Filing summary
Important identity note: The supplied filing is for Health Sciences Acquisitions Corporation 2 (HSAC 2), a Cayman Islands blank-check company—not Orchestra Biomed Holdings, Inc. The filing reports the quarter ended June 30, 2021 and was signed August 16, 2021. It describes a search for a healthcare-focused business combination; it does not report Orchestra Biomed operating results.
Business context and financial position
HSAC 2 had not commenced operations or generated operating revenue. Its activities were formation, completion of its August 2020 IPO and searching for a prospective business combination. It held $160.0 million in its Trust Account, principally for a future transaction or redemption of public shareholders.
| Metric | June 30, 2021 | Comparison / period detail |
|---|---|---|
| Revenue | None | No operating revenue expected before a business combination |
| Net loss | $92,329 for Q2; $200,331 for six months | Q2 comprised $66,318 of general and administrative expense and $30,000 of related-party administrative fees, partly offset by $3,989 of Trust Account interest income |
| Cash and current assets | $1.91 million cash; $2.02 million total current assets | Cash was $2.03 million at December 31, 2020 |
| Trust Account investments | $160.01 million | $160.01 million at December 31, 2020 |
| Liquidity | Working capital of approximately $1.8 million | Management said available working capital and potential borrowing capacity should cover needs through a business combination or one year from filing |
| Debt and liabilities | No Working Capital Loans outstanding; total liabilities $5.79 million | Includes $5.6 million deferred underwriting commissions payable only upon completion of a business combination |
| Cash flow | $115,517 cash used in operations for the six months | Cash declined from $2.03 million to $1.91 million; no financing cash flow in the period |
| Margins | Not meaningful | The company had no operating revenue |
Changes versus prior periods
- Q2 2021 net loss was $92,329; the six-month net loss was $200,331. The filing’s comparison for 2020 covers only May 25, 2020 (inception) through June 30, 2020, so it is not a comparable full quarter or half-year.
- Cash fell by $115,517 during the first half of 2021, mainly reflecting operating costs. Trust Account assets increased slightly, from $160.006 million to $160.014 million.
- Accrued related-party administrative fees rose from $30,000 at December 31, 2020 to $90,000 at June 30, 2021. The contractual fee is $10,000 per month.
Outlook, risks and unusual items
- The company had until August 6, 2022 to complete a business combination; otherwise, it would be required to wind up and distribute Trust Account funds to public shareholders, subject to claims and possible delays.
- Management stated that it intended to focus its search on healthcare innovation and believed liquidity was sufficient for its near-term needs. No transaction guidance, target, or operating forecast was provided in this filing.
- The Sponsor may, but is not obligated to, provide Working Capital Loans. It also agreed to purchase $25 million of company shares or equivalent target-company securities in connection with a business combination, subject to the described terms.
- Public shareholders generally have redemption rights in a business combination. The Sponsor and insiders waived redemption rights on founder and private-placement shares; the underwriters’ $5.6 million deferred commission is payable only if a transaction is completed.
- Management said the specific effect of COVID-19 was not readily determinable; the financial statements include no related adjustments. Management reported effective disclosure controls and no material change in internal control during the quarter. No legal proceedings or off-balance-sheet arrangements were reported.
Important facts for investors to verify
- Confirm the filing issuer: the document is HSAC 2, not Orchestra Biomed Holdings, Inc.
- Check subsequent filings for any business combination, transaction terms, redemptions, or change in the company’s status after June 30, 2021.
- Verify the Trust Account balance, redemption terms, and the conditions and timing of the deferred underwriting commission.
- Assess the sufficiency of cash outside the Trust Account and the Sponsor’s nonbinding Working Capital Loan capacity against ongoing costs and the business-combination deadline.