9. Subsequent Events

In July 2019, the Company completed its initial offering of 49,285,713 of common stock and the concurrent offering of 5,750,000 of tangible equity units (“TEUs”) for net proceeds of $608,679 and $278,875 respectively, before consideration of offering costs paid subsequent to the offerings from available cash. The proceeds of the offering of common stock were subsequently contributed to the Joint Venture in exchange for 49,285,713 additional units of the Joint Venture, which together with the Company’s existing holdings represents an approximately 41% interest in the Joint Venture. The proceeds of the offering of TEUs were used to acquire TEUs of the Joint Venture that substantially mirror the terms of the TEUs included in the offering. The Joint Venture, in turn, used the proceeds received from Change Healthcare Inc. to repay $805,000 of its indebtedness under the Term Loan Facility without penalty. However, due to the presence of unamortized discounts, the Joint Venture expects to recognize a loss on extinguishment of debt of approximately $14,300 for which the Company will recognize a proportionate amount within its loss from equity method investment in the Joint Venture.

In addition to the effects of the Joint Venture’s partial extinguishment of debt on the Company’s loss from equity method investment in the Joint Venture, the Company also expects other direct and indirect effects of the offerings. Some of the more significant expected effects include the following:

As a direct result of the additional ownership interest acquired in the Joint Venture, the Company expects to recognize a greater proportion of the earnings or loss of the Joint Venture when measuring its loss from equity method investment in the Joint Venture each period.

The purchase of additional interests in the Joint Venture results in a difference in the cost of the Company’s investment in the Joint Venture and the amount of the underlying equity in the Joint Venture (i.e. “basis difference”). In accordance with GAAP, such basis differences must be accounted for as if the investee were a consolidated subsidiary. As a result, the Company is required to prepare a valuation of the Joint Venture’s assets and liabilities as of the purchase date and perform an allocation of the purchase price among the underlying assets and liabilities of the Joint Venture as if the Company had gained control of the Joint Venture. The effect is that the Company will be required to recognize the effect of these additional basis differences on its periodic measurement of the loss from equity method investment in the Joint Venture. Due to the recent timing of the acquisition of this interest and the time necessary to complete such a valuation exercise, the Company cannot yet quantify the effects of these basis differences on the loss from equity method investment in the Joint Venture.

The investment in the mirror TEUs (which include both an amortizing debt component and a prepaid equity forward purchase contract) of the Joint Venture is expected to result in the Company recognizing separate investments in a debt security and a prepaid equity forward purchase contract. In each case, the Company expects these investments to be subject to periodic measurement to their respective fair values.

As a result of the offering of TEUs, the Company expects to recognize interest expense associated with the amortizing note component of the TEUs as well as interest income associated with the amounts expected to be received from the mirror TEUs issued by the Joint Venture to the Company.