TABULA RASA HEALTHCARE, INC (NASDAQ:TRHC) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
Agreement and Plan of Merger
On September 6, 2017 (the “Closing Date”), Tabula Rasa HealthCare, Inc., a Delaware corporation (“TRHC”), TRCRD, Inc., a Delaware corporation and wholly-owned subsidiary of TRHC (“Merger Sub I”) and TRSHC Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of TRHC (“Merger Sub II,” and together with Merger Sub I, the “Merger Subs”), entered into, and consummated the transactions contemplated by, an Agreement and Plan of Merger (the “Merger Agreement”), by and among TRHC, the Merger Subs, Sinfonía HealthCare Corporation, a Delaware corporation (“Sinfonía”), Michael Deitch, Fletcher McCusker and Mr. Deitch in his capacity as the Stockholders’ Representative. Under the terms of the Merger Agreement, Merger Sub I merged with and into Sinfonía, with Sinfonía surviving as a wholly-owned subsidiary of TRHC (the “First Merger”). Immediately following the First Merger, Sinfonía merged with and into Merger Sub II, with Merger Sub II surviving as a wholly-owned subsidiary of TRHC (the “Second Merger,” and together with the First Merger, the “Merger”). Capitalized terms used herein and not otherwise defined have the meaning set forth in the Merger Agreement.
At the closing of the Merger, TRHC (i) paid $35 million in cash consideration, subject to adjustments set forth in the Merger Agreement, and (ii) issued 520,833 shares of TRHC common stock (valued at $19.20 per share) (the “Closing Consideration”). A portion of the cash merger consideration is being held in escrow to secure potential claims by TRHC for indemnification under the Merger Agreement and in respect of adjustments to Merger Consideration. In addition, TRHC obtained a buyer-side representation and warranty insurance policy in connection with the Merger Agreement.
At the effective time of the Merger, all issued and outstanding shares of Sinfonía capital stock and options to purchase Sinfonía capital stock (“Sinfonía Options”) were cancelled, and all outstanding shares of Sinfonía capital stock and all vested Sinfonía Options with an exercise price less than the per share merger consideration (without taking into account any Contingent Payments) were exchanged for the Closing Consideration.
In addition to the Closing Consideration, holders of Sinfonía’s capital stock and vested Sinfonía Options with an exercise price less than the per share merger consideration (without taking into account any Contingent Payments) may be eligible to receive two additional contingent payments if Sinfonía achieves certain performance goals for each of the twelve-month periods ended December 31, 2017 and December 31, 2018 (each a “Contingent Payment” and, together, the “Contingent Payments”). The Contingent Payments, if any, will be paid 50% in cash and 50% in TRHC common stock, subject to adjustments as set forth in the Merger Agreement. However, to the terms of the Merger Agreement, in no event will the aggregate number of shares of TRHC common stock issued as Closing Consideration and in connection with Contingent Payments exceed 19.9% of the issued and outstanding shares of TRHC common stock as of the close of September 5, 2017. In addition, TRHC is not obligated to pay more than $35 million in cash and TRHC common stock for the first Contingent Payment, or more than $130 million for the aggregate overall Closing Consideration (not taking into account certain adjustments set forth in the Merger Agreement) and Contingent Payments.
The Merger Agreement includes customary terms and conditions, including provisions that require the stockholders of Sinfonía to indemnify TRHC for certain losses that it incurs, including as a result of a breach by Sinfonía of its representations, warranties or covenants under the Merger Agreement.
The foregoing description of the Merger Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference. The representations, warranties and covenants of the parties contained in the Merger Agreement have been made solely for the benefit of the parties thereto. In addition, such representations, warranties and covenants (i) have been made only for purposes of the Merger Agreement, (ii) have been qualified by confidential disclosures made by Sinfonía to TRHC in connection with the Merger Agreement, (iii) are subject to materiality qualifications contained in the Merger Agreement which may differ from what may be viewed as material by investors, (iv) were made only as of the date of the Merger Agreement or such other date as is specified in the Merger Agreement and (v) have been included in the Merger Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as facts. Accordingly, the Merger Agreement is included with this report only to provide investors with information regarding the terms of the Merger Agreement, and not to provide investors with any other factual information regarding the parties or their respective businesses. Investors