UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 5.02(b) and (e) Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 8, 2023, AdaptHealth Corp. (the “Company”) and Stephen P. Griggs, Chief Executive Officer of the Company, mutually agreed that Mr. Griggs will resign as Chief Executive Officer of the Company, effective as of 11:59 p.m. E.D.T. on June 30, 2023 (or the date of his death or “disability” if earlier) (the effective date of his resignation being, the “Separation Date”). It is further agreed that Mr. Griggs will not stand for reelection as a member of the Company’s Board of Directors (the “Board”) at the Company’s annual meeting currently scheduled for June 21, 2023.
In connection with Mr. Griggs’ resignation, the Company entered into a transition letter agreement with Mr. Griggs, dated May 8, 2023 (the “Transition Agreement”), pursuant to which Mr. Griggs will continue to serve as the Chief Executive Officer of the Company until the Separation Date or until such earlier time that a new chief executive officer is appointed. If a new chief executive officer is appointed prior to the Separation Date, Mr. Griggs will serve as an advisor through the Separation Date and his primary responsibility will be to assist in the smooth transition of his duties, responsibilities and business relationships to the new chief executive officer.
Subject to Mr. Griggs’ continuous employment with the Company through, and provided that “cause” does not exist as of, the Separation Date, Mr. Griggs is eligible to receive the following separation benefits pursuant to the Transition Agreement: (i) the contractual severance benefits that Mr. Griggs would have been entitled to receive pursuant to his existing employment agreement (the “Employment Agreement”) in connection with a resignation by Mr. Griggs for “good reason,” (ii) a pro rata percentage of the portion of the annual bonus for the 2023 fiscal year that is based on individual performance, as assessed through the Separation Date, payable on or prior to August 15, 2023, (iii) a pro rata percentage of the portion of the annual bonus for the 2023 fiscal year that is based on the level of achievement of the Company’s adjusted EBITDA and free cash flow goals for the 2023 fiscal year, payable at the same time as annual bonuses are paid to senior executives of the Company, (iv) full vesting of any outstanding equity awards subject exclusively to time-based vesting criteria, and (v) continued eligibility to vest in any outstanding equity awards subject to performance-based vesting criteria without regard to any continued employment or service conditions. Mr. Griggs’ receipt of the foregoing separation benefits is further subject to his satisfaction of the terms and conditions of his receipt of the severance benefits under the Employment Agreement, including, without limitation, his timely execution and non-revocation of a release of claims and continued compliance with his restrictive covenants.
The foregoing description of the Transition Agreement is qualified in its entirety by reference to the complete text of the Transition Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated by reference herein.
The Company’s Board is working with a leading executive search firm to identify a new chief executive officer and is considering several qualified candidates. Richard Barasch, Chairman of the Board, is expected to serve as interim chief executive officer if a successor to Mr. Griggs is not appointed by the time of his departure.
Item 7.01. Regulation FD Disclosure
On May 9, 2023, the Company issued a press release announcing the events described in Item 5.02 above. A copy of the press release is furnished as Exhibit 99.1.
The information in Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.1, is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits |
Exhibit No. | Description |
10.1 | Transition Letter Agreement, between AdaptHealth Corp. and Stephen P. Griggs, dated May 8, 2023. |
99.1 | Press Release dated May 9, 2023. | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
Dated: May 9, 2023
AdaptHealth Corp. | ||
By: | /s/ Jason Clemens | |
Name: Jason Clemens | ||
Title: Chief Financial Officer |
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Exhibit 10.1
ADAPTHEALTH CORP.
May 8, 2023
Stephen P. Griggs
via electronic delivery
Re: Transition Agreement
Dear Steve,
Reference is made to that certain Employment Agreement by and between you and AdaptHealth Corp. (the “Company”), dated as of February 1, 2021 (the “Employment Agreement”). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Employment Agreement.
This letter is intended to set forth our mutual agreement with respect to the termination of your employment with the Company. By signing below, you hereby resign from all positions that you hold with the Company Group (including as an executive officer and a director), effective as of the earlier of (i) 11:59pm E.D.T. on June 30, 2023, and (ii) the date on which your employment is terminated on account of your death or Disability in accordance with the terms of the Employment Agreement (the earlier of (i) and (ii) being the “Separation Date” and the period commencing on the date hereof and ending on the Separation Date being, the “Transition Period”). Further, it is agreed that you will not stand for reelection as a member of the Board at the annual meeting currently scheduled for June 21, 2023.
At all times during the Transition Period, you will continue to devote your full business time (unless otherwise requested by the Chairman of the Board), attention, skill and best efforts and will not engage in any other business or occupation (consistent with the terms of the Employment Agreement). You will to continue to serve as the Company’s Chief Executive Officer during the portion of the Transition Period prior to the date on which a new chief executive officer (your “Successor”) commences serving in such role (the “CEO Transition Date”). During the portion of the Transition Period, if any, following the CEO Transition Date, you will serve as an advisor to the Board and the Company’s senior management team and your primary responsibility will be to ensure a smooth transition of your duties and responsibilities to your Successor and to assist the Company Group and its counsel in connection with any investigation, administrative proceeding or litigation related to any matter in which you were involved or have knowledge. Further, at all times during the Transition Period, you will use your best efforts to maintain and solidify the Company Group’s relationships with its vendors and clients and to effectively transition such relationships to your Successor (once identified) or such other employees of the Company Group designated by the Chairman of the Board or your Successor. You agree that neither the appointment of your Successor nor your transition to an advisor or any changes to your duties, responsibilities or authority resulting therefrom will give rise to Good Reason for purposes of the Employment Agreement or otherwise.
During the Transition Period, you will continue to be paid your Base Salary (at a rate of $625,000 per annum) in accordance with the Employment Agreement, continue to vest in any outstanding equity awards in accordance with their respective terms and continue to participate in the Company Group benefit plan in which you participate as of the date hereof (subject to the terms of such plans). Further, subject to your continuous employment through, and provided that Cause does not exist as of, the Separation Date, the Company has agreed to treat your resignation as a resignation for Good Reason for purposes of the Employment Agreement and, in connection with such resignation, you will be entitled to the following payments and benefits (collectively, the “Separation Benefits”):
(i) | the Severance Benefits; |
(ii) | a pro rata percentage of the portion of the Annual Bonus in respect of the 2023 fiscal year that is based on the Compensation Committee’s assessment of your individual performance, which shall be in an amount equal to the product of (x) $156,250 (which, for the avoidance of doubt, is 25% of your target Annual Bonus), (y) your individual performance percentage as determined by the Compensation Committee on or prior to the payment date, and (z) a fraction (the “Pro Rata Percentage”), the numerator of which is the number of days during the 2023 calendar year from January 1, 2023 through and including the Separation Date, and the denominator of which is 365, such amount to be payable on or prior to August 15, 2023; |
(iii) | a pro rata percentage of the portion of the Annual Bonus in respect of the 2023 fiscal year that is based on the level of achievement of the adjusted EBITDA and free cash flow goals previously established by the Compensation Committee for the Company’s 2023 fiscal year (the “2023 Goals”), which shall be in an amount equal to the product of (x) $468,750 (which, for the avoidance of doubt, is 75% of your target Annual Bonus), (y) the payout percentage determined by the Compensation Committee with respect to the achievement of the 2023 Goals (which percentage shall be the same payout percentage as is generally applied in the determination of 2023 annual bonuses for the Company’s other senior executives), and (z) the Pro Rata Percentage, such amount to be payable at such time annual bonuses are generally paid to other senior executives of the Company, but in no event later than March 15, 2024; |
(iv) | full vesting of any outstanding equity awards subject exclusively to time-based vesting criteria as of the Separation Date; and |
(v) | continued eligibility to vest in any outstanding equity awards subject to performance-based vesting criteria without regard to any continued employment or service conditions. |
Your receipt of the Separation Benefits is subject to your satisfaction of the terms and conditions to your receipt of the Severance Benefits as set forth in the Employment Agreement (including, without limitation, your timely execution (and non-revocation) of a Release of Claims and continued compliance with the covenants set forth in the Restrictive Covenant Agreement). In the event that any portion of the Separation Benefits would be payable prior to the effective date of the Release of Claims, such amounts will not be paid until the first regularly scheduled payroll date of the Company following the effective date of the Release of Claims. For the avoidance of doubt, in the event that your employment is terminated by the Company with Cause or you resign without Good Reason, in either case, prior to the Separation Date, you shall not be eligible for the payments or benefits described above.
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The Company shall, promptly following your submission of an invoice from your attorney, reimburse you for your actual attorneys’ fees associated with the review and analysis of the Employment Agreement, your existing equity awards, the negotiation and drafting of this letter and related advise to you, up to a maximum of $25,000.
The Company agrees to instruct its officers and directors not to make any disparaging or defamatory comments regarding you from and after the date hereof, provided that you comply with your obligations pursuant to the Restrictive Covenant Agreement. However, nothing in this paragraph will apply to disclosures required by applicable law, regulation or order of a court or governmental agency. Further, nothing in this paragraph will prohibit any director or officer from speaking truthfully with law enforcement or the Company’s or his or her counsel.
The Company shall use commercially reasonable efforts to remove you from state and federal registrations in a timely manner following the Separation Date, and you agree to cooperate with the Company in connection with such efforts including, but not limited to, by supplying any information that may be required and executing all necessary documents in a timely manner.
All payments to you hereunder shall be subject to any and all applicable taxes, as required by applicable Federal, state, local and foreign law and regulations.
This letter constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions. This letter (and your right to any payments hereunder) is non-transferable and may not be assigned, pledged or encumbered in any way by you. By signing below, you acknowledge and agree that both the Employment Agreement and the Restrictive Covenant Agreement remain in full force and effect in accordance with their respective terms except as explicitly modified by this letter.
This letter may be executed in any number of counterparts, any of which may be executed and transmitted by DocuSign, facsimile or “.pdf”, and each of which shall be deemed to be an original, but all of which together shall be deemed to be one and the same instrument.
This letter shall be governed in all respects, including as to validity, interpretation and effect, by the internal laws of the State of New York, without giving effect to the choice of law principles thereof.
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[The remainder of this page is intentionally left blank.]
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Please confirm that the foregoing accurately reflects our mutual agreement by signing below and returning a fully executed copy to me on or before May 8, 2023.
Sincerely, | ||
ADAPTHEALTH CORP. | ||
By: | /s/ Christopher Joyce | |
Name: Christopher Joyce | ||
Title: General Counsel | ||
Acknowledged and agreed as of this 8th day of May, 2023 by: | ||
/s/ Stephen P. Griggs | ||
Stephen P. Griggs |
[Signature page to S. Griggs Transition Agreement]
Exhibit 99.1
AdaptHealth Announces Stephen Griggs Will Step Down as CEO at the End of Second Quarter
Board Has Initiated a Search for a Successor
Plymouth Meeting, PA – May 9, 2023 – AdaptHealth Corp. (NASDAQ: AHCO) (“AdaptHealth” or the “Company”), a national leader in providing patient-centered, healthcare-at-home solutions, including home medical equipment, medical supplies and related services, announced today that Stephen Griggs will step down as Chief Executive Officer by mutual agreement with the Board of Directors, effective June 30, 2023.
The Board is working with a leading executive search firm to identify a new CEO and is considering several qualified candidates. Richard Barasch, Chairman of the Board, will serve as interim CEO if a successor to Mr. Griggs is not appointed by the time of his departure. Mr. Griggs will not seek re-election to the Board at the Company’s forthcoming annual meeting in June.
Mr. Griggs joined AdaptHealth in 2021 following its acquisition of AeroCare Holdings, Inc., which he founded in 2000 and led as President and CEO until the acquisition. Under his leadership, AdaptHealth added key vendors, launched cross-selling initiatives, integrated its cloud-based workstreams and pioneered e-prescribe, e-ordering and e-delivery services.
Mr. Barasch said, “On behalf of the Board, I thank Steve for the critical leadership role he has played at AdaptHealth to help build a market-leading provider of sleep, diabetes, respiratory and other health care solutions. As CEO, he has led the Company through the successful integration of AdaptHealth and AeroCare, overseen more than two dozen acquisitions and helped us navigate the challenges of the COVID-19 pandemic, the CPAP shortage resulting from the Philips recall and other market headwinds. Steve leaves AdaptHealth in sound financial condition and much improved operational shape, and we are committed to finding a highly qualified candidate to capitalize on the strategic opportunities that will power the next stage of the Company’s growth.”
Mr. Griggs said, “I am proud to have worked with the most talented individuals in the industry to deliver on our vision of transforming the health care experience for patients by helping to keep them healthy at home. Now is the right time for a new leader to build on our strong foundation of cost-effective, scalable technology and established, trusted patient relationships. I look forward to working with Richard, the Board and our leadership team to ensure an effective transition.”
AdaptHealth also reported its first quarter 2023 earnings today. The Company looks forward to hosting a teleconference at 8:30 a.m. ET to discuss its results and business activities, including the leadership transition, with analysts and investors.
About AdaptHealth Corp.
AdaptHealth is a national leader in providing patient-centered, healthcare-at-home solutions including home medical equipment (HME), medical supplies, and related services. The Company provides a full suite of medical products and solutions designed to help patients manage chronic conditions in the home, adapt to challenges in their activities of daily living, and thrive. Product and service offerings include (i) sleep therapy equipment, supplies, and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea, (ii) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors and insulin pumps), (iii) HME to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. The Company is proud to partner with an extensive and highly diversified network of referral sources, including acute care hospitals, sleep labs, pulmonologists, skilled nursing facilities, and clinics. AdaptHealth services beneficiaries of Medicare, Medicaid, and commercial insurance payors, reaching approximately 3.9 million patients annually in all 50 states through its network of approximately 725 locations in 47 states.
Contacts
AdaptHealth Corp.
Jason Clemens, CFA
Chief Financial Officer
Jason.clemens@adapthealth.com
Cover |
May 08, 2023 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Amendment Flag | false |
Document Period End Date | May 08, 2023 |
Entity File Number | 001-38399 |
Entity Registrant Name | AdaptHealth Corp. |
Entity Central Index Key | 0001725255 |
Entity Tax Identification Number | 82-3677704 |
Entity Incorporation, State or Country Code | DE |
Entity Address, Address Line One | 220 West Germantown Pike |
Entity Address, Address Line Two | Suite 250 |
Entity Address, City or Town | Plymouth Meeting |
Entity Address, State or Province | PA |
Entity Address, Postal Zip Code | 19462 |
City Area Code | 610 |
Local Phone Number | 424-4515 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, par value $0.0001 per share |
Trading Symbol | AHCO |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |
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