. The coverage limits of AeroCare’s insurance policies may not be adequate, and AeroCare may not be able to obtain liability

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insurance in the future on acceptable terms or at all. In addition, AeroCare’s insurance premiums could be subject to increases in the future, which increases may be material. If the coverage limits are inadequate to cover AeroCare’s liabilities or AeroCare’s insurance costs continue to increase, then AeroCare’s financial condition and results of operations would likely decline.

Risks Relating to AeroCare’s Indebtedness

AeroCare’s substantial indebtedness could adversely affect AeroCare’s financial condition and prevent AeroCare from fulfilling AeroCare’s obligations under AeroCare’s indebtedness.

AeroCare has a substantial amount of debt, which requires significant interest and principal payments. As of December 31, 2013, AeroCare had approximately $67.6 million of total debt outstanding (including capital lease obligations) and as of June 30, 2014, AeroCare has approximately $75.2 million of total debt outstanding (including capital lease obligations). Subject to the limits contained in AeroCare’s Amended and Restated Credit Agreement, dated June 30, 2014, the Credit Agreement, dated November 30, 2012, as amended from time to time and AeroCare’s other debt instruments, AeroCare may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If AeroCare does so, the risks related to AeroCare’s high level of debt could intensify. Specifically, AeroCare’s high level of debt could have important consequences, including the following:

AeroCare’s variable rate indebtedness subjects AeroCare to interest rate risk, which could cause AeroCare’s indebtedness service obligations to increase significantly.

Borrowings under AeroCare’s credit facilities are at variable rates of interest and expose AeroCare to interest rate risk. If interest rates increase, AeroCare’s debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and AeroCare’s net income and cash flows, including cash available for servicing AeroCare’s indebtedness, would correspondingly decrease.

The credit agreement governing AeroCare’s credit facility imposes significant operating and financial restrictions on AeroCare and its subsidiaries, which may prevent AeroCare from capitalizing on business opportunities.

The credit agreement governing AeroCare’s Credit Facility imposes significant operating and financial restrictions on us. These restrictions limit AeroCare’s ability, among other things, to:

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AeroCare’s credit facility also includes financial covenants. AeroCare’s ability to comply with these covenants is dependent on AeroCare’s future performance, which will be subject to many factors, some of which are beyond AeroCare’s control.

As a result of these covenants and restrictions, AeroCare is limited as to how AeroCare conducts its business and AeroCare may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness AeroCare may incur could include more restrictive covenants. AeroCare cannot assure you that AeroCare will be able to maintain compliance with these covenants in the future and, if AeroCare fails to do so, that AeroCare will be able to obtain waivers from the lenders and/or amend the covenants.

In the first quarter of 2014, AeroCare received a waiver of default from the lender under its current credit facility. AeroCare’s failure to comply with the restrictive covenants described above as well as other terms of AeroCare’s existing indebtedness and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in AeroCare’s being required to repay these borrowings before their due date. If AeroCare is forced to refinance these borrowings on less favorable terms, AeroCare’s results of operations and financial condition could be materially and adversely affected.

Servicing AeroCare’s indebtedness will require a significant amount of cash. AeroCare’s ability to generate sufficient cash depends on numerous factors beyond its control, and AeroCare may be unable to generate sufficient cash flow to service its debt obligations.

AeroCare’s ability to make payments on or to refinance its indebtedness will depend on its ability to generate cash in the future. This, to a certain extent, is subject to general economic, political, financial, competitive, legislative, regulatory and other factors that are beyond AeroCare’s control.

AeroCare’s current annual interest payments are approximately $2.9 million to service its existing indebtedness. AeroCare cannot assure you that AeroCare’s business will generate cash flow from operations in an amount sufficient to enable us to pay its indebtedness or to fund AeroCare’s other liquidity needs. If AeroCare’s cash flows and capital resources are insufficient to allow it to make scheduled payments on its indebtedness, the combined company may need to reduce or delay capital expenditures, sell assets, seek additional capital or restructure or refinance all or a portion of AeroCare’s indebtedness on or before maturity. AeroCare cannot assure you that AeroCare will be able to refinance any of its indebtedness on commercially reasonable terms, or at all, or that these measures would satisfy its scheduled debt service obligations. If AeroCare is unable to generate sufficient cash flow or refinance its debt on favorable terms, it could have a material adverse effect on AeroCare’s financial condition and its ability to make any required cash payments under its indebtedness.

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AeroCare’s failure to comply with the agreements relating to AeroCare’s outstanding indebtedness, including as a result of events beyond AeroCare’s control, could result in an event of default that could materially and adversely affect AeroCare’s results of operations and AeroCare’s financial condition.

If there were an event of default under any of the agreements relating to AeroCare’s outstanding indebtedness, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. We cannot assure you that AeroCare’s assets or cash flow would be sufficient to fully repay borrowings under AeroCare’s outstanding debt instruments if accelerated upon an event of default. Further, if AeroCare is unable to repay, refinance or restructure AeroCare’s indebtedness under AeroCare’s secured debt, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of AeroCare’s other debt instruments.

Failure to maintain current levels of collectability of AeroCare’s accounts receivable likely would have a significant negative impact on AeroCare’s profitability and cash flow.

AeroCare derives a significant majority of AeroCare’s revenues from reimbursement by third-party payors. AeroCare accepts assignment of insurance benefits from patients and, in most instances, invoices and collects payments directly from Medicare, Medicaid and private insurance carriers, as well as from patients under co-insurance provisions. AeroCare’s financial condition and results of operations may be affected by the reimbursement process, which in the health care industry is complex and can involve lengthy delays between the time that services are rendered and the time that the reimbursement amounts are settled. Depending on the payor, AeroCare may be required to obtain certain payor-specific documentation from physicians and other health care providers before submitting claims for reimbursement. Certain payors have filing deadlines after which they will not pay submitted claims. As such, there can be no assurance that AeroCare will be able to maintain AeroCare’s current levels of collectability or that third-party payors will not experience financial difficulties. AeroCare may be unable to collect AeroCare’s accounts receivable on a timely basis, which likely would result in a significant decline in AeroCare’s operating cash flows.

Risks Related to MWRX and the Business Combination

References in this “Risks Related to MWRX and the Business Combination” section to “MWRX,” the “Company,” “we,” “us” and “our” refer to MergeWorthRx Corp.

We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002 that will be applicable to us after the Business Combination.

AeroCare is not currently subject to Section 404 of the Sarbanes-Oxley Act of 2002. However, following the Business Combination, we will be subject to Section 404. Based on the timing of this Business Combination, AeroCare believes that it will be subject to Section 404 beginning in fiscal 2015. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are significantly more stringent than those required of AeroCare as a privately-held company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that will be applicable to the Company after the Business Combination. If we are not able to implement the additional requirements of Section 404 in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our common stock.

Our working capital will be reduced if our stockholders exercise their conversion rights in connection with the Business Combination, which may adversely affect our business and future operations.

Pursuant to our amended and restated certificate of incorporation, holders of public shares may demand that we convert their shares, regardless of whether they vote for or against the Business Combination, into their pro rata share of the aggregate amount then on deposit in the trust account.

If the Business Combination is consummated, the funds held in the trust account will be released to pay (i) MWRX stockholders who properly exercise their conversion rights, (ii) an advisor fee of $1.848 million to

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EarlyBirdCapital, Inc., (iii) all applicable fees, costs and expenses (including regulatory fees, legal fees, accounting fees printer fees, and other professional fees) of the Company, Merger Sub and AeroCare as set forth in the Merger Agreement, (iv) unpaid franchise and income taxes of the Company, and (v) our sponsors, officers or directors for amounts owed pursuant to unpaid loans made to the Company and unreimbursed out-of-pocket expenses incurred by them in connection with our business and operations.

Subsequent to the consummation of the Business Combination, we may be required to take writedowns or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

Although we have conducted due diligence on AeroCare, we cannot assure you that this diligence revealed all material issues that may be present in AeroCare’s business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our and AeroCare’s control will not later arise. As a result, we may be forced to later writedown or write-off assets, restructure AeroCare’s operations, or incur impairment or other charges that could result in losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about the Company or its securities. In addition, charges of this nature may cause us to be unable to obtain future financing on favorable terms or at all.

Concentration of ownership after the Business Combination may have the effect of delaying or preventing a change in control.

We estimate that, upon completion of the Business Combination, former AeroCare stockholders will own between approximately 52.55% and 62.76% of the post-merger company. These percentages also do not take into account (i) up to 3,588,517 earnout shares that may be issued upon the achievement by the post-merger company of certain financial targets in the three years following the Business Combination, and (ii) 511,636 shares that may be issued upon the exercise of the assumed options. See “Proposal No. 1 —  Approval of the Business Combination — Company Shares and Options to be Issued at Closing of the Merger” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information. As a result, former AeroCare stockholders will have the ability to significantly influence the outcome of corporate actions of the Company requiring stockholder approval. This concentration of ownership may have the effect of delaying or preventing a change in control and might adversely affect the market price of our common stock.

Future sales of our common stock may cause the market price of our securities to drop significantly, even if our business is doing well.

The Merger Agreement provides that upon consummation of the Business Combination, the Company, each AeroCare executive officer and director, the Major Stockholders, any other 5% or greater stockholders of AeroCare, and each of Anthony Minnuto, Charles F. Fistel and Stephen B. Cichy will enter into an amended and restated registration rights agreement, or the “registration rights agreement with respect to the shares of Company Common Stock that will be issued under the Merger Agreement. The registration rights agreement will amend and restate entirely the registration rights agreement the Company entered into in connection with its initial public offering. Under the registration rights agreement, the Company will agree to file a registration statement with the SEC within 30 days after the Business Combination covering the resale of the securities of the Company specified therein, or registrable securities. Holders of 2,000,000 shares of registrable securities will be entitled to require the Company to undertake an underwritten public offering of all or a portion of the registrable securities pursuant to an effective registration statement, no more than once during any six month period, so long as the estimated market value of the registrable securities to be sold in such offering is at least $20,000,000. Holders of registrable securities will also have certain “piggy-back” registration rights with respect to registration statements filed by the Company subsequent to the Business Combination.

Upon effectiveness of the registration statement we file pursuant to the registration rights agreement, or upon the expiration of the lockup periods applicable to the common stock that we will issue to AeroCare

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stockholders, these parties may sell large amounts of our stock in the open market or in privately negotiated transactions, which could have the effect of increasing the volatility in our stock price or putting significant downward pressure on the price of our stock. In addition, the post-merger company may use shares of our common stock as consideration for future acquisitions, which could potentially dilute our stockholders.

Although we expect our common stock will be listed on NASDAQ after the closing, there can be no assurance that our common stock will be so listed or, if listed, that we will be able to comply with the continued listing standards of NASDAQ.

Our common stock is currently listed on NASDAQ. In connection with the closing of the Business Combination, we have applied to continue to list our common stock on NASDAQ after the closing under the symbol “AERX.” As part of the application process, we are required to provide evidence that we are able to meet the continued listing requirements of NASDAQ, including the requirement that our common stock is held by a minimum of 300 holders. If we are unable to list our common stock on NASDAQ or if, after the Business Combination, NASDAQ delists our common stock from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse consequences including:

We may apply the net proceeds released from the trust account in a manner that does not improve our results of operations or increase the value of your investment.

If the Business Combination is consummated, the funds held in the trust account will be released to pay (i) MWRX stockholders who properly exercise their conversion rights, (ii) an advisor fee of $1.848 million to EarlyBirdCapital, Inc., (iii) all applicable fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees, and other professional fees) of the Company, Merger Sub and AeroCare as set forth in the Merger Agreement, (iv) unpaid franchise and income taxes of the Company, and (v) our sponsors, officers or directors for amounts owed pursuant to unpaid loans made to the Company and unreimbursed out-of-pocket expenses incurred by them in connection with our business and operations.

Other than these uses, we do not have specific plans for any funds remaining from the trust account and will have broad discretion regarding how we use such funds. These funds could be used in a manner with which you may not agree or applied in ways that do not improve the Company’s results of operations or increase the value of your investment.

If the Business Combination’s benefits do not meet the expectations of investors or securities analysts, the market price of our securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of our common stock prior to the closing of the Business Combination may decline. The market value of our common stock at the time of the Business Combination may vary significantly from the price on the date the Merger Agreement was executed, the date of this proxy statement/prospectus, or the date on which our stockholders vote on the Business Combination. Because the share exchange ratio in the Merger Agreement will not be adjusted to reflect any changes in the market price of our common stock, the market value of the Company common stock issued in the Business Combination may be higher or lower than the values of these shares on earlier dates.

In addition, following the Business Combination, fluctuations in the price of our common stock could contribute to the loss of all or part of your investment. Prior to the Business Combination, there has not been a public market for AeroCare’s stock and trading in the shares of the Company’s common stock has not been active. Accordingly, the valuation ascribed to AeroCare and our common stock in the Business Combination

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may not be indicative of the price that will prevail in the trading market following the Business Combination. If an active market for our common stock develops and continues, the trading price of our common stock following the Business Combination could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our common stock and our common stock may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our common stock may not recover and may experience a further decline.

Factors affecting the trading price of our common stock may include:

Broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance. The stock market in general and NASDAQ have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to the Company could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our common stock also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

If, following the Business Combination, securities or industry analysts do not publish or cease publishing research or reports about the Company, its business, or its market, or if they change their recommendations regarding our common stock adversely, the price and trading volume of our common stock could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. Securities and industry analysts do not currently, and may never, publish research on the Company. If no securities or industry analysts commence coverage of the Company, our stock price and trading volume would likely be negatively

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impacted. If any of the analysts who may cover the Company change their recommendation regarding our stock adversely, or provide more favorable relative recommendations about our competitors, the price of our common stock would likely decline. If any analyst who may cover the Company were to cease coverage of the Company or fail to regularly publish reports on it, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Anti-takeover provisions contained in our certificate of incorporation and bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

The Company’s amended and restated certificate of incorporation and bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors. These provisions include:

These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law (“DGCL”), which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our certificate of incorporation or bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

If we are unable to effect a business combination by December 26, 2014, we will be forced to liquidate.

If we do not complete a business combination by December 26, 2014, our amended and restated certificate of incorporation provides that we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible

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following such redemption, subject to the approval of the remaining stockholders and the board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In the event of liquidation, there will be no distribution with respect to the Company’s founder shares and sponsor shares. Accordingly, the founder shares and sponsor shares will expire worthless.

For illustrative purposes, based on funds in the trust account of $63,457,168 on June 30, 2014, the estimated per share redemption price would have been approximately $8.36. We do not anticipate the trust account balance at the time the Business Combination is completed will be materially greater than the funds held in trust as of June 30, 2014.

If we are forced to liquidate, our stockholders may be held liable for claims by third parties against the Company to the extent of distributions received by them.

Under the DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of the trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not consummate an initial business combination by December 26, 2014, may be considered a liquidation distribution under Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, we intend to redeem our public shares as soon as reasonably possible following December 26, 2014, in the event we do not consummate an initial business combination and, therefore, we do not intend to comply with those procedures.

Because we will not be complying with Section 280, Section 281(b) of the DGCL requires the Company to adopt a plan, based on facts known to us at such time that will provide for the payment of all existing and pending claims or claims that may be potentially brought against the Company within the 10 years following dissolution. However, because we are a blank check company, rather than an operating company, and our operations have been limited to searching for prospective target businesses, the only likely claims to arise would be from vendors (such as lawyers, investment bankers, and consultants) or prospective target businesses. If the Company’s plan of distribution complies with Section 281(b) of the DGCL, any liability of our stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would likely be barred after the third anniversary of the dissolution. There can be no assurance that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of the trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not consummate an initial business combination within the required timeframe is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then, pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after December 26, 2014, in the event we do not consummate an initial business combination, this may be viewed or interpreted as giving preference to our stockholders over any potential creditors with respect to access to or distributions from the Company’s assets. Furthermore, our board of directors may be viewed as having breached its fiduciary duties to the Company’s creditors and/or may have acted in bad faith, thereby exposing

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itself and the Company to claims of punitive damages, by paying our stockholders from the trust account prior to addressing the claims of creditors. There can be no assurance that claims will not be brought against the Company for these reasons.

Unlike some other blank check companies, the Company does not have a specified maximum conversion threshold. The absence of such a conversion threshold will make it easier for us to consummate the Business Combination even if a substantial number of our stockholders do not agree.

Since the Company has no specified maximum conversion threshold, our structure is different in this respect from the structure that has been used by some blank check companies. Previously, a blank check company would not be able to consummate a business combination if the holders of the company’s public shares voted against a proposed business combination and elected to redeem or convert more than a specified percentage of the shares sold in such company’s initial public offering, which percentage threshold was typically between 19.99% and 39.99%. As a result, we may be able to consummate the Business Combination even though a substantial number of our public stockholders do not agree with the transaction and have converted their shares. In no event, however, will we convert public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (6,991,925 shares or 92.1% of the Company’s issued and outstanding public shares of common stock that are eligible for conversion, as of June 30, 2014). In addition, it is a condition to closing under the Merger Agreement, however, that the aggregate amount of funds in the trust account, after giving effect to the payment for all public shares properly submitted for conversion, the $1.848 million advisory fee to EBC and other specified costs set forth in the Merger Agreement, plus any proceeds from the issuance of additional shares of our common stock at the closing of the Business Combination and any available cash of the Company (net of any indebtedness), equals at least $30,000,000. Each conversion of shares by our public stockholders will decrease the amount in our trust account and thus decrease the amount of cash available to satisfy this closing condition. Therefore, assuming (i) we do not obtain financing through the issuance of additional shares of our common stock at the closing of the Business Combination and (ii) transaction costs and other specified deductions to the trust account do not exceed $4.4 million, the maximum number of public shares that may be converted into cash from the trust account in order for us to be able to complete the Business Combination would be 3,475,167. If conversions by our public stockholders cause us to be unable to satisfy this closing condition, then AeroCare, may, at its option, terminate the Merger Agreement.

Activities taken by affiliates of the Company to purchase, directly or indirectly, public shares will increase the likelihood of approval of the Business Combination Proposal and other proposals and may affect the market price of the Company’s securities during the buyback period.

Our sponsors, directors, officers, advisors or their affiliates may purchase shares in privately negotiated transactions either prior to or following the consummation of the Business Combination. None of our sponsors, directors, officers, advisors or their affiliates will make any such purchases when such parties are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Although none of our sponsors, directors, officers, advisors or their affiliates currently anticipate paying any premium purchase price for such public shares, in the event such parties do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. There is no limit on the number of shares that could be acquired by our sponsors, directors, officers, advisors or their affiliates, or the price such parties may pay.

If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals and would likely increase the chances that such proposals would be approved. In addition, if the market does not view the Business Combination positively, purchases of public shares may have the effect of counteracting the market’s view, which would otherwise be reflected in a decline in the market price of our securities. In addition, the termination of the support provided by these purchases may materially adversely affect the market price of our securities.

As of the date of this proxy statement/prospectus, no agreements with respect to the private purchase of public shares by the Company or the persons described above have been entered into with any such investor

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or holder. We will file a Current Report on Form 8-K with the SEC to disclose private arrangements entered into or significant private purchases made by any of the aforementioned persons that would affect the vote on the Business Combination Proposal or other proposals.

Our stockholders will experience immediate dilution as a consequence of the issuance of common stock as consideration in the Business Combination. Having a minority share position may reduce the influence that our current stockholders have on the management of the Company.

Based on AeroCare’s current capitalization, we expect to issue 11,296,079 shares of common stock of the Company at the closing to AeroCare’s stockholders, subject to adjustment as described herein, and up to an additional 3,588,517 earnout shares, subject to the achievement of certain financial targets by the post-merger Company in the three fiscal years following the Business Combination, as described herein. As a result, our current stockholders will hold 10,200,950 shares or approximately 47.45% of the post-merger company, assuming no MWRX shares are converted. This percentage does not take into account (i) up to 3,588,517 earnout shares that could be issued following the Business Combination, and (ii) the 511,636 shares that may be issued upon the exercise of the assumed options. See “Summary — Ownership After Business Combination” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information. Consequently, the ability of our current stockholders following the Business Combination to influence management of the Company through the election of directors will be substantially reduced.

If our stockholders fail to comply with the conversion requirements specified in this proxy statement/prospectus, they will not be entitled to convert their shares of our common stock into a pro rata share of the trust account.

Each of the Company’s public stockholders will have the right, regardless of whether he, she or it votes for or against the Business Combination, to demand that we convert his, her or its shares into a pro rata share of the trust account. In order to exercise their conversion rights, our stockholders are required to submit a request in writing and deliver their stock (either physically or electronically) to our transfer agent at least one business day prior to the closing. See the section entitled “Special Meeting in Lieu of 2014 Annual Meeting of MWRX Stockholders — Conversion Rights” for additional information on how to exercise your conversion rights.

Directors of the Company have potential conflicts of interest in recommending that stockholders vote in favor of approval of the Business Combination Proposal and approval of the other proposals described in this proxy statement/prospectus.

When considering our board of directors’ recommendation that our stockholders vote in favor of the approval of the Business Combination Proposal, our stockholders should be aware that directors and executive officers of the Company have interests in the Business Combination that may be different from, or in addition to, the interests of our stockholders. These interests include:

These interests may influence our directors in making their recommendation that you vote in favor of the Business Combination Proposal, and the transactions contemplated thereby.

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The exercise of discretion by our directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Merger Agreement or waivers of conditions are appropriate and in the best interests of our stockholders.

In the period leading up to the closing of the Business Combination, events may occur that, pursuant to the Merger Agreement, would require the Company to agree to amend the Merger Agreement, to consent to certain actions or to waive rights that we are entitled to under the Merger Agreement. Such events could arise because of changes in the course of AeroCare’s business, a request by AeroCare to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on AeroCare’s business and would entitle the Company to terminate the Merger Agreement. In any of such circumstances, it would be in the discretion of the Company, acting through its board of directors, to grant its consent or waive its rights. The existence of the financial and personal interests of the directors described elsewhere in this proxy statement/prospectus may result in a conflict of interest on the part of one or more of the directors between what he or she may believe is best for the Company and our stockholders and what he or she may believe is best for himself or herself or his or her affiliates in determining whether or not to take the requested action. As of the date of this proxy statement/prospectus, we do not believe there will be any changes or waivers that our directors and officers would be likely to make after stockholder approval of the Business Combination has been obtained. While certain changes could be made without further stockholder approval, if there is a change to the terms of the transaction that would have a material impact on the stockholders, we will be required to circulate a new or amended proxy statement/prospectus or supplement thereto and resolicit the vote of our stockholders with respect to the Business Combination Proposal.

If we are unable to complete the Business Combination by December 26, 2014, our amended and restated certificate of incorporation provides that our corporate existence will automatically terminate and we will dissolve and liquidate. In such event, third parties may bring claims against the Company and, as a result, the proceeds held in trust could be reduced and the per share liquidation price received by stockholders could be less than $8.36 per share.

We must complete a business combination by December 26, 2014, when, pursuant to our amended and restated certificate of incorporation, our corporate existence will terminate and we will be required to liquidate. In such event, third parties may bring claims against the Company. Although we have obtained waiver agreements from many of the vendors and service providers we have engaged and prospective target businesses with which we have negotiated, whereby such parties have waived any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that such parties will not bring claims seeking recourse against the trust account including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as other claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against the Company’s assets, including the funds held in the trust account. Further, we could be subject to claims from parties not in contract with us who have not executed a waiver, such as a third party claiming tortious interference as a result of the Business Combination. Our officers have agreed that they will be jointly and severally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. However, they may not be able to satisfy their indemnification obligations if they are required to do so. Additionally this agreement entered into by our officers specifically provides for two exceptions to the personal indemnity they have given: they will have no personal liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed a valid and enforceable agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims under our indemnity with the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. As a result, if we liquidate, the per-share distribution from the trust account could be less than $8.36 due to claims or potential claims of creditors. We will distribute to all of our public stockholders, in proportion to their respective equity interests, an aggregate sum equal to the amount in the trust account, inclusive of any interest (subject to our obligations under Delaware law to provide for claims of creditors as described below).

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Stockholders of the Company who wish to convert their shares into a pro rata share of the trust account must comply with specific requirements for conversion that may make it more difficult for them to exercise their conversion rights prior to the deadline for exercising conversion rights.

Public stockholders who wish to convert their shares for a pro rata portion of the trust account must, among other things, tender their certificates to our transfer agent or deliver their shares to the transfer agent electronically through the DTC prior to 4:30 P.M., New York time, on the second business day prior to the special meeting of stockholders. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and our transfer agent will need to act to facilitate this request. It is our understanding that stockholders should generally allot at least two weeks to obtain physical certificates from the transfer agent. However, because we do not have any control over this process or over the brokers or DTC, it may take significantly longer than two weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, stockholders who wish to convert their shares may be unable to obtain physical certificates by the deadline for exercising their conversion rights and thus will be unable to convert their shares.

The financial statements included in this proxy statement/prospectus do not take into account the consequences to the Company of a failure to complete a business combination by December 26, 2014.

The financial statements included in this proxy statement/prospectus have been prepared assuming that we would continue as a going concern. As discussed in Note 1 to the Notes to the Company’s financial statements for the year ended December 31, 2013, we are required to complete the Business Combination by December 26, 2014. The possibility of the Business Combination not being consummated raises some doubt as to our ability to continue as a going concern and the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our board of directors did not obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination.

Our board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. In analyzing the Business Combination, our board and management conducted due diligence on AeroCare, researched the industries in which AeroCare operates, and reviewed AeroCare’s financial information and concluded that the Business Combination was in the best interest of our stockholders. The lack of a third-party valuation or fairness opinion may lead an increased number of our stockholders to vote against the Business Combination Proposal or demand conversion of their shares of our common stock, which could potentially impact our ability to consummate the Business Combination.

The Company and AeroCare will be subject to business uncertainties and contractual restrictions while the Business Combination is pending.

Uncertainty about the effect of the Business Combination on employees and customers may have an adverse effect on the Company and AeroCare. These uncertainties may impair our or AeroCare’s ability to retain and motivate key personnel and could cause customers and others that deal with any of us or them to defer entering into contracts or making other decisions or to seek to change existing business relationships. If key employees depart because of uncertainty about their future roles and the potential complexities of the Business Combination, our or AeroCare’s business could be harmed.

We will incur significant transaction and transition costs in connection with the Business Combination.

We expect to incur significant, non-recurring costs in connection with consummating the Business Combination and AeroCare operating as a public company. We may incur additional costs to maintain employee morale and to retain key employees. We will also incur significant fees and expenses relating to financing arrangements and legal, accounting and other transaction fees and costs associated with the Business Combination. Some of these costs are payable regardless of whether the Business Combination is completed.

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The unaudited pro forma financial information included in this document may not be indicative of what our actual financial position or results of operations would have been.

The unaudited pro forma financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the dates indicated. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.

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INFORMATION ABOUT MWRX

Introduction

We are a blank check company formed for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. We have focused our efforts to identify a prospective target business in the healthcare industry, with specific focus on the specialty pharmacy, infusion pharmacy and/or drug distribution sectors based in the U.S. However, we are not limited to a particular geographic region or business industry or section and may pursue opportunities in any location or business sector or industry that we believe is attractive.

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (which is referred to herein as the JOBS Act) and will remain such for up to five years. However, if our non-convertible debt issued within a three year period or total revenues exceed $1 billion or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year. As an emerging growth company, we have elected, under Section 107(b) of the JOBS Act, to take advantage of the extended transition period provided in Securities Act Section 7(a)(2)(B) for complying with new or revised accounting standards.

Company History

We were incorporated in Delaware on January 22, 2013, under the name “MedWorth Acquisition Corp.” In February 2013, we issued an aggregate of 1,725,000 shares of common stock, par value $0.0001 per share, for an aggregate purchase price of $25,000, or approximately $0.015 per share. Effective June 26, 2013, we authorized a stock dividend of 0.1 shares of common stock for each outstanding share of common stock, resulting in our sponsors holding an aggregate of 1,897,500 founder shares.

In July 2013, we consummated our initial public offering of 7,590,000 shares of common stock for an offering price of $8.00 per share, generating gross proceeds of $60,720,000. Concurrently therewith, we issued an aggregate of 713,450 sponsor shares in a private placement to our sponsors and their designees at a price of $8.00 per share, generating gross proceeds of $5,707,600.

Of the net proceeds from the initial public offering and the private placement, $63,452,400 was placed in a trust account at UBS Financial Services, Inc., with Continental Stock Transfer & Trust Company acting as trustee. Except as described in this proxy statement/prospectus, these proceeds will not be released until the earlier of the completion of an initial business combination and our redemption of 100% of the outstanding public shares of common stock upon our failure to consummate an initial business combination on or before December 26, 2014. After the payment of approximately $2.6 million in expenses relating to the initial public offering, $231,392 of the net proceeds of the initial public offering and the private placement became available to be used as working capital to provide for business, legal and accounting due diligence on prospective business combinations and continuing general and administrative expenses. As of June 30, 2014, we have $64,794 of proceeds held outside the trust account and all interest income on the balance of the trust account (less amounts released to us to pay taxes or dissolution expenses) available to fund working capital requirements. The net proceeds deposited into the trust account remain on deposit in the trust account earning interest. As of June 30, 2014, the balance in the trust account was $63,457,168.

On November 27, 2013, after obtaining the written consent of a majority of our stockholders, we changed our name to “MergeWorthRx Corp.”

Identification of Potential Targets

Subsequent to the consummation of the initial public offering on July 2, 2013, we commenced consideration of potential target companies with the objective of consummating a business combination. MWRX management profiled more than 1,000 healthcare services companies as potential acquisition targets and contacted owners and senior executives of more than 100 of the companies, primarily in the specialty and infusion pharmacy space or where members of MWRX had a direct and existing relationship, to inform them about MWRX’s unique equity structure and available growth capital as a publicly-traded acquisition company,

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learn about their company’s operations and finances, and to gauge their interest in considering entering into a transaction with MWRX. MWRX management attended key industry events and conferences and utilized other public relations such as magazine articles to increase visibility and awareness of MWRX and its focus to search for prospective businesses and/or assets within the healthcare services space. We also contacted numerous individuals in the healthcare services advisory market, including investment bankers, financial advisors, partners in private equity firms, law firms and accounting firms, and other members of the financial and healthcare advisory communities. We were also apprised of target business candidates through our management’s direct relationships. Between August 15, 2013 and July 29, 2014, we analyzed five potential target businesses under confidentiality agreements and then decided to focus on the potential transaction with AeroCare.

For a description of activities in connection with identification of a target business and the negotiation of the Merger Agreement, see the section entitled “Proposal No. 1 — Approval of the Business Combination.”

Stockholder Approval of the Business Combination

In connection with the proposed Business Combination, we are seeking stockholder approval at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the Business Combination, into their pro rata share of the aggregate amount then on deposit in the trust account, subject to the limitations described herein. We will consummate the Business Combination only if we have net tangible assets of at least $5,000,001 upon such consummation and a majority of the outstanding shares of common stock voted are voted in favor of such proposed Initial Business Combination.

In connection with the stockholder vote to approve the Business Combination, our sponsors, as well as our officers and directors, have agreed to vote the shares of common stock owned by them immediately prior to our IPO, as well as any shares of common stock acquired by them after our IPO, in favor of the Business Combination. None of our officers, directors, sponsors or their affiliates has indicated any intention to purchase shares from persons in the open market or in private transactions. However, if a significant number of stockholders vote, or indicate an intention to vote, against the Business Combination, our officers, directors, sponsors or their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. The foregoing open market purchases by our sponsors, officers, directors or their affiliates who are “affiliated purchasers” under Rule 10b-18 under the Exchange Act will comply with Rule 10b-18, which is safe harbor from liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Our sponsors, officers, directors and their affiliates will not make any purchases of common stock if the purchases would violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.

Conversion Rights

In connection with seeking stockholder approval the Business Combination, public stockholders may seek to convert their shares, regardless of whether they vote for or against the Business Combination, into their pro rata share of the aggregate amount then on deposit in the trust account.

Notwithstanding the foregoing, pursuant to our amended and restated certificate of incorporation, a public stockholder, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 25% or more of the shares of common stock sold in our initial public offering. Such a public stockholder is still entitled to vote against the Business Combination with respect to all shares of common stock owned by him or his affiliates.

Our sponsors do not have conversion rights with respect to any shares of common stock owned by them, directly or indirectly, whether acquired prior to our initial public offering or purchased by them thereafter.

We may also require public stockholders, whether they are a record holder or hold their shares in “street name,” to either tender their certificates to our transfer agent at any time prior to the vote on the Business Combination or to deliver their shares to the transfer agent electronically prior to the vote on the proposed Initial Business Combination using Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option.

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There is a nominal cost associated with the above-referenced delivery process and the act of certificating the shares or delivering them through the DWAC System. The transfer agent will typically charge the tendering broker $45.00 and it would be up to the broker whether or not to pass this cost on to the holder. However, this fee would be incurred regardless of whether or not we require holders to exercise conversion rights. The need to deliver shares is a requirement of exercising conversion rights regardless of the timing of when such delivery must be effectuated. However, in the event we require stockholders to exercise conversion rights prior to the consummation of the proposed Initial Business Combination and the proposed Initial Business Combination is not consummated, this may result in an increased cost to stockholders.

Any request to convert such shares, once made, may be withdrawn at any time up to the vote on the proposed Initial Business Combination. Furthermore, if a holder of a public share of common stock delivered his certificate in connection with an election of conversion and subsequently decided prior to the vote not to elect to exercise such rights, he may simply request that the transfer agent return the certificate (physically or electronically).

If the Business Combination is not approved or completed for any reason, then our public stockholders who elected to exercise their conversion rights would not be entitled to convert their shares for the applicable pro rata share of the trust account. In such case, we will promptly return any shares delivered by public stockholders.

Liquidation if No Business Combination

Our amended and restated certificate of incorporation provides that we will continue in existence only until December 26, 2014. If we have not completed our initial business combination by such date, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

Under the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our outstanding public shares in the event we do not complete our initial business combination on or before December 26, 2014 may be considered a liquidation distribution under Delaware law. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.

Furthermore, if the pro rata portion of our trust account distributed to our public stockholders upon the redemption of 100% of our public shares in the event we do not complete our initial business combination on or before December 26, 2014, is not considered a liquidation distribution under Delaware law and such redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the Delaware General Corporation Law, the statute of limitations for claims of creditors could then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we are unable to complete our initial business combination within the prescribed time frame, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, divided by the number of then outstanding public

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shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject (in the case of (ii) and (iii) above) to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to redeem our public shares as soon as reasonably possible following December 26, 2014, and, therefore, we do not intend to comply with those procedures. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of such date.

Because we will not be complying with Section 280 of the Delaware General Corporation Law, Section 281(b) of the Delaware General Corporation Law requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all existing and pending claims or claims that may be potentially brought against us within the subsequent 10 years. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses.

We have sought to have all third parties and any prospective target businesses enter into valid and enforceable agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account. As a result, the claims that could be made against us will be limited, thereby lessening the likelihood that any claim would result in any liability extending to the trust. We therefore believe that any necessary provision for creditors will be reduced and should not have a significant impact on our ability to distribute the funds in the trust account to our public stockholders. Nevertheless, there is no guarantee that vendors, service providers and prospective target businesses will execute such agreements. In the event that a potential contracted party was to refuse to execute such a waiver, we will execute an agreement with that entity only if our management first determines that we would be unable to obtain, on a reasonable basis, substantially similar services or opportunities from another entity willing to execute such a waiver. Examples of instances where we may engage a third party that refused to execute a waiver would be the engagement of a third party consultant who cannot sign such an agreement due to regulatory restrictions, such as our auditors who are unable to sign due to independence requirements, or whose particular expertise or skills are believed by management to be superior to those of other consultants that would agree to execute a waiver or a situation in which management does not believe it would be able to find a provider of required services willing to provide the waiver. There is also no guarantee that, even if they execute such agreements with us, they will not seek recourse against the trust account. Our officers have agreed that they will be jointly and severally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. However, they may not be able to satisfy their indemnification obligations if they are required to do so. Additionally this agreement entered into by our officers specifically provides for two exceptions to the personal indemnity they have given: they will have no personal liability (1) as to any claimed amounts owed to a target business or vendor or other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, or (2) as to any claims under our indemnity with the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. As a result, if we liquidate, the per-share distribution from the trust account could be less than $8.36 due to claims or potential claims of creditors. We will distribute to all of our public stockholders, in proportion to their respective equity interests, an aggregate sum equal to the amount in the trust account, inclusive of any interest (subject to our obligations under Delaware law to provide for claims of creditors as described above).

We anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after such date and anticipate it will take no more than 10 business days to effectuate such distribution. Our sponsors have waived their rights to participate in any liquidation distribution with respect to their founder shares and sponsor shares. We will pay the costs of any subsequent liquidation from our remaining assets outside of the trust account. If such funds are insufficient, our officers have agreed to pay the out-of-pocket expenses necessary to complete such liquidation (currently anticipated to be no more than approximately $15,000) and have agreed not to seek repayment for such expenses.

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If we are unable to complete our initial business combination and expend all of the net proceeds of our IPO, other than the proceeds deposited in the trust account, and without taking into account interest, if any, earned on the trust account, the initial per-share redemption price would be $8.36. The proceeds deposited in the trust account could, however, become subject to claims of our creditors that are in preference to the claims of public stockholders.

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we may not be able to return to our public stockholders at least $8.36 per share.

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance”. As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after December 26, 2014, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to, or distributions from, our assets. Furthermore, our board may be viewed as having breached its fiduciary duties to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. Claims may be brought against us for these reasons.

Management

Directors and Executive Officers

Our current directors and executive officers are as follows:

Name		Age		Position		Term Expires
Anthony Minnuto		41		Executive Chairman of the Board		2016
Charles F. Fistel		54		Chief Executive Officer, Chief Financial Officer, Treasurer and Director		2015
Stephen B. Cichy		43		President, Chief Operating Officer, Secretary and Director		2015
John J. Delucca		70		Director		2015
Jeffrey A. Rein		62		Director		2016
Robert G. Savage		60		Director		2014
Howard I. Schwartz, M.D.		54		Director		2014

Anthony Minnuto has been the Executive Chairman of our Board since October 2013 and a Director since our inception. He also served as Secretary from our inception to August 2013. Since its founding in July 2008, Mr. Minnuto has served as Chairman and Chief Executive Officer of Allied Medical Supply Inc., a privately held, national specialty drug distributor. Allied provides pharmaceutical supply chain solutions designed to increase drug availability and maximize product flow to medical and healthcare facilities and providers with a priority access reach for drugs to more than 1,000 hospitals. From April 2006 to July 2008, Mr. Minnuto was Founder and President of Minnuto Publishing LLC, where he was a speaker, educator and author of personal development seminars and books focused on creatively negotiating and structuring commercial real estate transactions and achieving success. From 2004 to July 2008, Mr. Minnuto was a real estate investor primarily in apartment buildings in Indiana, through Arlington Management, LLC. From 2002 to 2004, he was an independent mortgage broker for various lending institutions. From 1994 to 2002, he was a technology consultant specializing in Oracle database and Sun Solaris network administration for Fortune 500 customers. From 1991 to 1994, Mr. Minnuto was an investment advisor holding Series 6 and 63 (securities), life insurance, health insurance and real estate licenses.

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We believe Mr. Minnuto is well-qualified to serve as a member of the board due to his business leadership, sales, marketing and technology experience and operational experience in the specialty pharmaceutical distribution market.

Charles F. Fistel has been our Chief Executive Officer, Chief Financial Officer, Treasurer and a Director since our inception. Mr. Fistel also serves as Chairman and Chief Executive Officer of Pacifica Capital Group, LLC, a company focused on capital sourcing, mergers and acquisitions, and wealth strategies. He has held this position since 2004. From October 2010 to April 2013, he served as the Chief Financial Officer of Allied Medical Supply Inc., a privately held, national specialty drug distributor. From 2001 to 2004, he served as Co-Managing Partner of Agilex Holdings, Inc., a holding company which developed and managed SEC registered equity mutual funds. Prior to co-founding Agilex, from July 1999 to June 2002, Mr. Fistel served as Co-Managing Partner of Unisyn, Inc., a life insurance estate and tax strategy firm. Unisyn was a wholly owned subsidiary of National Financial Partners, a publicly traded financial services firm. From May 1993 to May 1995, he served as Chief Executive Officer, and from May 1995 to June 1999, he served as Executive Vice President and a director, of Viragen, Inc., a publicly traded biopharmaceutical developer specializing in oncology, infectious diseases and autoimmune disorders. From 1986 to 1991, he was the Chief Financial Officer and a director of BLOC Development Corp., a publicly traded specialty personal computer software developer and distributor. Mr. Fistel is a certified public accountant. He graduated from Florida International University with a Bachelors of Business Administration in Accounting.

We believe Mr. Fistel is well-qualified to serve as a member of the board due to his public company experience, business leadership and contacts, corporate finance, mergers and acquisitions and business development experience and operational experience in the specialty pharmaceutical distribution and development markets.

Stephen B. Cichy has been our President and Chief Operating Officer and a director since our inception and Secretary since August 2013. Since its founding in August 2012, he has served as President and Chief Executive Officer of Monarch Specialty Group, Inc., a strategic advisor to mid-sized specialty pharmacy companies and healthcare entities. From March 2009 to May 2012, Mr. Cichy served as Executive Vice President of BioScrip, Inc., a publicly traded national specialty and infusion pharmacy and prescription service provider. In May, 2012, select assets of BioScrip’s operating businesses relating to specialty, community and mail pharmacy were acquired by Walgreens. From August 2007 to March 2009, Mr. Cichy served as Vice President Product Development and Marketing Strategy for Walgreens, Inc., a prescription drug retailer. Prior to joining Walgreens, from April 2005 to September 2007, Mr. Cichy served as Vice President of Business Development and Commercial Operations for Option Care, Inc., a publicly traded specialty and infusion pharmacy organization. Option Care was acquired by Walgreens in September 2007. Prior to joining Option Care, from March 2003 to April 2005, Mr. Cichy was Director of New Product Planning for Caremark, Inc., a pharmacy benefit management and specialty pharmacy company. Mr. Cichy currently serves as a director of Compliance Meds Technologies, a privately held health service technology company. Mr. Cichy graduated from the University of North Carolina with a Bachelors of Science.

We believe Mr. Cichy is well-qualified to serve as a member of the board due to his public company experience, business leadership and contacts, sales, marketing and business development experience and operational experience in the specialty pharmacy and infusion pharmacy markets.

John J. Delucca has served as a director since June 2013. Since 2004, Mr. Delucca has served as the President of Atlantic & Gulf, Limited, LLC, an investment and consulting company. Prior to founding Atlantic & Gulf, he served as Executive Vice President and Chief Financial Officer of Rel Consultancy Group, a private financial consulting group, from 2003 to 2004. From 1998 to 2002, Mr. Delucca served as the Executive Vice President of Finance and Administration and Chief Financial Officer of Coty, Inc., a global cosmetics and fragrance company. Prior to joining Coty, from 1993 to 1998, he served as Senior Vice President and Treasurer of RJR Nabisco, Inc., a tobacco sales and food processing conglomerate. Mr. Delucca currently serves on the boards of directors of Endo Health Solutions, Inc., a U.S.-based, publicly traded, specialty healthcare solutions company focused on branded and generic pharmaceuticals, devices and services, and of the Elliott Company, a corporation specializing in industrial turbines and equipment and power generation. He previously served on the boards of directors of the following companies: Elster Group SE,

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ITC Deltacom, Tier Technologies, Inc., British Energy, PLC, and Enzo Biochem, Inc. Mr. Delucca graduated from Bloomfield College with a degree in Business Administration and from Fairleigh-Dickinson University School of Graduate Studies with a Master’s in Business Administration.

We believe Mr. Delucca is well-qualified to serve as a member of the board due to his public company experience, business leadership and contacts, corporate finance, mergers and acquisitions and financial operations experience in a broad range of industries.

Jeffrey A. Rein has served as a director since February 2013. In October 2008, Mr. Rein retired as Chairman and Chief Executive Officer of Walgreens Co., the world’s largest drug store chain, positions which he had held since 2007. Prior to being appointed as Chairman and Chief Executive Officer, he held a variety of positions with Walgreens, where he started his career as an assistant manager in 1982 and was promoted to store manager in 1984, district manager in 1990, divisional Vice President and Treasurer in 1996 and Vice President of Marketing Systems and Services in 2000. Mr. Rein was appointed executive vice president of marketing in 2001 and promoted to president and chief operating officer in 2003. In 2006, he became chief executive officer and was named chairman in 2007. Mr. Rein presently serves as an independent director of Meijer, Inc., a privately held general merchandise, grocery and health and beauty aid retail chain. He graduated from the University of Arizona with Bachelors of Science degrees in Accounting and Pharmacy.

We believe Mr. Rein is well-qualified to serve as a member of the board due to his public company experience, business leadership and contacts, and operational experience in the retail pharmacy, specialty pharmacy and infusion pharmacy markets.

Robert G. Savage has served as a director since March 2013. Mr. Savage served as Group Vice President and President — General Therapeutics & Inflammation Business of Pharmacia Corporation from 2002 until its acquisition by Pfizer, Inc. in 2003. From 1996 through 2001, Mr. Savage was employed by Johnson & Johnson in a variety of roles, most recently as Worldwide Chairman of Johnson & Johnson’s Pharmaceutical Group. From 1985 to 1996, he was employed by Roche Holding AG in a variety of senior marketing, business development and operations positions, including as Vice President — Marketing, Hoffman-La Roche, Inc. He is currently a director of The Medicines Company, a publicly traded pharmaceutical developer that provides medical solutions for patients in acute and intensive care hospitals worldwide. Mr. Savage was a member of the Board of Directors of Noven Pharmaceuticals, Inc. from 2004 until 2009 when the company was sold to Hisamitsu Pharmaceuticals Company, EpiCept Corporation from 2004 until 2013 when it merged with Immune Pharmaceuticals Inc., and Savient Pharmaceuticals, Inc. from 2012 to 2013 when it was acquired by Crealta Pharmaceuticals. Mr. Savage has been the President of Strategic Imagery LLC, a pharmaceutical consultancy, since 2003. He received a Bachelors of Science in biology from Upsala College and an MBA from Rutgers University.

We believe Mr. Savage is well-qualified to serve as a member of the board due to his public company experience, business leadership and contacts, and operational experience in the pharmaceutical manufacturing and development markets.

Howard I. Schwartz, M.D. has served as a director since February 2013. Since January 2013, Dr. Schwartz has served as Chief Medical Officer of QPS Holdings, and President of QPS MRA, its subsidiary. QPS is a US-based, international GLP/GCP-compliant contract research organization (CRO) supporting discovery, preclinical and clinical drug development. Prior to its sale to QPS, Dr. Schwartz was the Chief Executive Officer and Medical Director of Miami Research Associates, Inc., a privately held multi-specialty clinical research organization, a position he held from its founding in 1996. In addition, since 1989, he has been in the private practice of gastroenterology and internal medicine. Dr. Schwartz is a board certified gastroenterologist. He graduated from the University of Miami School of Medicine with his medical degree.

We believe Dr. Schwartz is well-qualified to serve as a member of the board due to his business leadership and contacts, specialty pharmaceutical development knowledge, operational experience in chronic disease management and treatment and the clinical aspects of specialty pharmaceutical development.

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Employees

We have three executive officers. These individuals are not obligated to devote any specific number of hours to our matters, but they intend to devote as much of their time as they deem necessary to our affairs until we have completed the Business Combination. We do not intend to have any full time employees prior to the consummation of the Business Combination.

Legal Proceedings

There are no legal proceedings pending against us.

Corporate Governance

Director Independence

Our board of directors has determined that Messrs. Deluca, Rein, Savage and Dr. Schwartz are “independent directors” as such term is defined in Rule 10A-3 of the Exchange Act and the NASDAQ listing standards.

Board of Directors and Committees

Our board currently has three committees, consisting of an audit committee, a compensation committee and a nominating committee. During the fiscal year ended December 31, 2013, our board of directors held six meetings. All of our directors attended at least 75% of the board meetings and their respective committee meetings. The Company does not have a policy regarding director attendance at annual meetings, but encourages the directors to attend all meetings.

Audit Committee

Effective July 2013, we established an audit committee of the board of directors, which consists of John J. Delucca, Jeffrey A. Rein and Robert G. Savage, each of whom is an independent director. During the fiscal year ended December 31, 2013, the audit committee met twice.

The audit committee’s duties, which are specified in our audit committee charter, include, but are not limited to:

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Audit Committee Financial Expert

Our audit committee is composed exclusively of “independent directors” who are “financially literate,” as defined under the listing standards of NASDAQ. In addition, we must certify to NASDAQ that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board of directors has determined that John J. Delucca qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC.

Nominating Committee

Effective July 2013, we established a nominating committee of the board of directors, which consists of Jeffrey A. Rein, John J. Delucca and Howard I. Schwartz, each of whom is an independent director. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers and others. During the fiscal year ended December 31, the nominating committee did not meet.

Guidelines for Selecting Director Nominees

The guidelines for selecting nominees, which are specified in our nominating committee charter, generally provide that persons to be nominated:

The nominating committee will consider a number of qualifications relating to management and leadership experience, background, integrity and professionalism in evaluating a person’s candidacy for membership on the board of directors. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee does not distinguish among nominees recommended by stockholders and other persons.

There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors.

Compensation Committee

Effective July 2013, we established a compensation committee of the board of directors, which consists of Robert G. Savage, John J. Delucca and Howard I. Schwartz. Upon consummation of our Initial Business Combination, the compensation committee will determine the goals and objectives, and make determinations regarding the salary and incentives for the chief executive officer, approve salaries and incentives for other executive officers, administer our incentive compensation plans and make recommendations to the board of directors and senior management regarding our compensation programs, including an assessment of the risks associated with such programs. Our compensation committee did not meet during fiscal year 2013.

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Code of Ethics

In July 2013, our board of directors adopted a code of ethics that applies to directors, officers, and employees of ours and of any subsidiaries we may have in the future (including our principal executive officer, our principal financial officer, our principal accounting officer or controller, and persons performing similar functions). We will provide, without charge, upon request, copies of our code of ethics. Requests for copies of our code of ethics should be sent in writing to MergeWorthRx Corp., 3123 McDonald Street, Miami, Florida 33133.

Executive Compensation

Compensation Discussion and Analysis

No executive officer has received any cash compensation for services rendered to us. No compensation or fees of any kind, including finder’s, consulting fees and other similar fees, will be paid to our sponsors, members of our management team or their respective affiliates, for services rendered prior to or in connection with the consummation of our Initial Business Combination (regardless of the type of transaction that it is). They will, however, receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us.

After our Initial Business Combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of a stockholder meeting held to consider our Initial Business Combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K, as required by the SEC.

Since our formation, we have not granted any stock options or stock appreciation rights or any other awards under long-term incentive plans to any of our executive officers or directors.

Compensation Committee Interlocks and Insider Participation

During 2013, none of the members of our compensation committee was a current or former employee of our Company. None of the members of our compensation committee had a direct or indirect material interest in any related-party transaction involving our company.

No interlocking relationships exist between our board of directors or our compensation committee and the board of directors or the compensation committee of any other entity. None of our executive officers serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or our compensation committee.

Compensation Committee Report

Our compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on that review and discussion, the compensation committee has recommended that the Compensation Discussion and Analysis be included in this proxy statement/prospectus.

Respectfully submitted,
 
John J. Delucca
Robert G. Savage
Howard I. Schwartz, M.D.

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Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and ten percent stockholders are required by regulation to furnish us with copies of all Section 16(a) reports they file. Based solely on a review of such reports received by us and written representations from certain reporting persons that no Form 5s were required for those persons, we believe that, during the fiscal year ended December 31, 2013, all reports required to be filed by our officers, directors and persons who own more than ten percent of a registered class of our equity securities were filed on a timely basis.

Audit Committee Matters

Audit Committee Report

The Company’s audit committee reviewed with management and Marcum LLP (“Marcum”) the results of the 2013 audit, including the audited financial statements. The audit committee reviewed the requirements of the audit committee charter previously adopted and the reports required to be disclosed to the audit committee. The audit committee discussed with Marcum the matters required to be discussed by Auditing Standard No. 16, “Communications with Audit Committees” as adopted by the Public Company Accounting Oversight Board. Marcum representatives reviewed the written disclosures required by the Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” as amended, regarding independence of public accountants with the audit committee and presented their Report on Auditor Independence regarding that matter to the audit committee. The audit committee has determined that Marcum was independent of the Company. The audit committee also discussed with management and Marcum the quality and adequacy of the Company’s internal control over financial reporting and disclosure controls and procedures and internal audit organization, responsibilities, budget, staffing and identification of audit risks.

The audit committee reviewed and discussed with management and Marcum a draft of the Annual Report on Form 10-K and the audited financial statements for the year ended December 31, 2013. Management has the responsibility for the preparation of the financial statements and the reporting process, including the systems of internal control over financial reporting and disclosure controls and procedures. The external auditor is responsible for examining the financial statements and expressing an opinion on the conformity of the audited financial statements with accounting principles generally accepted in the United States of America. Based on its review of all of the above and on discussions with management and the external auditor, the audit committee recommended to the board of directors that MWRX’s audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2013 for filing with the SEC.

Respectfully submitted,
 
John J. Delucca,
Jeffrey A. Rein
Robert G. Savage

Fees and Services

The firm of Marcum LLP acts as our independent registered public accounting firm. The following is a summary of fees paid to Marcum LLP for services rendered.

Audit Fees

During the period from January 22, 2013 (inception) through December 31, 2013, audit fees for our independent registered public accounting firm were $60,000.

Audit-Related Fees

We did not receive audit-related services that are not reported as audit fees for the period from January 22, 2013 (inception) through December 31, 2013.

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Tax Fees

During the period from January 22, 2013 (inception) through December 31, 2013, our independent registered public accounting firm did not render any fees for tax services to us. However, such firm will provide tax services to us as, and when, required.

All Other Fees

During the period from January 22, 2013 (inception) through December 31, 2013, there were no fees billed for services provided by our independent registered public accounting firm other than those set forth above.

Audit Committee Approval

Since our audit committee was not formed until July 2013, the audit committee did not pre-approve any the foregoing services prior to such date, although any services rendered prior to the formation of our audit committee were reviewed and ratified. Our audit committee pre-approved all the foregoing services subsequent to such date. In accordance with Section 10A(i) of the Securities Exchange Act of 1934, before we engage our independent registered public accounting firm to render audit or non-audit services on a going-forward basis, the engagement will be approved by our audit committee.

Periodic Reporting and Audited Financial Statements

We have registered our common stock under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly, and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports on Form 10-K contain financial statements audited and reported on by our independent registered public accounting firm. Our website address is http://www.mergeworthrx.com/. Our reports filed with the SEC can be inspected and copied at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information about the operation of the public reference room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains a website at http://www.sec.gov which contains the registration statements, reports, proxy and information statements and information regarding issuers that file electronically with the SEC. All of our SEC filings are also available on our website at http://www.mergeworthrx.com/ir/filings.php, as soon as reasonably practicable after having been electronically filed or furnished to the SEC. We will provide electronic or paper copies of such materials free of charge upon request.

We are currently required to comply with the internal controls requirements of the Sarbanes-Oxley Act. However, AeroCare may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy of its internal controls. The development of the internal controls of the combined entity to achieve compliance with the Sarbanes-Oxley Act may increase the time and costs necessary to complete the Business Combination.

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MWRX MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes of MWRX included elsewhere in this proxy statement/prospectus. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.”

References in this “MWRX Management’s Discussion and Analysis of Financial Condition and Results of Operations” section to the “Company,” “us” or “we” refer to MergeWorthRx Corp.

Overview

We are a blank check company, formed on January 22, 2013, for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. We have focused our efforts to identify a prospective target business in the healthcare industry, with specific focus on the specialty pharmacy, infusion pharmacy and/or drug distribution sectors based in the United States. However, we are not limited to a particular geographic region or business industry or section and may pursue opportunities in any location or business sector or industry that we believe is attractive.

In July 2013, we consummated our initial public offering of 7,590,000 shares of common stock for an offering price of $8.00 per share, generating gross proceeds of $60,720,000. Concurrently therewith, we issued an aggregate of 713,450 sponsor shares in a private placement to our sponsors and their designees at a price of $8.00 per share, generating gross proceeds of $5,707,600.

We deposited substantially all of the net proceeds of these sales, or $63,452,400, into a trust account at UBS Financial Services, Inc. maintained by Continental Stock Transfer & Trust Company acting as the trustee. Except as described in the final prospectus relating to the initial public offering, these proceeds will not be released until the earlier of the completion of a business combination or our redemption of 100% of the outstanding public shares of common stock upon the failure to consummate a business combination on or before December 26, 2014. As of June 30, 2014, a total of $63,457,168 was held in the trust account, or $8.36 per share.

Results of Operations

Our entire activity from inception through the closing of the initial public offering on July 2, 2013, was in preparation for the initial public offering. Since the initial public offering, our activity has been limited to the evaluation of business combination candidates, and we will not generate any operating revenues until the closing and completion of an initial business combination. We have generated and expect to continue to generate small amounts of non-operating income in the form of interest income on cash and cash equivalents. Interest income has not been and is not expected to be significant in view of low interest rates on risk-free investments (U.S. Treasury securities). We have incurred and expect to continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with the Business Combination.

For the three and six months ended June 30, 2014, we had net losses of approximately $69,624 and $163,509 respectively, compared to $5,488 and $8,488 for the three months ended June 30, 2013, and the period from January 22, 2013 (inception) through June 30, 2013. Net loss in all periods primarily consists of formation and operating costs.

Liquidity and Capital Resources

We presently have no revenue and have had losses since inception. We have relied upon the sale of our securities and loans from our officers and directors to fund our operations.

As of June 30, 2014, we had cash and cash equivalents of $64,794 available for working capital and $63,457,168 of cash held in trust, including interest.

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Prior to the consummation of the Business Combination, we will have available to us the $64,794 of proceeds held outside the trust account (as of June 30, 2014) and all interest income on the balance of the trust account (less amounts released to pay taxes or dissolution expenses) that will be released to fund working capital requirements. Should this amount be insufficient, we may need to raise additional capital through loans or additional investments from our initial stockholders, officers, directors, or third parties. None of the initial stockholders, officers or directors is under any obligation to advance funds to, or invest in, us. We may not have sufficient funds to operate until December 26, 2014, which is the date that we are required to liquidate, assuming that a business combination is not consummated during that time. We have used and will continue to use funds outside the trust account for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less interest released to us for working capital purposes or to pay taxes and advisor fees) to consummate the Business Combination. We may use all interest earned on the trust account for purposes of working capital and to pay taxes and dissolution expenses. To the extent that our capital stock or debt is used, in whole or in part, as consideration to consummate an initial business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue growth strategies.

As stated above, in order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our initial stockholders, officers and directors may, but are not obligated to, loan us funds as may be required. If we consummate an initial business combination, we would repay such loaned amounts. In the event that we do not consummate an initial business combination, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from the trust account would be used for such repayment, other than the interest income earned on such proceeds.

We may need to raise additional funds in order to meet the expenditures required for operating our business. Moreover, we may need to obtain additional financing either to consummate an initial business combination or because we become obligated to convert a significant number of public shares upon consummation of an initial business combination, in which case we may issue additional securities or incur debt in connection with and contemporaneous with such business combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of an initial business combination.

Following any initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2014.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.

Critical Accounting Policies and Estimates

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States of America. In preparing these financial statements, we make assumptions, judgments and estimates that can have a significant impact on amounts reported in the financial statements. We base these assumptions, judgments and estimates on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. We evaluate these assumptions, judgments and estimates on a regular basis and make changes accordingly. We believe that, of the significant accounting policies discussed in Note 2 to the

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financial statements appearing elsewhere in this proxy statement/prospectus, the following accounting policies require the most difficult, subjective and/or complex judgments:

Redeemable Securities

We account for redeemable common stock in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480-10-S99-3A, “Classification and Measurement of Redeemable Securities,” which provides that securities that are optionally redeemable by the holder for cash or other assets are classified outside of permanent equity in temporary equity.

Fair Value Measurement

We adopted FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing U.S. GAAP that requires the use of fair value measurements, which establishes a framework for measuring fair value and expands disclosure about such fair value measurements.

ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Recent Accounting Pronouncements

We do not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.

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INFORMATION ABOUT AEROCARE

Unless otherwise stated, references in this section to “AeroCare,” the “Company,” “we,” “us” or “our” generally refer to AeroCare Holdings, Inc. and its consolidated subsidiaries.

General

AeroCare Holdings Inc., together with its subsidiaries (“AeroCare”), is a leading provider of oxygen, respiratory and other chronic therapy services to patients in the home. AeroCare’s customers typically suffer from chronic obstructive pulmonary disease (“COPD”), such as emphysema, chronic bronchitis or asthma, and require supplemental oxygen, respiratory and other chronic therapy services in order to alleviate the symptoms and discomfort of respiratory dysfunction. AeroCare also provides sleep apnea devices, including CPAP/bi-level devices to individuals suffering from obstructive sleep apnea (“OSA”). AeroCare currently serves more than 150,000 patients in 20 U.S. states through 176 locations. AeroCare Holdings Inc. was incorporated in Delaware in 2002. AeroCare’s principal executive offices are located at 3325 Bartlett Blvd., Orlando, Florida, 32811.

Industry Overview

According to a recent report from Research and Markets, the global COPD market is approximately $11 billion with the U.S. accounting for well over half of the global market. A recent KOL Insight and Consensus Outlook report forecasts COPD market growth in excess of 7% annually over the next five years. Growth in the home respiratory market is driven by increases in the number of persons afflicted with COPD, demographic factors that contribute to an increase in the proportion of the U.S. population over the age of 65 years, and the continued trend toward treatment of patients in the home as a lower cost alternative to the acute care setting. According to the Centers of Disease Control and Prevention (“CDC”), COPD is the third leading cause of death in U.S. (143,000 deaths in 2011) and is the only chronic disease growing in mortality. According to a Frost & Sullivan research report, over 15 million people in the U.S. are currently diagnosed with COPD, with less than three million Medicare beneficiaries on service and another 12 million Americans undiagnosed or in the process of developing COPD.

Sleep Apnea is one of the most common sleep disorders. According to the CDC, approximately 70 million Americans are affected by chronic sleep disorders. The American Sleep Apnea Association estimates that approximately 22 million Americans currently suffer from OSA with another 10 million estimated OSA cases still undiagnosed. OSA occurs when the airway temporarily collapses during sleep, preventing or restricting breathing for up to ten seconds or more. According to a recent MarketsandMarkets report, the U.S. OSA market is estimated at approximately $3.0 billion with sleep therapy/apnea expected to see high growth in the coming years (estimated at 15% – 20%), driven by an increasing awareness of the symptoms and risks of sleep apnea.

Business Strategy

AeroCare’s strategy is to increase its market share through a combination of internal growth and strategic business acquisitions. AeroCare achieves internal growth in existing geographic markets through the addition of new customers and referral sources to its network of local locations. In addition, AeroCare expands into new geographic markets on a selective basis, either through acquisitions or by opening new operating centers, when it believes such expansion will enhance its business. Each member of AeroCare’s integration team has an average of over twenty years of experience, which facilitates the integration of AeroCare’s acquisitions. In the year ended December 31, 2013, AeroCare acquired 27 companies with operations in 13 states generating annual revenue of approximately $43 million.

AeroCare’s revenue growth is dependent upon the overall growth rate of the home respiratory and sleep apnea markets and on AeroCare’s ability to increase market share through effective delivery of high quality equipment and services and selective business acquisitions. Continued cost containment efforts by government and private insurance reimbursement programs have created an increasingly competitive environment, accelerating consolidation trends within the home health care industry.

AeroCare will continue its focus on providing oxygen, respiratory and other chronic therapy services to patients in the home and to provide home medical equipment and other services where it believes such

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services will enhance its primary business. In the year ended December 31, 2013, oxygen, respiratory and other chronic therapy services accounted for approximately 96% of AeroCare’s net revenues.

Products and Services

AeroCare primarily provides oxygen, respiratory and other chronic therapy services to patients in the home. AeroCare also provides a variety of durable medical equipment (“DME”). When a physician, hospital discharge planner, or other source refers a patient to one of AeroCare’s locations, its customer service representative obtains the necessary medical and insurance coverage information and assignment of benefits to AeroCare, and coordinates the delivery of patient care. The prescribed therapy is delivered by one of AeroCare’s service representatives or clinicians at the customer’s home, where instruction and training are provided to the customer and the customer’s family regarding appropriate equipment use and maintenance and compliance with the prescribed therapy. Following the initial setup, AeroCare’s service representatives and/or clinicians make periodic visits to the customer’s home, the frequency of which is dictated by the type of therapy prescribed and physician orders. All services and equipment provided by AeroCare are coordinated with the prescribing physician. During the period that AeroCare provides services and equipment for a customer, the customer remains under the physician’s care and medical supervision. AeroCare employs a highly trained clinical staff of more than 140 respiratory care professionals, including home respiratory therapists, nurses and other qualified clinicians who provide direct patient care, monitoring and 24-hour support services under physician-directed treatment plans in accordance with our proprietary acuity programs.

The principal products and services provided by AeroCare are:

Home Oxygen Equipment.  The major types of oxygen delivery equipment are oxygen concentrators and liquid oxygen systems. Each method of delivery has different characteristics that make it more or less suitable to specific customer applications.

Other Respiratory Therapies.  Other respiratory and chronic therapy services offered by AeroCare include the following:

AeroCare also supplies home medical equipment, such as hospital beds, wheelchairs and other supplies that may be required by our customers.

Company Operations

Management.  While AeroCare maintains a central corporate office, it emphasizes a decentralized approach to management through its local business operations. Decentralization of managerial decision-making enables AeroCare’s operating centers to respond promptly and effectively to local market demands and opportunities. AeroCare believes that the personalized nature of customer requirements and referral relationships characteristic of the home health care business mandate that it maintain a localized operating structure.

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Each of AeroCare’s locations is managed by a location manager who is responsible and accountable for the operating and financial performance of the center. Service and marketing functions are performed at the local operating level, while strategic development, financial control and operating policies are administered at the corporate level. Reporting mechanisms are in place at the operating center level to monitor performance and ensure field accountability.

A team of regional managers directly supervises individual operating center managers, serving as an additional mechanism for assessing and improving performance of AeroCare’s operations. AeroCare’s locations are served by regional billing centers, which control all of its billing and reimbursement functions.

MIS Systems.  AeroCare believes that its proprietary management information systems integrated with its primary billing software is one of its key competitive advantages. The systems provide management with critical information on a timely basis to measure and evaluate performance levels company-wide. Management reviews monthly reports, including revenues and expenses by location and employer, accounts receivable and cash collection performance, equipment controls and utilization, customer activity and manpower trends. AeroCare has an in-house staff of technology experts that maintain the integration between its primary software vendor, other software companies and its internal management and reporting of data, which enables AeroCare to continually enhance its system of managing data in order to provide timely financial and operational information and to respond promptly to changes in reimbursement regulations and policies.

AeroCare’s billing system has both manual and computerized functions and processes that are designed to maintain the integrity of revenue and accounts receivable. Third-party payors, such as Medicare, that can accommodate electronic claims submission are billed electronically on a daily basis from AeroCare’s central computer system. Paper claims and invoices are generated and billed to various state Medicaid agencies, other health care entities, commercial payors and individual customers when electronic billing is unavailable. However, less than 2% of AeroCare’s billing is done manually. Electronic billing expedites the billing process and generally allows AeroCare to receive payment more quickly. The medical billing process requires the collection of various paper documents from customers and referral sources. Information, such as customer demographics, insurance coverage and verification, prescriptions from physicians, physician notes justifying medical necessity, delivery receipts, billing authorizations and assignments of benefits to AeroCare, is gathered at the local locations and forwarded to its regional billing offices for review and manual input into its billing system. Item codes within the system representing specific products supplied to customers are matched against the Healthcare Common Procedure Coding System (“HCPCS”) for verification and accuracy of billing codes. Price tables within the system containing expected allowable payment amounts are maintained and updated by AeroCare based on published Medicare and Medicaid fee schedules and bulletins, as well as contracts and supplier notifications from private insurance companies.

Accounts Receivable Management.  AeroCare derives a substantial majority of its revenue from reimbursement by third-party payors. AeroCare accepts assignment of insurance benefits from customers and, in most instances, invoice and collect payments directly from Medicare, Medicaid and private insurance carriers, as well as from customers under co-payment provisions. The following table sets forth, for the periods indicated, the percentage of AeroCare’s revenues derived from different types of payors.

		Six Months Ended June 30 2014				Year Ended December 31,
Payors						2013				2012				2011
Medicare			54	%			59	%			62	%			62	%
Private insurance, including Medicare Advantage plans			37	%			33	%			31	%			29	%
Medicaid			5	%			5	%			5	%			6	%
Direct payment			4	%			3	%			2	%			3	%
			100	%			100	%			100	%			100	%

Third-party reimbursement is a complicated process that involves submission of claims to multiple payors, each having its own specific claim requirements. To operate effectively in this environment, AeroCare has designed and implemented a proprietary computer system to decrease the time required for the submission and processing of third-party claims. AeroCare’s systems are capable of tailoring the submission of claims to

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the specifications of individual payors. AeroCare’s in-house information system capabilities also enable reimbursement or regulatory changes to be adjusted quickly. These features serve to decrease the processing time of claims for payment resulting in more rapid collection of accounts receivable.

It is AeroCare’s policy to verify insurance benefits with the responsible third-party payor before or within 48 hours of delivery of products to customers. Medicare beneficiaries provide AeroCare’s service representatives with a Medicare identification card containing the beneficiary’s Health Identification Control Number (“HICN”) at the time of customer setup and delivery. The existence of an HICN indicates the beneficiary’s eligibility to receive benefits under the Medicare program for covered services. Medicare benefits are then verified with the applicable Medicare intermediaries.

Medicare and most other government and commercial payors that provide coverage to AeroCare’s customers include a 20 percent co-payment provision in addition to a nominal deductible. Co-payments are generally not collected at the time of service and are invoiced to the customer or applicable secondary payor (supplemental providers of insurance coverage) on a monthly billing cycle as products are provided. A majority of our customers maintain, or are entitled to, secondary or supplemental insurance benefits providing “gap” coverage of this co-payment amount. In the event coverage is denied by the third-party payor, the customer may ultimately be responsible for all services rendered by AeroCare.

Sales and Marketing

Sales activities are generally carried out by AeroCare’s full-time sales representatives located at its locations with assistance from AeroCare’s location, regional and sales managers. In addition to communicating the high quality of its equipment and services, AeroCare’s sales representatives are trained to provide information concerning the benefits of home respiratory care. Sales representatives may be licensed respiratory therapists who are highly knowledgeable in the provision of supplemental oxygen, respiratory and other chronic therapies.

AeroCare primarily acquires new customers through referrals. Its principal sources of referrals are physicians, hospital discharge planners, prepaid health plans and clinical case managers. AeroCare’s sales representatives maintain continual contact with these medical professionals.

AeroCare’s referral sources recognize its reputation for providing high-quality equipment and service and have historically provided a steady flow of customers. While AeroCare views its referral sources as fundamental to its business, no single referral source accounts for more than one percent of its revenues. AeroCare has more than 150,000 active customers, and the loss of any single referral source, customer or group of customers would not materially impact its business.

New Locations

AeroCare opened five new hub branches or smaller satellites around existing coverage (“Branch Openings”) in the year ended December 31, 2013. AeroCare had six branch openings in the year ended December 31, 2012. In the six months ended June 30, 2014, AeroCare had 2 new branch openings. In the six months ended June 30, 2014, AeroCare acquired 3 companies. AeroCare’s Branch Openings historically have relatively minimal start-up costs and achieve branch-level profitability within 18 to 24 months. AeroCare uses Branch Openings as a growth strategy when it identifies an opportunity to attract highly trained managers and salespeople, allowing for significant ramp-up in performance, or in instances where a new satellite branch can become profitable from an existing patient base already being served by a hub branch.

Acquisitions

AeroCare acquired 27 companies in the year ended December 31, 2013, with operations in 13 states generating annual revenue of approximately $43 million. AeroCare acquired three companies in the year ended December 31, 2012, with annual revenue of approximately $3 million. The aggregate purchase price for these acquisitions was $27 million and $2 million in 2013 and 2012, respectively. Through June 30, 2014, AeroCare has acquired three companies for total purchase consideration of $1,290,000. Growth through selected acquisitions continues to be a strategy of AeroCare and each member of AeroCare’s integration team possesses an average of over twenty years experience in this area. AeroCare’s centralized back-office operations provides AeroCare’s newly acquired companies the opportunity to focus on relationship building and reliable patient service by consolidating some of their back-office operations.

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Quality Control

AeroCare is committed to providing high-quality products and services. AeroCare’s quality control procedures and training programs are designed to promote greater responsiveness and sensitivity to individual customer needs and to assure the highest level of quality and convenience to the customer and the referring physician. Licensed respiratory therapists, registered nurses and other employed clinicians provide professional health care support to AeroCare’s customers and enhance its efforts to provide effective disease management services.

Suppliers

AeroCare purchases oxygen and other medical equipment from a variety of suppliers. AeroCare is not dependent upon any single supplier and believe that its product needs can be met by an adequate number of qualified manufacturers.

Competition

The home respiratory market is a fragmented and highly competitive industry that is served by AeroCare, other large and both national and regional providers and, by our estimate, over 2,000 local providers. It is estimated that over 90% of the home respiratory/DME providers in the U.S. generate annual revenue less than $10 million.

Home respiratory companies compete primarily on the basis of service, not pricing, since uniform reimbursement levels are established by fee schedules promulgated by Medicare and Medicaid or by the individual determinations of private insurance companies. Furthermore, marketing efforts by home respiratory companies are typically directed toward referral sources that generally do not share financial responsibility for the payment of services provided to customers. The relationships between a home respiratory company and its customers and referral sources are highly personal. There is no compelling incentive for either physicians or the patients to alter the relationship, so long as the home respiratory company is providing responsive, professional and high-quality service.

AeroCare is a leading provider of oxygen, respiratory and other chronic therapy services to patients in the home. AeroCare has positioned itself as one of the top 10 providers in the U.S. and continues to increase its market share through effective delivery of high quality equipment and services and selective business acquisitions. The home respiratory market is a fragmented and highly competitive industry that is served by AeroCare, other large national and regional providers and, by numerous local providers.

Government Regulation

The federal government and all states in which AeroCare currently operates regulate various aspects of AeroCare’s business. In particular, AeroCare’s operating centers are subject to federal laws that regulate the repackaging of drugs (including oxygen) and interstate motor-carrier transportation. AeroCare’s operations also are subject to state laws governing, among other things, pharmacies, nursing services, distribution of medical equipment and certain types of home health activities. Certain of its employees are subject to state laws and regulations governing the ethics and professional practice of respiratory therapy, pharmacy and nursing.

As a health care provider, AeroCare is subject to extensive government regulation, including numerous laws directed at preventing fraud and abuse and laws regulating reimbursement under various government programs. The marketing, billing, documenting and other practices of health care companies are all subject to government scrutiny. To ensure compliance with Medicare, Medicaid and other regulations, regional health insurance carriers and state agencies often conduct audits and request customer records and other documents to support AeroCare’s claims submitted for payment of services rendered to customers. Similarly, government agencies periodically open investigations and obtain information from health care providers pursuant to the legal process. Violations of federal and state regulations can result in severe criminal, civil and administrative penalties and sanctions, including disqualification from Medicare and other reimbursement programs, which could have a material adverse effect on AeroCare’s business.

Numerous federal and state laws and regulations, including the Federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act (“HITECH Act”), govern the collection, dissemination, security, use and confidentiality of

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patient-identifiable health information. As part of AeroCare’s provision of, and billing for, health care equipment and services, AeroCare is required to collect and maintain patient-identifiable health information. New health information standards, whether implemented pursuant to HIPAA, the HITECH Act, congressional action or otherwise, could have a significant effect on the manner in which AeroCare handles health care related data and communicate with payors, and the cost of complying with these standards could be significant. If AeroCare does not comply with existing or new laws and regulations related to patient health information, it could be subject to criminal or civil sanctions.

Health care is an area of rapid regulatory change. Changes in the laws and regulations and new interpretations of existing laws and regulations may affect permissible activities, the relative costs associated with doing business, and reimbursement amounts paid by federal, state and other third-party payors. AeroCare cannot predict the future of federal, state and local regulation or legislation, including Medicare and Medicaid statutes and regulations, or possible changes in national health care policies. Future legislative and regulatory changes could have a material adverse effect on AeroCare’s business.

Medicare Reimbursement

As a provider of home oxygen, respiratory and other chronic therapy services to the home health care market, AeroCare participates in Medicare Part B, the Supplementary Medical Insurance Program, which was established by the Social Security Act of 1965. Providers of home oxygen and other respiratory therapy services have historically been heavily dependent on Medicare reimbursement due to the high proportion of elderly persons suffering from respiratory disease. Durable medical equipment (“DME”), including oxygen equipment, is traditionally reimbursed by Medicare based on fixed fee schedules.

Recent legislation, including the Patient Protection and Affordable Care Act (“PPACA”), the Medicare Improvements for Patients and Providers Act of 2008 (“MIPPA”), the Medicare, Medicaid and SCHIP Extension Act of 2007 (“SCHIP Extension Act”), the Deficit Reduction Act of 2005 (“DRA”) and the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”), contain provisions that directly impact reimbursement for the primary respiratory and other DME products provided by AeroCare. PPACA, as amended, is a comprehensive health care reform law that contains a large number of health-related provisions to take effect over the next several years, including various cost containment and program integrity changes that will apply to the home medical equipment industry. MIPPA delayed the implementation of a Medicare competitive bidding program for oxygen equipment and certain other DME items that was scheduled to begin on July 1, 2008, and instituted a 9.5% price reduction nationwide for these items as of January 1, 2009. The SCHIP Extension Act reduced Medicare reimbursement amounts for covered Part B drugs, including inhalation drugs that we provide, beginning April 1, 2008. DRA provisions negatively impacted reimbursement for oxygen equipment beginning in 2009 through the implementation of a capped rental arrangement. MMA changed the pricing formulas used to establish payment rates for inhalation drug therapies resulting in significantly reduced reimbursement beginning in 2005, established a competitive acquisition program for DME, established a Recovery Audit Contractors (“RAC”) program, which implemented a new method for recovery of Medicare overpayments by utilizing private companies operating on a contingent fee basis to identify and recoup Medicare overpayments, and implemented quality standards and accreditation requirements for DME suppliers. These legislative provisions, as currently in effect and when fully implemented, have had and will continue to have a material adverse effect on our business, financial condition, operating results and cash flows.

PPACA was signed into law on March 23, 2010. Together with the Health Care and Education Reconciliation Act of 2010 (signed into law on March 30, 2010) which amended the statute, PPACA is a comprehensive health care law that is intended to expand access to health insurance, reform the health insurance market to provide additional consumer protections, and improve the health care delivery system to reduce costs and produce better outcomes through a combination of cost controls, subsidies and mandates. Among other things, PPACA:

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PPACA is a complex, sweeping health care reform law that will dramatically alter the structure of health insurance markets and the practice of medicine in the United States. Due to the complex nature of the legislation and the extended time period over which various provisions of the new law will be implemented (pursuant to yet unwritten regulations), we cannot predict at this time what effects PPACA and related regulations will have on our business in the future.

The MIPPA legislation imposed a 9.5% reduction in Medicare payment rates for certain specified product categories, including oxygen, effective January 1, 2009. In addition to the 9.5% reduction, the Centers for Medicare and Medicaid Services (“CMS”), as required by statute, subjected the monthly payment amount for stationary oxygen equipment to additional cuts of 2.3%, thereby reducing the monthly payment rate from $199.28 in 2008 to $175.79 in 2009. The monthly payment amount was reduced by 1.5% in 2010, to $173.17. We estimate that this reduction negatively impacted our revenues in 2010 by approximately $0.6 million when compared to the prior year period. The stationary oxygen payment rate for 2011 was increased to $173.31 per month, an increase of 0.1%, and was not material to AeroCare’s operating results in 2011. The stationary oxygen payment rate for 2012 was $176.06 per month, an increase of 1.6%. This increase favorably impacted our revenues in 2012 by approximately $0.8 million. The stationary oxygen payment rate for 2013 was $177.36 per month, an increase of 0.7%. This increase favorably impacted our revenues in 2013 by approximately $0.3 million. The stationary oxygen payment rate for 2014 has been established by CMS at $178.24 per month, an increase of 0.5%. We estimate that this increase will favorably impact our revenues in 2014 by approximately $0.3 million.

The SCHIP Extension Act, which became law on December 29, 2007, required CMS to adjust the methodology used to determine Medicare payment amounts for inhalation drugs by using volume-weighted average selling prices (“ASP”) based on actual sales volumes rather than average sales prices. CMS publishes payment rates for inhalation drugs each calendar quarter, representing the unit reimbursement rates in effect for inhalation drugs dispensed within that quarter. These payment rates may be subject to volatility as a result of the underlying ASP data used to determine the rates in effect each quarter. The quarterly ASP data published by CMS for inhalation drugs provided in 2012 and 2013 resulted in slight overall increases in the Medicare payment rates for inhalation drugs that positively impacted AeroCare’s annual net revenues by

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approximately $0.2 million and $0.1 million, respectively. Based upon the ASP payment rates published by CMS for the first quarter of 2014, and assuming no changes in the volume or mix of drugs that we currently dispense, we estimate that our annual net revenues will be favorably impacted by approximately $0.1 million in 2014 when compared with 2013. We cannot determine whether quarterly updates in ASP pricing data will result in future reductions in payment rates for inhalation drugs, or what impact such payment reductions could have on our business in the future.

Additionally, beginning in 2013, CMS began using 103% of Average Manufacturer Price (“AMP”) rather than 106% of ASP for a drug when ASP exceeds AMP by 5% for either two straight quarters or three of the past four quarters. The policy limits substitution of the price formula in a given quarter to only those drugs where ASP and AMP can be compared using the same set of national drug codes. We cannot determine at this time which, if any, inhalation drugs might meet the criteria established for substitution in a particular future quarter, nor the impact on payment rates for such drugs in the event that the AMP formula is utilized.

On February 1, 2006, Congress passed the DRA legislation which changed the reimbursement methodology for oxygen equipment from continuous monthly payment for as long as the equipment is in use by a Medicare beneficiary, which includes payment for oxygen contents, related disposable supplies and accessories and maintenance of equipment, to a capped rental arrangement whereby payment for oxygen equipment may not extend over a period of continuous use of longer than 36 months. Thereafter, the supplier must continue to furnish the equipment without additional rental payments until the end of the equipment’s 60-month useful life. Separate payments for oxygen contents continue to be made for the period of medical need beyond the 36^th month. Additionally, payment for routine maintenance and service of an oxygen concentrator (but not gaseous or liquid oxygen equipment) may be made following each six-month period after the 36-month rental period ends. The oxygen provisions contained in DRA became effective on January 1, 2006. In the case of beneficiaries receiving oxygen equipment prior to the effective date, the 36-month period of continuous use began on January 1, 2006. Accordingly, the first month in which the new payment methodology impacted our net revenues was January 2009. We anticipate that these oxygen payment rules will continue to negatively affect our net revenues on an ongoing basis, as each month additional customers reach the 36-month capped service period, resulting in up to two or more years without rental income from these customers. During 2013, we estimate that our sequential net revenues were reduced as a result of additional customers reaching the payment cap by approximately $1.2 million when compared to the prior year period.

In December 2003, MMA was signed into law. The MMA legislation directly impacted reimbursement for the primary respiratory and other DME products that we provide. Among other things, MMA:

For each competitive acquisition area, CMS is required to conduct a competition under which providers submit bids to supply certain covered items of DME. Successful bidders are expected to meet certain program quality standards in order to be awarded a contract and only successful bidders can supply the covered items to Medicare beneficiaries in the acquisition area (there are, however, regulations in place that allow non-contracted providers to continue to provide equipment and services to their existing customers at the new prices determined through the bidding process). The contracts are expected to be re-bid at least every three years. CMS is required to award contracts to multiple entities submitting bids in each area for an item or service, but has the authority to limit the number of contractors in a competitive acquisition area to the number it determines to be necessary to meet projected demand.

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CMS concluded the bidding process for the first round of MSAs in September 2007. However, in July 2008, Congress enacted the MIPPA legislation which retroactively delayed the implementation of competitive bidding and reduced Medicare prices nationwide by 9.5% beginning in 2009 for the product categories, including oxygen, that were initially included in competitive bidding.

In 2009, CMS reinstituted the bidding process in the nine largest MSA markets. Reimbursement rates from the re-bidding process were publicly released by CMS on June 30, 2010. CMS announced average savings of approximately 32% off the current payment rates in effect for the product categories included in competitive bidding. As of January 1, 2011, these payment rates were in effect in the nine markets only (Charlotte, Cincinnati, Cleveland, Dallas, Kansas City, Miami, Orlando, Pittsburgh and Riverside). AeroCare was offered contracts to provide oxygen equipment in just four of the nine markets, Dallas, Orlando, Charlotte and Miami, and we accepted and signed those contracts. AeroCare’s annual Medicare revenues from the product categories in the nine markets affected by competitive bidding were approximately $5.6 million at the time the program commenced.

On January 30, 2013, CMS announced new, lower Medicare pricing for the second round of competitive bidding effective July 1, 2013. CMS announced average savings of approximately 45% for the product categories included in Round 2. AeroCare’s Medicare revenues from the product categories in the 91 additional markets that are included in the second round of competitive bidding were approximately $26.5 million in 2012. The PPACA legislation requires CMS to expand competitive bidding further to additional geographic markets (certain markets may be excluded at the discretion of CMS) or to use competitive bid pricing information to adjust the payment amounts otherwise in effect for areas that are not competitive acquisition areas by January 1, 2016.

CMS is required by law to re-compete competitive bidding contracts at least once every three years. With the Round 1 rebid contracts expiring on December 31, 2013, new Round 1 re-compete contracts and pricing went into effect on January 1, 2014. Round 1 re-compete bidding occurred in the same nine Metropolitan Statistical Areas (MSAs) as the Round 1 rebid. CMS’ contract prices under the Round 1 re-compete averaged 37% below Medicare’s fee schedule rates for the six product categories. AeroCare’s Medicare revenues from the product categories in nine markets that are included in the Round 1 re-compete of competitive bidding were approximately $6.0 million in 2013.

We will continue to monitor developments regarding the implementation of the competitive bidding program. While we cannot predict the outcome of the competitive bidding program on our business when fully implemented nor the Medicare payment rates that will be in effect in future years for the items subjected to competitive bidding, it is likely that the program will materially adversely affect our financial position and operating results.

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In October 2008, CMS announced the establishment of new Zone Program Integrity Contractors (“ZPICs”), who are responsible for ensuring the integrity of all Medicare-related claims. The ZPICs assumed the responsibilities previously held by Medicare’s Program Safeguard Contractors (“PSCs”). Industry-wide, ZPIC audit activity increased substantially throughout 2010 and 2011 and that activity is expected to continue to increase for the foreseeable future as additional ZPICs become operational across the country. The industry trade associations are advocating for more standardized audit procedures, contractor transparency and consistency surrounding all government audit activity directed toward the DME industry.