Schedule I - Condensed Financial Information of Registrant

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

Schedule I - Condensed Financial Information of Registrant

OPKO Health, Inc.

PARENT COMPANY CONDENSED BALANCE SHEETS

(In thousands, except share and per share data)

	December 31,
	2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	32,234		$	104,783
Other current assets and prepaid expenses		2,408			14,666
Total current assets		34,642			119,449
Investments		1,577,938			1,665,355
Operating lease right-of-use assets		693			1,822
Other assets		3			4
Total assets	$	1,613,276		$	1,786,630
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	407		$	311
Accrued expenses		5,655			6,238
Current maturities of operating leases		737			1,225
Current portion of convertible notes		—			3,050
Current portion of notes payable		2,454			2,615
Total current liabilities		9,253			13,439
Operating lease liabilities		—			693
Convertible notes		214,325			210,371
Deferred tax liabilities, net		479			479
Total long-term liabilities		214,804			211,543
Total liabilities		224,057			224,982
Equity:
Common Stock - $0.01 par value, 1,000,000,000 shares authorized; 781,936,885 and 781,306,164 shares issued at December 31, 2023 and 2022, respectively		7,820			7,813
Treasury Stock, at cost - 8,655,082 shares at December 31, 2023 and 2022, respectively		(1,791	)		(1,791	)
Additional paid-in capital		3,433,006			3,421,872
Accumulated other comprehensive income (loss)		(38,030	)		(43,323	)
Accumulated deficit		(2,011,786	)		(1,822,923	)
Total shareholders’ equity		1,389,218			1,561,648
Total liabilities and equity	$	1,613,276		$	1,786,630

The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.

OPKO Health, Inc.

PARENT COMPANY CONDENSED STATEMENTS OF INCOME

(In thousands)

	For the years ended December 31,
	2023			2022			2021
Revenues:
Revenue from products	$	—		$	—		$	—
Revenue from transfer of intellectual property and other		—			—			—
Total revenues		—			—			—
Costs and expenses:
Costs of revenue		739			2,347			1,279
Selling, general and administrative		46,359			46,882			66,483
Research and development		4,106			4,196			2,029
Gain on sale of GeneDx		—			(18,559	)		—
Total costs and expenses		51,204			34,866			69,791
Operating loss		(51,204	)		(34,866	)		(69,791	)
Other income and (expense), net:
Interest income		2,499			1,762			334
Interest expense		(12,460	)		(13,688	)		(21,297	)
Fair value changes of derivative instruments, net		(26	)		12			(58	)
Other income (expense), net		(16,593	)		(154,807	)		(9,013	)
Other expense, net		(26,580	)		(166,721	)		(30,034	)
Loss before income taxes and investment losses		(77,784	)		(201,587	)		(99,825	)
Income tax provision		(19	)		(10	)		(2	)
Net loss before investments and loss from subsidiaries		(77,803	)		(201,597	)		(99,827	)
Loss from investments in investees		(107	)		(383	)		(629	)
Net income (loss) from subsidiaries, net of taxes		(110,953	)		(126,425	)		70,313
Net loss	$	(188,863	)	$	(328,405	)	$	(30,143	)

The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.

OPKO Health, Inc.

PARENT COMPANY CONDENSED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

	For the years ended December 31,
	2023			2022			2021
Net loss	$	(188,863	)	$	(328,405	)	$	(30,143	)
Other comprehensive income (loss), net of tax:
Change in foreign currency translation and other comprehensive income (loss)		5,293			(12,828	)		(26,270	)
Comprehensive loss	$	(183,571	)	$	(341,233	)	$	(56,413	)

The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.

OPKO Health, Inc.

PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

	For the years ended December 31,
	2023			2022			2021
Cash flows from operating activities:
Net loss	$	(188,863	)	$	(328,405	)	$	(30,143	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest		2,750			2,750			9,389
Amortization of deferred financing costs		1,154			1,093			722
Losses from investments in investees		107			383			629
(Income) loss from subsidiaries		110,953			126,425			(70,313	)
Equity-based compensation – employees and non-employees		11,414			18,509			13,632
Non-cash revenue from the transfer of intellectual property		—			—			(3,801	)
Realized gain on equity securities and disposal of fixed assets		(364	)		—			(2,981	)
Change in fair value of derivative instruments and equity securities		16,891			154,473			4,871
Loss on conversion of the 2025 Notes		—			—			11,111
Gain on sale of GeneDx		—			(18,559	)		—
Changes in other assets and liabilities		11,559			(14,993	)		10,970
Net cash used in operating activities		(34,399	)		(58,324	)		(55,914	)
Cash flows from investing activities:
Investments in investees		(5,000	)		—			(2,000	)
Subsidiary financing		(30,242	)		23,866			69,608
Proceeds from sale of investments		364			—			—
Proceeds from sale of equity securities		—			115,423			8,078
Net cash (used in) provided by investing activities		(34,878	)		139,289			75,686
Cash flows from financing activities:
Proceeds from the exercise of Common Stock options and warrants		(272	)		(774	)		1,080
Redemption of 2033 Senior Notes		(3,000	)		—			—
Net cash (used in) provided by financing activities		(3,272	)		(774	)		1,080
Net increase (decrease) in cash and cash equivalents		(72,549	)		80,191			20,852
Cash and cash equivalents at beginning of period		104,783			24,592			3,740
Cash and cash equivalents at end of period	$	32,234		$	104,783		$	24,592
SUPPLEMENTAL INFORMATION:
Interest paid	$	8,135		$	7,420		$	8,515
Income taxes paid, net of refunds	$	3,712		$	8,037		$	5,969
Non-cash financing:
Shares issued upon the conversion of:
Common Stock options and warrants, surrendered in net exercise	$	301		$	1,268		$	—
Issuance of common stock for acquisition of ModeX	$	—		$	221,662		$	—
Fair value of shares included in consideration from GeneDx Holdings	$	6,689		$	172,000		$	—

The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.

OPKO Health, Inc.

Notes to Parent Company Condensed Financial Statements

Note 1. Organization and Basis of Presentation

We are a diversified healthcare company that seeks to establish industry-leading positions in large and rapidly growing medical markets. The parent company condensed financial statements included in this Schedule I represent the financial statements of OPKO Health, Inc., the parent company (or “OPKO”), on a stand-alone basis and do not include results of operations from our consolidated subsidiaries. The Parent Company Condensed Financial Statements should be read in conjunction with our audited consolidated financial statements included in Item 8 of Part II of this Form 10-K. As of December 31, 2023 and 2022, approximately $1.6 billion and $1.7 billion, respectively, of our Investments, net have not been eliminated in the parent company condensed financial statements.

The Parent Company Condensed Financial Statements included herein have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as substantially all the assets of BioReference, a wholly-owned subsidiary, and its subsidiaries are restricted from sale, transfer, lease, disposal or distributions to OPKO under the A&R Credit Agreement (as defined below), subject to certain exceptions. BioReference and its subsidiaries’ net assets as of December 31, 2023 were approximately $488.3 million, which includes goodwill of $283.0 million and intangible assets of $167.8 million. BioReference’s restricted net assets exceeds 25% of OPKO’s consolidated net assets of $1.4 billion as of December 31, 2023.

Note 2 Debt    

In February 2019, we issued $200.0 million aggregate principal amount of Convertible Senior Notes due 2025 (the “2025 Notes”) in an underwritten public offering. The 2025 Notes bear interest at a rate of 4.50% per year, payable semiannually in arrears on February 15 and August 15 of each year. The 2025 Notes mature on February 15, 2025, unless earlier repurchased, redeemed or converted.

Holders may convert their 2025 Notes into shares of Common Stock at their option at any time prior to the close of business on the business day immediately preceding November 15, 2024 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ended March 31, 2019 (and only during such calendar quarter), if the last reported sale price of our Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Common Stock and the conversion rate on each such trading day; (3) if we call any or all of the 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events set forth in the indenture governing the 2025 Notes. On or after November 15, 2024, until the close of business on the business day immediately preceding the maturity date, holders of the 2025 Notes may convert their notes at any time, regardless of the foregoing conditions. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our Common Stock, or a combination of cash and shares of our Common Stock, at our election.

The initial and current conversion rate for the 2025 Notes is 236.7424 shares of Common Stock per $1,000 principal amount of 2025 Notes (equivalent to a conversion price of approximately $4.22 per share of Common Stock). The conversion rate for the 2025 Notes is subject to adjustment in certain events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date of the 2025 Notes or if we deliver a notice of redemption, in certain circumstances the indenture governing the 2025 Notes requires an increase in the conversion rate of the 2025 Notes for a holder who elects to convert its notes in connection with such a corporate event or notice of redemption, as the case may be.

We may redeem for cash any or all of the 2025 Notes, at our option, if the last reported sale price of our Common Stock has been at least 130% of the then current conversion price for the notes for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes.

If we undergo a fundamental change, as defined in the indenture governing the 2025 Notes, prior to the maturity date of the 2025 Notes, holders may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2025 Notes are our senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to any of our existing and future liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries.

In May 2021, we entered into the Exchange with certain holders of the 2025 Notes pursuant to which the holders exchanged $55.4 million in aggregate principal amount of the outstanding 2025 Notes for 19,051,270 shares of our Common Stock (the “Exchange”). We recorded an $11.1 million non-cash loss related to the Exchange during 2021.

Contemporaneously with the closing of our offering of the 2029 Convertible Notes (as defined in Note 22) on January 9, 2024, we repurchased approximately $144.4 million aggregate principal amount of the 2025 Notes for cash, using $146.3 million of the net proceeds from our issuance and sale of the 2029 Convertible 144A Notes, following which only $170 thousand aggregate principal amount of the 2025 Notes remained outstanding. See Note 22 for additional information.

In conjunction with the issuance of the 2025 Notes, we agreed to loan up to 30,000,000 shares of our Common Stock to affiliates of the underwriter in order to assist investors in the 2025 Notes to hedge their position. Following the consummation of the Exchange, the number of outstanding borrowed shares of Common Stock was reduced by 8,105,175 shares. As of  December 31, 2023 and 2022, a total of 21,144,825 shares remained outstanding under the Share Lending Arrangement. We will not receive any of the proceeds from the sale of the borrowed shares, but we received a one-time nominal fee of $0.3 million for the newly issued shares. Shares of our Common Stock outstanding under the Share Lending Arrangement are excluded from the calculation of basic and diluted earnings per share. See Note 4. The Share Lending Arrangement was terminated in connection with the closing of the offering of the 2029 Convertible Notes. See Note 22.

The following table sets forth information related to the 2025 Notes which is included in our Consolidated Balance Sheet as of December 31, 2023:

(In thousands)	2025 Senior Notes		Debt Issuance Costs			Total
Balance at December 31, 2022	$	144,580	$	(2,484	)	$	142,096
Amortization of debt discount and debt issuance costs		—		1,154			1,154
Balance at December 31, 2023	$	144,580	$	(1,330	)	$	143,250

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40).” ASU 2020-06 simplifies the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. The ASU is effective for public entities for fiscal years beginning after December 15, 2021, with early adoption permitted. As required, we adopted ASU 2020-06 on January 1, 2022 and used the modified retrospective approach for all convertible debt instruments at the beginning of the period of adoptions. Results for reporting periods beginning January 1, 2022 are presented under ASU 2020-06, while prior period amounts were not adjusted and continue to be reported in accordance with historic accounting guidance.

Under the modified approach, entities applied the guidance to all financial instruments that are outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. ASU 2020-06 eliminates the cash conversion and beneficial conversion feature models in ASC 470-20 that require an issuer of certain convertible debt and preferred stock to separately account for embedded conversion features as a component of equity. The adoption of ASU 2020-06 at January 1, 2022 resulted in an increase of the 2025 Convertible notes of $21.6 million, a reduction of the Accumulated deficit of $17.5 million and a reduction of Additional paid-in capital of $39.1 million.

In February 2018, we issued a series of 5% Convertible Promissory Notes (the “2023 Convertible Notes”) in the aggregate principal amount of $55.0 million. The original maturity of the 2023 Convertible Notes was five years following the date of issuance and each holder of a 2023 Convertible Note originally had the option, from time to time, to convert all or any portion of the outstanding principal balance of such 2023 Convertible Note, together with accrued and unpaid interest thereon, into shares of our Common Stock at a conversion price of $5.00 per share. On February 10, 2023, we amended the 2023 Convertible Notes to extend their maturity to January 31, 2025 and reset the conversion price to the 10 day volume weighted average price immediately preceding the date of the amended notes, plus a 25% conversion premium, or $1.66 per share. Interest under the 2023 Convertible Notes accrues from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance, until the principal and accrued and unpaid interest, are paid in full. Purchasers of the 2023 Convertible Notes included an affiliate of Dr. Phillip Frost, M.D., our Chairman and Chief Executive Officer, and Dr. Jane H. Hsiao, Ph.D., MBA, our Vice-Chairman and Chief Technical Officer.

Contemporaneously with the closing of the offering of the 2029 Convertible Notes (as defined in Note 22) on January 9, 2024, we issued and sold approximately $71.1 million aggregate principal amount of the 2029 Convertible Affiliate Notes (as defined in Note 22) in exchange for all $55.0 million aggregate principal amount of the outstanding 2023 Convertible Notes, including approximately $16.1 million of accrued but unpaid interest thereon, following which no 2023 Convertible Notes remained outstanding. See Note 22 for additional information.

In January 2013, we issued an aggregate of $175.0 million of our 3.0% Senior Notes due 2033 (the “2033 Senior Notes”) in a private placement. The 2033 Senior Notes bear interest at the rate of 3.0% per year, payable semiannually on February 1 and August 1 of each year and mature on February 1, 2033, unless earlier repurchased, redeemed or converted. From 2013 to 2016, holders of the 2033 Senior Notes converted $143.2 million in aggregate principal amount into Common Stock, and, on February 1, 2019, approximately $28.8 million aggregate principal amount of 2033 Senior Notes were tendered by holders pursuant to such holders’ option to require us to repurchase the 2033 Senior Notes. During the year ended December 31, 2023, we paid approximately $3.0 million to purchase 2033 Senior Notes in accordance with the indenture governing the 2033 Senior Notes, following which $50.6 thousand 2033 Senior Notes remained outstanding.

The terms of the 2033 Senior Notes, include, among others: (i) rights to convert the notes into shares of our Common Stock, including upon a fundamental change; and (ii) a coupon make-whole payment in the event of a conversion by the holders of the 2033 Senior Notes on or after February 1, 2017 but prior to February 1, 2019. We determined that these specific terms were embedded derivatives. Embedded derivatives are required to be separated from the host contract, the 2033 Senior Notes, and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. We concluded that the embedded derivatives within the 2033 Senior Notes met these criteria and, as such, were valued separate and apart from the 2033 Senior Notes and recorded at fair value each reporting period.

In November 2015, BioReference and certain of its subsidiaries entered into a credit agreement (as amended (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“CB”), as lender and administrative agent. The Credit Agreement originally provided for a $75.0 million secured revolving credit facility and currently includes a $20.0 million sub-facility for swingline loans and a $20.0 million sub-facility for the issuance of letters of credit.

On June 29, 2023, the Company entered into an amendment to the Credit Agreement (the "Credit Agreement Amendment"), which, among other things, (i) replaced the London interbank offered rate (LIBOR) with the forward-looking term rate based on the secured overnight financing rate (the "SOFR Rate") as the interest rate benchmark, (ii) reduced the aggregate revolving commitment from $75,000,000 to $50,000,000, (iii) provided a revised commitment fee rate, and (iv) extended the maturity date from August 2024 to the earlier of August 2025, and 90 days prior to the maturity date of any indebtedness of the Company in an aggregate principal amount exceeding $7,500,000.

The Credit Agreement is guaranteed by all of BioReference’s domestic subsidiaries and is also secured by substantially all assets of BioReference and its domestic subsidiaries, as well as a non-recourse pledge by us of our equity interest in BioReference. Availability under the Credit Agreement is based on a borrowing base composed of eligible accounts receivables of BioReference and certain of its subsidiaries, as specified therein. As of December 31, 2023, $7.5 million remained available for borrowing under the Credit Agreement. Principal under the Credit Agreement is due upon maturity on August 30, 2025.

At BioReference’s option, borrowings under the Credit Agreement (other than swingline loans) bear interest at (i) the CB floating rate (defined as the higher of (x) the prime rate and (y) the SOFR Rate for an interest period of one month plus 2.50% and a benchmark spread adjustment of 0.10%) plus an applicable margin of 1.00%; or (ii) the SOFR Rate plus a benchmark spread adjustment of 0.10% and an applicable margin of 2.00%. Swingline loans will bear interest at the CB floating rate plus the applicable margin. The Credit Agreement also calls for other customary fees and charges, including an unused commitment fee of 0.400% if the average quarterly availability is 50% or more of the revolving commitment, or 0.275% if the average quarterly availability is less than or equal to 50% of the revolving commitments.

As of December 31, 2023 and 2022, $12.7 million and $18.1 million, respectively, was outstanding under the Credit Agreement.

The Credit Agreement contains customary covenants and restrictions, including, without limitation, covenants that require BioReference and its subsidiaries to maintain a minimum fixed charge coverage ratio if availability under the new credit facility falls below a specified amount and to comply with laws and restrictions on the ability of BioReference and its subsidiaries to incur additional indebtedness or to pay dividends and make certain other distributions to the Company, subject to certain exceptions as specified therein. Failure to comply with these covenants would constitute an event of default under the Credit Agreement, notwithstanding the ability of BioReference to meet its debt service obligations. The Credit Agreement also includes various customary remedies for the lenders following an event of default, including the acceleration of repayment of outstanding amounts under the Credit Agreement and execution upon the collateral securing obligations under the Credit Agreement. Substantially all the assets of BioReference and its subsidiaries are restricted from sale, transfer, lease, disposal or distributions to the Company, subject to certain exceptions. As of December 31, 2023, BioReference and its subsidiaries had net assets of approximately $488.3 million, which included goodwill of $283.0 million and intangible assets of $167.8 million.

Note 3 Commitments and Contingencies    

See Note 14 of our Consolidated Financial Statements in Item 8 of Part II of this Form 10-K for a discussion of our commitments and contingencies.

Note 4 Dividends

We received $0.0 milion and $33 million dividend payments from our consolidated subsidiaries for the years ended December 31, 2023 and 2022, respectively.

Note 5 Income Taxes

The Parent Company Condensed Financial Statements recognize the current and deferred income tax consequences that result from our activities during the current and preceding periods pursuant to the provisions of Accounting Standards Codification Topic 740, Income Taxes (ASC 740), as if we were a separate taxpayer rather than a member of the consolidated income tax return group. The tax expense and benefit recorded in OPKO’s consolidated financial statements was the result of activity at the subsidiaries and therefore all tax benefit and expense was reported in the Net income (loss) from subsidiaries, net of taxes line in the Condensed Statement of Income.

Note 6 Subsequent Events

In January 2024, we completed a private offering of $230.0 million aggregate principal amount of our 3.75% Convertible Senior Notes due 2029 (the “2029 Convertible 144A Notes”) in accordance with the terms of a note purchase agreement (the “144A Note Purchase Agreement”) entered into by and between by the Company and J.P. Morgan Securities LLC (the “Initial Purchaser”). The $230.0 million aggregate principal amount of 2029 Convertible 144A Notes included $30.0 million aggregate principal amount of 2029 Convertible 144A Notes purchased on the Closing Date by the Initial Purchaser in accordance with its exercise in full of its option to purchase additional 2029 Convertible 144A Notes under the 144A Note Purchase Agreement.

We received net proceeds from the issuance of the 2029 Convertible 144A Notes of approximately $222.0 million, after deducting fees and estimated offering expenses payable by us. We used approximately $50.0 million of the net proceeds from the offering of the 2029 Convertible 144A Notes to repurchase shares of our Common Stock from purchasers of the 2029 Convertible 144A Notes in privately negotiated transactions effected with or through the Initial Purchaser or its affiliate.  The purchase price per share of the Common Stock repurchased in such transactions equaled the closing sale price of the Common Stock on January 4, 2024, which was $0.9067 per share. Also, contemporaneously with the pricing of the 2029 Convertible 144A Notes, we entered into separate, privately negotiated transactions with certain holders of our outstanding 2025 Notes to repurchase, on the closing date, approximately $144.4 million aggregate principal amount of such notes. We effected such repurchases for cash, using $146.3 million of the net proceeds from the offering of the 2029 Convertible 144A Notes.

Additionally, we issued and sold approximately $71.1 million aggregate principal amount of our 3.75% Convertible Senior Notes due 2029 (the “2029 Convertible Affiliate Notes” and, together with the 2029 Convertible 144A Notes, the “2029 Convertible Notes” of the "notes") pursuant to the terms of a note purchase agreement entered into on January 4, 2024 (the “Affiliate Note Purchase Agreement”) by and among the Company and certain investors including, Frost Gamma Investments Trust, a trust controlled by Phillip Frost, M.D., our Chairman and Chief Executive Officer, and Jane H. Hsiao, Ph.D., MBA, our Vice-Chairman and Chief Technical Officer (collectively, the “Affiliate Purchasers”). Pursuant to the Affiliate Note Purchase Agreement, we issued and sold the 2029 Convertible Affiliate Notes to the Affiliate Purchasers in exchange for the entirety of the $55.0 million aggregate principal amount of our outstanding 2023 Convertible Notes, together with approximately $16.1 million of accrued but unpaid interest thereon, held by the Affiliate Purchasers. Following such exchange, no 2023 Convertible Notes remained outstanding.

Holders may convert their 2029 Convertible Notes at their option prior to the close of business on the business day immediately preceding September 15, 2028 only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2024 (and only during such calendar quarter), if the last reported sale price of our Common Stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the applicable conversion price on each applicable trading day; (2) during the five consecutive business day period after any ten consecutive trading day period (the “convertible note measurement period”) in which the trading price  per $1,000 principal amount of notes for each trading day of the convertible note measurement period was less than 98% of the product of the last reported sale price of our Common Stock and the applicable conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events specified in the indenture governing the 2029 Convertible Notes. On or after September 15, 2028 until the close of business on the business day immediately preceding the maturity date, holders may convert their notes at any time, regardless of the foregoing conditions. Upon conversion of a note, we will pay or deliver, as the case may be, cash, shares of our Common Stock or a combination of cash and shares of our Common Stock, at our election. However, we will be required to elect to deliver solely cash or, subject to certain limitations, a combination of cash and shares of our Common Stock upon conversion, unless and until we have duly authorized and reserved for issuance (by all necessary corporate action and arrangements with the transfer agent for our Common Stock) upon conversion of the notes a number of authorized shares of our Common Stock that have not been issued or reserved for any other purpose, and/or a number of treasury shares of our Common Stock that have not been reserved for any other purpose, equal to the maximum number of underlying shares.

The conversion rate is initially equal to 869.5652 shares of Common Stock per $1,000 principal amount of notes (equivalent to an initial conversion price of approximately $1.15 per share of Common Stock). The conversion rate for the 2029 Convertible Notes will be subject to adjustment upon the occurrence of certain events, but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date of the notes, in certain circumstances we will increase the conversion rate of the 2029 Convertible Notes for a holder who elects to convert its notes in connection with such a corporate event.

We may not redeem the notes prior to the maturity date, and no sinking fund is provided for the notes. If we undergo a fundamental change, holders may require us to purchase the notes in whole or in part for cash at a fundamental change purchase price equal to 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date. The 2029 Convertible Notes are our senior unsecured obligations and rank senior in right of payment to any indebtedness that is expressly subordinated in right of payment to the notes, and equal in right of payment with all of our existing and future unsecured indebtedness that is not so subordinated. The notes are effectively subordinated to all of our existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally subordinated to all existing and future liabilities (including trade payables) of our subsidiaries (including, without limitation, liabilities of our subsidiaries under the Credit Agreement).

The indenture governing the notes provides for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, the following: nonpayment of principal or interest; breach of covenants or other agreements in the indenture; defaults in failure to pay certain other indebtedness; judgment defaults; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs and is continuing under the indenture, the trustee thereunder or the holders of at least 25% in aggregate principal amount of the notes then outstanding may declare 100% of the principal of and accrued and unpaid interest, if any on all then-outstanding notes to be immediately due and payable.  In certain circumstances, we may, for a period of time, elect to pay additional interest on the notes as the sole remedy to holders of the notes in the case of an event of default related to certain failures by us to comply with certain reporting covenants in the indenture.

Effective January 22, 2024, the Company terminated its share lending agreement, dated as of February 4, 2019 (the “Share Lending Agreement”), entered into with Jefferies Capital Services, LLC (the “Share Borrower”), pursuant to which the Company lent to the Share Borrower approximately 30 million shares of its Common Stock in connection with the 2019 issuance of its $200.0 million aggregate principal amount of the 2025 Notes. The amount of outstanding borrowed shares was subsequently reduced by approximately 8,313,000 shares and concurrent with the termination of the Share Lending Agreement, all shares have been returned to the Company to be held as treasury shares.