(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol | Name of exchange on which registered | ||||||||||||
Press Release of Surgalign Holdings, Inc., issued on November 9, 2021. | ||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SURGALIGN HOLDINGS, INC. | ||||||||
Date: November 9, 2021 | By: | /s/ Christopher S. Thunander | ||||||
Name: | Christopher S. Thunander | |||||||
Title: | Vice President and Chief Accounting Officer |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||||||||||||||
(Unaudited, in thousands, except share and per share data) | ||||||||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenues | $ | 20,545 | $ | 27,926 | $ | 68,670 | $ | 75,562 | ||||||||||||||||||
Cost of goods sold | 6,811 | 11,892 | 20,278 | 30,585 | ||||||||||||||||||||||
Gross profit | 13,734 | 16,034 | 48,392 | 44,977 | ||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||
Marketing, general and administrative | 27,564 | 27,684 | 79,264 | 96,842 | ||||||||||||||||||||||
Research and development | 2,901 | 2,208 | 8,960 | 9,764 | ||||||||||||||||||||||
Gain on acquisition contingency | (1,266) | — | (3,553) | (130) | ||||||||||||||||||||||
Asset impairment and abandonments | 5,411 | 9,356 | 9,794 | 12,117 | ||||||||||||||||||||||
Transaction and integration expenses | — | 3,411 | 2,510 | 5,826 | ||||||||||||||||||||||
Total operating expenses | 34,610 | 42,659 | 96,975 | 124,419 | ||||||||||||||||||||||
Other operating income, net | (3,932) | — | (3,932) | — | ||||||||||||||||||||||
Operating loss | (16,944) | (26,625) | (44,651) | (79,442) | ||||||||||||||||||||||
Other (income) expense - net: | ||||||||||||||||||||||||||
Other (income) expense - net | (117) | (21) | (221) | (92) | ||||||||||||||||||||||
Foreign exchange loss (gain) | 471 | (21) | 921 | 28 | ||||||||||||||||||||||
Change in fair value of warrant liability | (7,739) | — | (10,262) | — | ||||||||||||||||||||||
Total other (income) expense - net | (7,385) | (42) | (9,562) | (64) | ||||||||||||||||||||||
Loss before income tax (benefit) | (9,559) | (26,583) | (35,089) | (79,378) | ||||||||||||||||||||||
Income tax (benefit) | (1,304) | — | (1,004) | (3,492) | ||||||||||||||||||||||
Net loss from continuing operations | (8,255) | (26,583) | (34,085) | (75,886) | ||||||||||||||||||||||
Discontinued operations (Note 3) | ||||||||||||||||||||||||||
Income (loss) from operations of discontinued operations (including gain on disposition of $210.9 million for the three and nine months ended September 30, 2020) | — | 191,801 | (6,316) | 181,333 | ||||||||||||||||||||||
Income tax provision (benefit) | (349) | 42,534 | (1,112) | 39,189 | ||||||||||||||||||||||
Net income (loss) from discontinued operations | 349 | 149,267 | (5,204) | 142,144 | ||||||||||||||||||||||
Net (loss) income applicable to common shares | (7,906) | 122,684 | (39,289) | 66,258 | ||||||||||||||||||||||
Other comprehensive (loss) income: | ||||||||||||||||||||||||||
Unrealized foreign currency translation (gain) loss | (362) | 108 | (398) | 180 | ||||||||||||||||||||||
Total other comprehensive (loss) income | $ | (7,544) | $ | 122,576 | $ | (38,891) | $ | 66,078 | ||||||||||||||||||
Net loss from continuing operations per common share - basic | $ | (0.06) | $ | (0.36) | $ | (0.29) | $ | (1.04) | ||||||||||||||||||
Net loss from continuing operations per common share - diluted | $ | (0.06) | $ | (0.36) | $ | (0.29) | $ | (1.04) | ||||||||||||||||||
Net income (loss) from discontinued operations per common share - basic | $ | — | $ | 2.04 | $ | (0.04) | $ | 1.95 | ||||||||||||||||||
Net income (loss) from discontinued operations per common share - diluted | $ | — | $ | 2.04 | $ | (0.04) | $ | 1.95 | ||||||||||||||||||
Weighted average shares outstanding - basic | 138,317,858 | 73,212,662 | 117,135,533 | 72,933,038 | ||||||||||||||||||||||
Weighted average shares outstanding - diluted | 138,317,858 | 73,212,662 | 117,135,533 | 72,933,038 |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||||
(Unaudited, in thousands) | ||||||||||||||
September 30, | December 31, | |||||||||||||
2021 | 2020 | |||||||||||||
Assets | ||||||||||||||
Cash | $ | 68,360 | $ | 43,962 | ||||||||||
Accounts receivable - net | 20,652 | 27,095 | ||||||||||||
Inventories - net | 27,442 | 22,841 | ||||||||||||
Prepaid and other assets | 19,625 | 10,284 | ||||||||||||
Total current assets | 136,079 | 104,182 | ||||||||||||
Non-current inventories - net | 9,591 | 7,856 | ||||||||||||
Property, plant and equipment - net | 1,028 | 521 | ||||||||||||
Other assets - net | 10,045 | 10,145 | ||||||||||||
Total assets | $ | 156,743 | $ | 122,704 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||
Accounts payable | $ | 9,482 | $ | 13,418 | ||||||||||
Current portion of acquisition contingency | 18,406 | 8,996 | ||||||||||||
Accrued expenses and other current liabilities | 26,844 | 12,648 | ||||||||||||
Accrued income taxes | 504 | 11,761 | ||||||||||||
Total current liabilities | 55,236 | 46,823 | ||||||||||||
Acquisition contingencies | 34,556 | 47,519 | ||||||||||||
Warrant liability | 16,487 | — | ||||||||||||
Other Long-term liabilities | 3,353 | 4,192 | ||||||||||||
Total liabilities | 109,632 | 98,534 | ||||||||||||
Stockholders' equity: | ||||||||||||||
Common stock and additional paid-in capital | 573,379 | 511,548 | ||||||||||||
Accumulated other comprehensive loss | (2,018) | (2,416) | ||||||||||||
Accumulated deficit | (524,250) | (484,962) | ||||||||||||
Total stockholders' equity | 47,111 | 24,170 | ||||||||||||
Total liabilities and stockholders' equity | $ | 156,743 | $ | 122,704 |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||||
(Unaudited, in thousands) | ||||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||
2021 | 2020 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net (loss) income | $ | (39,289) | $ | 66,258 | ||||||||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: | ||||||||||||||
Depreciation and amortization expense | 1,856 | 6,003 | ||||||||||||
Provision for bad debts and product returns | 2,404 | 2,015 | ||||||||||||
Change in fair value of warrant liability | (10,262) | — | ||||||||||||
Provision for inventory write-downs | 5,754 | 9,597 | ||||||||||||
Revenue recognized due to change in deferred revenue | — | (2,618) | ||||||||||||
Deferred income tax benefit | — | (932) | ||||||||||||
Income taxes payable | (10,294) | — | ||||||||||||
Stock-based compensation | 4,218 | 5,550 | ||||||||||||
Asset impairment and abandonments | 9,794 | 12,117 | ||||||||||||
Gain on acquisition contingency | (3,553) | (130) | ||||||||||||
Loss on extinguishment of debt | — | 2,686 | ||||||||||||
Bargain purchase gain | (90) | — | ||||||||||||
Amortization of debt issuance costs | — | 283 | ||||||||||||
Amortization of debt discount | — | 2,479 | ||||||||||||
Derivative loss | — | 12,641 | ||||||||||||
Loss (gain) on sale of OEM business (discontinued operations) | 6,316 | (210,866) | ||||||||||||
Other | (5) | 214 | ||||||||||||
Change in assets and liabilities: | ||||||||||||||
Accounts receivable | 6,059 | 9,221 | ||||||||||||
Inventories | (12,461) | (7,236) | ||||||||||||
Accounts payable | (3,868) | 1,695 | ||||||||||||
Accrued expenses | 23,040 | 20,694 | ||||||||||||
Deferred revenue | — | 2,955 | ||||||||||||
Right-of-use asset and lease liability | (2,814) | — | ||||||||||||
Other operating assets and liabilities | (18,416) | (5,295) | ||||||||||||
Net cash used in operating activities | (41,611) | (72,669) | ||||||||||||
Cash flows from investing activities: | ||||||||||||||
Payments for OEM working capital adjustment | (5,430) | — | ||||||||||||
Proceeds from sale of OEM business | — | 437,097 | ||||||||||||
Purchases of property and equipment | (10,834) | (9,738) | ||||||||||||
Business acquisitions, net of cash acquired | (328) | — | ||||||||||||
Patent and acquired intangible asset costs | (496) | (419) | ||||||||||||
Net cash (used in) provided by investing activities | (17,088) | 426,940 | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Share offering proceeds, net | 82,326 | — | ||||||||||||
Proceeds from exercise of common stock options | 23 | 20 | ||||||||||||
Repayment of short-term obligations | — | (76,912) | ||||||||||||
Proceeds from long-term obligations | — | 89,892 | ||||||||||||
Payments of debt issuance costs | — | (1,740) | ||||||||||||
Payments on long-term obligations | — | (207,266) | ||||||||||||
Payments for treasury stock | (158) | (418) | ||||||||||||
Redemption of preferred stock | — | (66,519) | ||||||||||||
Other | — | 38 | ||||||||||||
Net cash provided by (used in) financing activities | $ | 82,191 | $ | (262,905) |
Effect of exchange rate changes on cash and cash equivalents | $ | 906 | $ | (1,184) | ||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 24,398 | $ | 90,182 | ||||||||||
Cash and cash equivalents, beginning of period | $ | 43,962 | $ | 5,608 | ||||||||||
Cash and cash equivalents, end of period | $ | 68,360 | $ | 95,790 |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
Reconciliation of Revenues to Adjusted Gross Profit | ||||||||||||||||||||||||||
(Unaudited, in thousands) | ||||||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Revenues | $ | 20,545 | $ | 27,926 | $ | 68,670 | $ | 75,562 | ||||||||||||||||||
Costs of processing and distribution | 6,811 | 11,892 | 20,278 | 30,585 | ||||||||||||||||||||||
Gross profit, as reported | 13,734 | 16,034 | 48,392 | 44,977 | ||||||||||||||||||||||
Inventory write-off | — | 3,583 | — | 3,631 | ||||||||||||||||||||||
Inventory purchase price adjustment | 458 | 788 | 1,539 | 2,229 | ||||||||||||||||||||||
Non-GAAP gross profit, adjusted | 14,192 | 20,405 | 49,931 | 50,837 | ||||||||||||||||||||||
Non-GAAP gross profit percentage, adjusted | 69.1 | % | 73.1 | % | 72.7 | % | 67.3 | % | ||||||||||||||||||
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
Reconciliation of Net Loss Applicable to Commons Shares to Adjusted EBITDA | ||||||||||||||||||||||||||
(Unaudited, in thousands) | ||||||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
Net loss from continuing operations | $ | (8,255) | $ | (26,583) | $ | (34,085) | $ | (75,886) | ||||||||||||||||||
Interest expense, net | — | (21) | — | (92) | ||||||||||||||||||||||
Provision (benefit) for income taxes | (1,304) | — | (1,004) | (3,492) | ||||||||||||||||||||||
Depreciation | 703 | 757 | 1,856 | 1,074 | ||||||||||||||||||||||
Amortization of intangible assets | — | — | — | 297 | ||||||||||||||||||||||
EBITDA | (8,856) | (25,847) | (33,233) | (78,099) | ||||||||||||||||||||||
Reconciling items impacting EBITDA | ||||||||||||||||||||||||||
Non-cash stock based compensation | 1,868 | — | 1,140 | 4,218 | 3,244 | |||||||||||||||||||||
Foreign exchange (loss) gain | 471 | (21) | 921 | 28 | ||||||||||||||||||||||
Other reconciling items * | ||||||||||||||||||||||||||
Inventory write-off | — | 3,583 | — | 3,631 | ||||||||||||||||||||||
Other operating income | (3,932) | — | (3,932) | — | ||||||||||||||||||||||
Inventory purchase price adjustment | 458 | 788 | 1,539 | 2,229 | ||||||||||||||||||||||
Restatement and related costs | — | 1,381 | — | 12,637 | ||||||||||||||||||||||
Change in fair value of warrant liability | (7,739) | — | (10,262) | — | ||||||||||||||||||||||
Gain on acquisition contingency | (1,266) | — | (3,553) | (130) | ||||||||||||||||||||||
Bargain purchase gain | — | — | (90) | — | ||||||||||||||||||||||
Asset impairment and abandonments | 5,411 | 9,356 | 9,794 | 12,117 | ||||||||||||||||||||||
Transaction and integration expenses | — | 3,411 | 2,510 | 5,826 | ||||||||||||||||||||||
Severance and restructuring costs | (10) | — | 227 | — | ||||||||||||||||||||||
Adjusted EBITDA | $ | (13,595) | $ | (6,209) | $ | (31,861) | $ | (38,517) | ||||||||||||||||||
Adjusted EBITDA as a percent of revenues | (66.2) | % | (22.2) | % | (46.4) | % | (51.0) | % | ||||||||||||||||||
*See explanations in Non-GAAP Financial Measures above. |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
Reconciliation of Net (Loss) Income Applicable to Common Shares and Net (Loss) Income Per Diluted Share to Adjusted Net (Loss) Income Applicable to Common Shares and Adjusted Net (Loss) Income Per Diluted Share | ||||||||||||||||||||||||||
(Unaudited, in thousands except per share data) | ||||||||||||||||||||||||||
For the Three Months Ended September 30, | ||||||||||||||||||||||||||
September 30, 2021 | September 30, 2020 | |||||||||||||||||||||||||
Net (Loss) Income Applicable to Common Shares | Amount Per Diluted Share | Net (Loss) Income Applicable to Common Shares | Amount Per Diluted Share | |||||||||||||||||||||||
Net loss from continuing operations | $ | (8,255) | — | $ | (0.06) | — | $ | (26,583) | — | $ | (0.36) | |||||||||||||||
Change in fair value of warrant liability | (7,739) | (0.06) | — | 0.00 | ||||||||||||||||||||||
Gain on acquisition contingency | (1,266) | — | (0.01) | — | — | — | 0.00 | |||||||||||||||||||
Other operating income | (3,932) | (0.03) | — | 0.00 | ||||||||||||||||||||||
Asset impairment and abandonments | 5,411 | 0.04 | 9,356 | 0.13 | ||||||||||||||||||||||
Transaction and integration expenses | — | 0.00 | 3,411 | 0.05 | ||||||||||||||||||||||
Inventory purchase price adjustment | 458 | 0.00 | 788 | 0.01 | ||||||||||||||||||||||
Inventory write-off | — | 0.00 | 3,583 | 0.05 | ||||||||||||||||||||||
Restatement and related costs | — | 0.00 | 1,381 | 0.02 | ||||||||||||||||||||||
Severance and restructuring costs | (10) | — | 0.00 | — | 0.00 | |||||||||||||||||||||
Tax effect on adjustments | — | 0.00 | — | — | — | 0.00 | ||||||||||||||||||||
Adjusted * | $ | (15,333) | $ | (0.12) | $ | (8,064) | $ | (0.10) | ||||||||||||||||||
*See explanations in Non-GAAP Financial Measures above. |
For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
September 30, 2021 | September 30, 2020 | |||||||||||||||||||||||||
Net (Loss) Income Applicable to Common Shares | Amount Per Diluted Share | Net (Loss) Income Applicable to Common Shares | Amount Per Diluted Share | |||||||||||||||||||||||
Net loss from continuing operations | $ | (34,085) | $ | (0.29) | $ | (75,886) | $ | (1.04) | ||||||||||||||||||
Change in fair value of warrant liability | (10,262) | (0.09) | — | 0.00 | ||||||||||||||||||||||
Gain on acquisition contingency | (3,553) | (0.03) | (130) | 0.00 | ||||||||||||||||||||||
Bargain purchase gain | (90) | 0.00 | — | 0.00 | ||||||||||||||||||||||
Other operating income, net | (3,932) | (0.03) | — | 0.00 | ||||||||||||||||||||||
Asset impairment and abandonments | 9,794 | 0.08 | 12,117 | 0.17 | ||||||||||||||||||||||
Transaction and integration expenses | 2,510 | 0.02 | 5,826 | 0.08 | ||||||||||||||||||||||
Inventory purchase price adjustment | 1,539 | 0.01 | 2,229 | 0.03 | ||||||||||||||||||||||
Inventory write-off | — | 0.00 | 3,631 | 0.05 | ||||||||||||||||||||||
Restatement and related costs | — | 0.00 | 12,637 | 0.17 | ||||||||||||||||||||||
Severance and restructuring costs | 227 | 0.00 | — | 0.00 | ||||||||||||||||||||||
Tax effect on adjustments | (28) | 0.00 | (1,597) | (0.02) | ||||||||||||||||||||||
Adjusted * | $ | (37,880) | $ | (0.33) | $ | (41,173) | $ | (0.56) | ||||||||||||||||||
*See explanations in Non-GAAP Financial Measures above. |
Document |
Nov. 09, 2021 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | Nov. 09, 2021 |
Entity Registrant Name | SURGALIGN HOLDINGS, INC. |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 001-38832 |
Entity Tax Identification Number | 83-2540607 |
Entity Address, Address Line One | 520 Lake Cook Road |
Entity Address, Address Line Two | Suite 315 |
Entity Address, City or Town | Deerfield |
Entity Address, State or Province | IL |
Entity Address, Postal Zip Code | 60015 |
City Area Code | 877 |
Local Phone Number | 343-6832 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Entity Emerging Growth Company | false |
Title of 12(b) Security | common stock, $0.001 par value |
Trading Symbol | SRGA |
Security Exchange Name | NASDAQ |
Amendment Flag | false |
Entity Central Index Key | 0001760173 |
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