Business Context and Reporting Period
biote Corp. filed a Form 8-K regarding a binding settlement term sheet entered into on February 13, 2024, concerning previously disclosed litigation with stockholder Dr. Gary S. Donovitz. The report was signed on February 20, 2024. biote Corp. is an emerging growth company whose Class A common stock trades on Nasdaq under the symbol BTMD.
Financial and Capital Markets Impact
- The Company agreed to repurchase all Class A common units of Biote Holdings, LLC, Class V common stock and Class A common stock beneficially owned by Donovitz for approximately $76.9 million in aggregate.
- Approximately $32.2 million is payable at the closing of the definitive settlement agreement for approximately 5.1 million Class A shares and 3.1 million paired interests.
- Approximately $15.1 million is payable on the 12-month anniversary of closing for approximately 4.1 million paired interests.
- Approximately $19.1 million is payable on the 24-month anniversary of closing for approximately 4.1 million paired interests.
- Approximately $10.5 million is payable on the 36-month anniversary of closing for approximately 2.0 million paired interests.
- The filing does not provide revenue, profit, cash flow, margin, debt, liquidity or other operating-period financial metrics.
Material Changes Versus the Prior Comparable Period
The filing does not present comparative operating or financial results. The material development is the proposed settlement-related repurchase obligation and related resolution of the Donovitz Litigation.
Guidance, Outlook, Risks and Unusual Items
- The Settlement Term Sheet is binding, but the parties still must negotiate and enter into a definitive settlement agreement, which will supersede the term sheet.
- The definitive agreement is expected to contain customary representations, warranties and agreements.
- The parties agreed to mutual releases of claims arising from or relating to the litigation.
- Donovitz’s founder advisory agreement is expected to be terminated.
- Donovitz is expected to enter into two-year non-compete and non-solicitation agreements.
- The parties also agreed to negotiate and enter into a voting agreement with customary terms acceptable to the Company.
- The filing does not state how the repurchases will be financed or quantify the effect on cash, liquidity, leverage, earnings or shares outstanding.
- The Settlement Term Sheet is expected to be filed in the Company’s next quarterly report on Form 10-Q.
Important Facts for Investors to Verify
- Whether and when the definitive Settlement Agreement is executed and the closing occurs.
- The final purchase price, payment schedule, securities repurchased and settlement conditions.
- The Company’s source of funds and resulting cash, debt and liquidity position.
- The accounting treatment and potential effect on earnings, equity and shares or units outstanding.
- Whether the planned voting, non-compete, non-solicitation and mutual-release provisions are finalized as described.
- Any subsequent disclosures regarding the litigation, settlement agreement or repurchase completion.