Harrow Health, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Harrow Health, Inc. on June 17, 2021, covering events occurring between June 14, 2021, and June 17, 2021. The filing details the closing of a debt offering and the subsequent redemption of preferred stock.
Key Financial Metrics and Transaction Details
- Debt Issuance: The Company sold $17,500,000 in 8.625% Senior Notes due 2026 (Firm Notes) plus an additional $2,500,000 (Additional Notes) upon underwriters exercising their option, totaling $20,000,000 in principal.
- Net Proceeds: The offering generated approximately $19.6 million in net proceeds after underwriting discounts and commissions, but before expenses.
- Preferred Stock Redemption: The Company used approximately $11.1 million of the net proceeds to redeem all 440,000 outstanding shares of Series B Cumulative Preferred Stock.
- Redemption Price: The redemption price was $25.00 per share plus accrued and unpaid dividends.
- Interest Rate: The new Notes bear interest at 8.625% per annum, payable quarterly.
- Maturity: The Notes mature on April 30, 2026.
Material Changes
The primary material change is the increase in the Company's senior unsecured indebtedness by $20,000,000. This issuance is treated as a single series with $55,000,000 of existing 8.625% Senior Notes due 2026, bringing the total outstanding principal for this series to $75,000,000. Concurrently, the Company eliminated its Series B Cumulative Preferred Stock obligation.
Outlook, Risks, and Contingencies
- Redemption Rights: Prior to February 1, 2026, the Company may redeem the Notes at 100% of principal plus a make-whole premium. On or after February 1, 2026, the Company may redeem them at 100% of principal.
- Subordination: The Notes are senior unsecured obligations but are effectively subordinated to all secured indebtedness and structurally subordinated to subsidiary indebtedness.
- Events of Default: Standard events of default apply, including bankruptcy or insolvency, which would trigger immediate payment of principal and accrued interest.
Investor Verification Checklist
- Verify the total outstanding principal of the 8.625% Senior Notes due 2026 is now $75,000,000.
- Confirm the exact amount of accrued dividends paid on the Series B Preferred Stock redemption, as the $11.1 million figure includes these amounts.
- Review the First Supplemental Indenture for specific details regarding the make-whole redemption premium calculation.
- Check the Company's cash position post-closing to assess liquidity relative to the new quarterly interest obligations.