Long-Term Debt

9 Months Ended

Sep. 30, 2024

Debt Disclosure [Abstract]

Long-Term Debt

10.LONG-TERM DEBT

Truist Term Loan

On May 22, 2022, the Company entered into a loan agreement with Truist Bank (the “Credit Agreement”) for $125.0 million. The Credit Agreement provides for (i) a $50.0 million senior secured revolving credit facility (the “Revolving Loans”) and (ii) a $125.0 million senior secured term loan A credit facility (the “Term Loan”), which was borrowed in full on May 22, 2022. The Company used the proceeds to refinance and replace an existing credit facility pursuant to a credit agreement, dated as of May 17, 2019, with Bank of America, N.A. and for general corporate purposes. Interest on borrowings under the Credit Agreement is based on either, at the Company’s election, the Standard Overnight Financing Rate plus an applicable margin of 2.5% or 2.75% or the Base Rate plus an applicable margin of 1.5% or 1.75%. At September 30, 2024, the interest rate charged to the Company was approximately 8.10%. The Term Loan requires principal payments of $1.6 million in quarterly installments on the last day of each calendar quarter, commencing on September 30, 2022, with repayment of the outstanding amount of the note due on maturity, which occurs on May 26, 2027.

Pursuant to the Credit Agreement, the Company may borrow under the Revolving Loans from time to time up to the total commitment of $50.0 million. The Company did not draw on the Revolving Loans during the three months ended September 30, 2024 and drew $10.0 million under the Revolving Loans during the nine months ended September 30, 2024. The Company did not draw on the Revolving Loans during the three and nine months ended September 30, 2023. At September 30, 2024, the Company had $40 million available under its Revolving Loans. On October 4, 2024, the Company repaid the amount that was drawn on the Revolving Loans.

The Credit Agreement is secured by substantially all of the assets of the Company and is subject to, among other provisions, customary covenants regarding indebtedness, liens, negative pledges, restricted payments, certain prepayments of indebtedness, investments, fundamental changes, disposition of assets, sale and lease-back transactions, transactions with affiliates, amendments of or waivers with respect to restricted debt and permitted activities of the Company. The Credit Agreement is subject to (i) a maximum total net leverage ratio and (ii) a minimum fixed charge coverage ratio. The Company must maintain a total net leverage ratio of less than or equal to 3.75:1.00 and must not permit the Consolidated Fixed Charge Coverage Ratio to be less than 1.25:1.00. Both financial covenants are tested quarterly. In addition to the financial covenants, the Company is required to deliver financial statements and other information and is prohibited from making certain restricted payments, as defined in the Credit Agreement, during the fiscal year in progress. Although the Company was in compliance with all required financial covenants associated with the Credit Agreement, it failed to notify the administrative agent of its commitment to repurchase certain shares currently beneficially owned by the Company’s founder pursuant to a settlement agreement reached in the Donovitz Litigation (as defined herein), resulting in an event of default as of March 31, 2024. On April 26, 2024, the Company entered into a First Amendment to the Credit Agreement and Waiver with the lender, that waived the event of default and also agreed that the payments made to repurchase the specified shares in settlement of the Donovitz Litigation will no longer continue as an event of default. On June 26, 2024, the Company entered into a Second Amendment to the Credit Agreement, in which the lender agreed that the payments made to repurchase specified shares in settlement of the June 5, 2024 Litigation (as defined herein) will not qualify as an event of default on the Term Loan. See Note 19 Commitments and Contingencies for additional information on the Donovitz Litigation and the June 5, 2024 Litigation.

In connection with obtaining the Credit Agreement in May of 2022, the Company incurred lender’s fees and related attorney’s fees of $4.0 million. The Company capitalized these costs and is amortizing these to interest expense over the term of the Term Loan. The balance on the Term Loan is presented in the unaudited condensed consolidated balance sheets net of the related debt issuance costs.

Amortization expense related to the debt issuance costs on the Credit Agreement was $0.2 million for each of the three months ended September 30, 2024 and 2023, respectively, and $0.6 million for each of the nine months ended September 30, 2024 and 2023, respectively.

Long-term debt was as follows:

	September 30,			December 31,
(in thousands)	2024			2023
Term loan	$	110,938		$	115,625
Less: Current portion		(6,250	)		(6,250	)
		104,688			109,375
Less: Unamortized debt issuance costs		(2,140	)		(2,745	)
Term loan, net of current portion	$	102,548		$	106,630

Future maturities of long-term debt, excluding debt issuance costs, are as follows:

As of September 30,	(in thousands)
2024 (remaining three months)		1,563
2025		6,250
2026		6,250
2027		96,875
	$	110,938