(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 | ||||||||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SURGALIGN HOLDINGS, INC. | ||||||||
Date: May 11, 2023 | By: | /s/ David B. Lyle | ||||||
Name: | David B. Lyle | |||||||
Title: | Chief Financial 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 | ||||||||||||||
March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Revenues | $ | 16,748 | $ | 20,605 | ||||||||||
Cost of goods sold | 6,074 | 6,410 | ||||||||||||
Gross profit | 10,674 | 14,195 | ||||||||||||
Operating Expenses: | ||||||||||||||
General and administrative | 21,127 | 25,317 | ||||||||||||
Severance and restructuring costs | 466 | — | ||||||||||||
Research and development | 2,905 | 4,447 | ||||||||||||
Gain on acquisition contingency | (1,066) | (8,503) | ||||||||||||
Asset impairment and abandonments | 553 | 939 | ||||||||||||
Transaction and financing expenses | 463 | 916 | ||||||||||||
Total operating expenses | 24,448 | 23,116 | ||||||||||||
Gain on sale of Coflex | (12,631) | — | ||||||||||||
Operating loss | (1,143) | (8,921) | ||||||||||||
Other (income) expense - net | ||||||||||||||
Other (income) expense - net | (147) | 28 | ||||||||||||
Interest expense | 252 | 252 | ||||||||||||
Foreign exchange (gain) loss | (238) | 353 | ||||||||||||
Change in fair value of warrant liability | (5,288) | (9,743) | ||||||||||||
Total other (income) - net | (5,421) | (9,110) | ||||||||||||
Income before income tax provision | 4,278 | 189 | ||||||||||||
Income tax provision | 133 | 162 | ||||||||||||
Net income from operations | 4,145 | 27 | ||||||||||||
Other comprehensive income (loss) | ||||||||||||||
Unrealized foreign currency translation (gain) | (509) | (109) | ||||||||||||
Total other comprehensive income | $ | 4,654 | $ | 136 | ||||||||||
Net income per common share - basic | $ | 0.51 | $ | 0.00 | ||||||||||
Net (loss) income per common share - diluted | $ | (0.03) | $ | 0.00 | ||||||||||
Weighted average shares outstanding - basic | 8,072,339 | 5,733,646 | ||||||||||||
Weighted average shares outstanding - diluted | 13,320,439 | 5,910,719 |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||||
(Unaudited, in thousands) | ||||||||||||||
March 31, | December 31, | |||||||||||||
2023 | 2022 | |||||||||||||
Assets | ||||||||||||||
Cash | $ | 22,430 | $ | 16,295 | ||||||||||
Accounts receivable - net | 12,575 | 16,057 | ||||||||||||
Current inventories - net | 13,530 | 17,710 | ||||||||||||
Prepaid and other assets | 4,895 | 6,649 | ||||||||||||
Total current assets | $ | 53,430 | $ | 56,711 | ||||||||||
Non-current inventories - net | 6,148 | 5,947 | ||||||||||||
Property, plant and equipment - net | 2,421 | 2,057 | ||||||||||||
Other assets - net | 5,713 | 5,527 | ||||||||||||
Total assets | $ | 67,712 | $ | 70,242 | ||||||||||
Liabilities, Mezzanine Equity and Stockholders' Equity | ||||||||||||||
Accounts payable | $ | 7,492 | $ | 7,705 | ||||||||||
Accrued expenses and other current liabilities | 12,090 | 13,146 | ||||||||||||
Accrued income taxes | 402 | 296 | ||||||||||||
Total current liabilities | $ | 19,984 | $ | 21,147 | ||||||||||
Notes payable - related party | 10,244 | 10,192 | ||||||||||||
Acquisition contingencies - Holo | 22,995 | 24,061 | ||||||||||||
Warrant liability | 15,512 | 22,982 | ||||||||||||
Other Long-term liabilities | 7,906 | 7,583 | ||||||||||||
Total liabilities | $ | 76,641 | $ | 85,965 | ||||||||||
Mezzanine equity | 10,006 | 10,006 | ||||||||||||
Stockholders' equity: | ||||||||||||||
Common stock and additional paid-in capital | 604,487 | 601,329 | ||||||||||||
Accumulated other comprehensive loss | (3,349) | (2,840) | ||||||||||||
Accumulated deficit | (620,073) | (624,218) | ||||||||||||
Total stockholders' equity | $ | (18,935) | $ | (25,729) | ||||||||||
Total liabilities and stockholders' equity | $ | 67,712 | $ | 70,242 |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||||||||
(Unaudited, in thousands) | ||||||||||||||
For the Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income | $ | 4,145 | $ | 27 | ||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||
Depreciation and amortization expense | 499 | 562 | ||||||||||||
Provision for bad debts and product returns | 29 | 913 | ||||||||||||
Investor fee | — | 916 | ||||||||||||
Change in fair value of warrant liability | (5,288) | (9,743) | ||||||||||||
Provision for inventory write-downs | 215 | 3,044 | ||||||||||||
Deferred income tax provision | (21) | — | ||||||||||||
Stock-based compensation | 985 | 1,374 | ||||||||||||
Asset impairment and abandonments | 553 | 939 | ||||||||||||
Gain on acquisition contingency | (1,066) | (8,503) | ||||||||||||
Gain on sale of Coflex | (12,631) | — | ||||||||||||
Other | (35) | (3) | ||||||||||||
Change in assets and liabilities: | ||||||||||||||
Accounts receivable | 3,451 | (2,235) | ||||||||||||
Inventories | 1,580 | (2,122) | ||||||||||||
Accounts payable | (2,405) | 1,771 | ||||||||||||
Accrued expenses | (826) | (17,492) | ||||||||||||
Right-of-use asset and lease liability | (360) | (2) | ||||||||||||
Other operating assets and liabilities | 2,153 | 11,416 | ||||||||||||
Net cash used in operating activities | $ | (9,022) | $ | (19,138) | ||||||||||
Cash flows from investing activities: | ||||||||||||||
Purchases of property and equipment | (1,297) | (1,261) | ||||||||||||
Disposal of Coflex | 17,000 | — | ||||||||||||
Patent and acquired intangible asset costs | (35) | (81) | ||||||||||||
Net cash provided by (used in) investing activities | $ | 15,668 | $ | (1,342) | ||||||||||
Cash flows from financing activities: | ||||||||||||||
Share offering proceeds including prefunded warrant exercised, net | — | 17,729 | ||||||||||||
Payment of Holo Milestones - contingent consideration | — | (4,081) | ||||||||||||
Pre-funded warrant execution | 1 | — | ||||||||||||
Payments for treasury stock | (20) | (5) | ||||||||||||
Net cash (used in) provided by investing activities | $ | (19) | $ | 13,643 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | (492) | 227 | ||||||||||||
Net increase (decrease) in cash and cash equivalents | 6,135 | (6,610) | ||||||||||||
Cash and cash equivalents, beginning of period | 16,295 | 51,287 | ||||||||||||
Cash and cash equivalents, end of period | $ | 22,430 | $ | 44,677 |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||||||||||||||
Reconciliation of Revenues to Adjusted Gross Profit | |||||||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||||||
For the Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Revenues | $ | 16,748 | 100.0 | % | $ | 20,605 | 100.0 | % | |||||||||||||||
Costs of processing and distribution | 6,074 | 36.3 | % | 6,410 | 31.1 | % | |||||||||||||||||
Gross profit, as reported | 10,674 | 63.7 | % | 14,195 | 68.9 | % | |||||||||||||||||
Inventory write-off | 730 | 4.4 | % | — | — | % | |||||||||||||||||
Inventory purchase price adjustment | 235 | 1.4 | % | 410 | 2.0 | % | |||||||||||||||||
Non-GAAP gross profit, adjusted | $ | 11,639 | 69.5 | % | $ | 14,605 | 70.9 | % | |||||||||||||||
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | |||||||||||
Non-GAAP Operating Expenses, Adjusted | |||||||||||
(Unaudited, in thousands) | |||||||||||
For the Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Operating Expenses | $ | 24,448 | $ | 23,116 | |||||||
Non-cash stock-based compensation | 985 | 1,374 | |||||||||
Gain on acquisition contingency | (1,066) | (8,503) | |||||||||
Asset impairment and abandonments | 553 | 939 | |||||||||
Transaction and integration expenses | 463 | 916 | |||||||||
Severance and restructuring costs | 466 | — | |||||||||
Non-GAAP Operating Expenses, adjusted* | $ | 23,047 | $ | 28,390 | |||||||
Non-GAAP Operating Expenses, adjusted, as a percent of revenues | 137.6 | % | 137.8 | % | |||||||
*Please note this reconciliation does not include HOLO™ Portal capitalized costs of $0.4 million and $0.0 million for the three months ended March 31, 2023 and 2022. | |||||||||||
#See explanations in Non-GAAP Financial Measures above. |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||
Reconciliation of Net Income Applicable to Common Shares and Income Per Diluted Share to Adjusted Net Loss Applicable to Common Shares and Adjusted Net Loss Per Diluted Share | ||||||||||||||||||||||||||
(Unaudited, in thousands except per share data) | ||||||||||||||||||||||||||
For the Three Months Ended | ||||||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | |||||||||||||||||||||||||
Net Income Applicable to Common Shares | Amount Per Diluted Share | Net Income Applicable to Common Shares | Amount Per Diluted Share | |||||||||||||||||||||||
Net income from continuing operations | $ | 4,145 | $ | 0.31 | $ | 27 | $ | 0.00 | ||||||||||||||||||
Change in fair value of warrant liability | (5,288) | (0.40) | (9,743) | (1.65) | ||||||||||||||||||||||
Gain on acquisition contingency | (1,066) | (0.08) | (8,503) | (1.44) | ||||||||||||||||||||||
Non-cash stock-based compensation | 985 | 0.07 | 1,374 | 0.23 | ||||||||||||||||||||||
Foreign exchange (gain) loss | (238) | (0.02) | 353 | 0.06 | ||||||||||||||||||||||
Gain on sale of Coflex | (12,631) | (0.95) | — | 0.00 | ||||||||||||||||||||||
Asset impairment and abandonments | 553 | 0.04 | 939 | 0.16 | ||||||||||||||||||||||
Transaction and financing expenses | 463 | 0.03 | 916 | 0.15 | ||||||||||||||||||||||
Inventory purchase price adjustment | 235 | 0.02 | 410 | 0.07 | ||||||||||||||||||||||
Product rationalization | 730 | 0.05 | — | 0.00 | ||||||||||||||||||||||
Severance and restructuring costs | 466 | 0.03 | — | 0.00 | ||||||||||||||||||||||
Tax effect on adjustments | 17 | 0.00 | — | 0.00 | ||||||||||||||||||||||
Non-GAAP net loss from continuing operations, adjusted* | $ | (11,629) | $ | (0.90) | $ | (14,227) | $ | (2.42) | ||||||||||||||||||
*Please note this reconciliation does not include HOLO™ Portal capitalized costs of $0.4 million and $0.0 million for the three months ended March 31, 2023 and 2022. | ||||||||||||||||||||||||||
#See explanations in Non-GAAP Financial Measures above. |
SURGALIGN HOLDINGS, INC. AND SUBSIDIARIES | ||||||||||||||
Reconciliation of Net Income Applicable to Commons Shares to Adjusted EBITDA | ||||||||||||||
(Unaudited, in thousands) | ||||||||||||||
For the Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net income from continuing operations | $ | 4,145 | $ | 27 | ||||||||||
Interest expense, net | 252 | 252 | ||||||||||||
Income tax provision | 133 | 162 | ||||||||||||
Depreciation | 450 | 509 | ||||||||||||
EBITDA | $ | 4,980 | $ | 950 | ||||||||||
Reconciling items impacting EBITDA | ||||||||||||||
Non-cash stock-based compensation | 985 | 1,374 | ||||||||||||
Foreign exchange loss | (238) | 353 | ||||||||||||
Other reconciling items* | ||||||||||||||
Inventory purchase price adjustment | 235 | 410 | ||||||||||||
Change in fair value of warrant liability | (5,288) | (9,743) | ||||||||||||
Gain on acquisition contingency | (1,066) | (8,503) | ||||||||||||
Gain on sale of Coflex | (12,631) | — | ||||||||||||
Asset impairment and abandonments | 553 | 939 | ||||||||||||
Transaction and financing expenses | 463 | 916 | ||||||||||||
Product rationalization | 730 | — | ||||||||||||
Severance and restructuring costs | 466 | — | ||||||||||||
Adjusted EBITDA* | $ | (10,811) | $ | (13,304) | ||||||||||
Adjusted EBITDA as a percent of revenues | (64.6) | % | (64.6) | % | ||||||||||
*Please note this reconciliation does not include HOLO™ Portal capitalized costs of $0.4 million and $0.0 million for the three months ended March 31, 2023 and 2022. | ||||||||||||||
#See explanations in Non-GAAP Financial Measures above. |
Document |
May 11, 2023 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | May 11, 2023 |
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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