Adapthealth Corp. current report, 07 November 2019

Vollständiges Dokument

AdaptHealth Corp. Form 8-K Summary

Business Context and Reporting Period

Date of Report: November 7, 2019 (Earliest event reported); Closing Date: November 8, 2019.
Company: AdaptHealth Corp. (formerly DFB Healthcare Acquisitions Corp.).
Event: The registrant consummated a business combination with AdaptHealth Holdings LLC, a provider of home medical equipment and services. Following the closing, the company changed its name from DFB Healthcare Acquisitions Corp. to AdaptHealth Corp. and ceased to be a shell company. The combined entity is now a holding company whose primary asset is equity interests in AdaptHealth Holdings.

Key Financial Metrics and Capital Structure

Capitalization Post-Closing:

  • Class A Common Stock: 40,296,166 shares outstanding (trading symbol: AHCO).
  • Class B Common Stock: 32,113,799 shares outstanding (non-voting except as required by law).
  • Warrants: 12,666,666 warrants outstanding (trading symbol: AHCOW), exercisable at $11.50 per share.
  • Registrable Securities: Approximately 76 million shares subject to a Registration Rights Agreement.
Debt and Liquidity:
  • Credit Facility: AdaptHealth LLC entered into Amendment No. 2 to its Credit Agreement, increasing the delayed draw term loan availability from $50 million to $100 million.
  • Interest Rates: The amendment lowered the applicable margin to determine the variable quarterly interest rate.
  • Cash Flow: The filing text does not provide specific revenue, profit, or cash flow figures for the period; these are incorporated by reference from the Proxy Statement and Exhibit 99.3.

Material Changes and Transactions

Business Combination Structure:

  • Blocker Mergers: BM AH Holdings, LLC and Access Point Medical, Inc. merged into DFB. 17,386,200 shares of Class A Common Stock were issued to Blocker Sellers.
  • AdaptHealth Merger: Merger Sub merged into AdaptHealth Holdings. 32,133,799 New AdaptHealth Units and an equal number of Class B Common Stock shares were issued to Non-Blocker AdaptHealth Members.
  • Private Placement: The Sponsor and RAB Ventures purchased 12,500,000 shares of Class A Common Stock in a private placement concurrent with the closing.
Corporate Governance Changes:
  • Board of Directors: Seven directors were elected to serve staggered three-year terms. The board size is seven members.
  • Management: Luke McGee appointed CEO; Joshua Parnes appointed President; Gregg Holst appointed CFO.
  • Accountant Change: WithumSmith + Brown, PC was dismissed as the independent registered public accounting firm. KPMG was engaged as the new auditor.

Agreements, Risks, and Outlook

Material Agreements:

  • Registration Rights Agreement: Provides registration rights for approximately 76 million shares held by the Sponsor, Blocker Sellers, and other holders. The Company must file a shelf registration statement.
  • Exchange Agreement: Allows holders of New AdaptHealth Units to exchange them for Class A Common Stock at a 1:1 ratio, subject to quarterly limits and minimum exchange thresholds.
  • Tax Receivable Agreement (TRA): The Company will pay 85% of the net cash tax savings realized from certain tax attributes and basis increases to the Blocker Sellers and Non-Blocker AdaptHealth Members.
  • Board Designee Rights: BlueMountain Entities holding a majority of promissory notes were granted the right to designate one director until the notes are paid in full.
Risks and Contingencies:
  • Forward-Looking Statements: Risks include the ability to maintain NASDAQ listing, disruption of operations, integration challenges, and changes in healthcare regulations.
  • Dividends: The Company does not anticipate declaring stock dividends in the foreseeable future; ability to pay dividends may be limited by debt covenants.

Investor Verification Checklist

  • Pro Forma Financials: Review Exhibit 99.2 for unaudited pro forma condensed consolidated combined financial information to understand the combined entity's financial position.
  • Tax Receivable Obligations: Assess the potential cash outflow impact of the Tax Receivable Agreement, which requires paying 85% of tax savings to former owners.
  • Debt Covenants: Verify the specific leverage ratio thresholds and interest rate margins in the amended Credit Agreement (Exhibit 10.8).
  • Shareholder Dilution: Monitor the 76 million registrable securities and the exchange rights for Class B stock, which could increase the float and impact share price.
  • Accountant Transition: Confirm the completion of KPMG's client acceptance procedures and the execution of the engagement letter.