Business Context and Reporting Period
This Form 8-K, dated July 1, 2018, reports the completion of a strategic acquisition by ExlService Holdings, Inc. (the "Company"). On this date, the Company, through its subsidiaries, finalized the acquisition of SCIOInspire Holdings Inc. ("SCIO"), a health analytics solution and services provider serving over 100 healthcare organizations and 130 million covered lives.
Key Financial Metrics
- Acquisition Consideration: The aggregate consideration payable at closing was $236.5 million.
- Payment Structure: The consideration was subject to adjustments based on SCIO's cash, debt, and working capital position. A portion was placed in escrow for post-closing adjustments and indemnifiable matters.
- Equity Component: Approximately $4 million in SCIO shares held by senior management were exchanged for 69,459 newly issued restricted common shares of the Company. This exchange reduced the cash payment by the same dollar amount.
- Funding Sources: The cash portion of the transaction was funded using a combination of cash on hand and borrowings from the Company's credit facility.
- Financial Statements: Specific revenue, profit, cash flow, and margin data for the acquired entity are not included in this filing; they are scheduled to be filed within 71 days.
Material Changes
The primary material change is the consolidation of SCIO as a wholly-owned subsidiary of the Company. This transaction expands the Company's footprint in the health analytics sector. The transaction resulted in an immediate increase in the Company's debt load due to borrowings from its credit facility to fund the cash portion of the purchase price, offset partially by the equity exchange with SCIO management.
Outlook, Risks, and Contingencies
- Lock-Up Period: The restricted common stock issued to SCIO senior management is subject to a two-year lock-up period, unless the individual is terminated without cause.
- Pro Forma Information: Pro forma financial information reflecting the impact of the merger will be filed in an amendment to this report within 71 days.
- Contingencies: The final purchase price is subject to working capital adjustments and indemnification matters managed through an escrow account.
Investor Verification Checklist
- Verify the final adjusted purchase price once working capital and debt adjustments are finalized.
- Review the upcoming pro forma financial statements (due within 71 days) to assess the impact on leverage and liquidity.
- Confirm the specific terms of the credit facility utilized to fund the acquisition.
- Monitor the retention of SCIO senior management under the two-year lock-up agreement.