TABULA RASA HEALTHCARE,INC (NASDAQ:TRHC) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
On February7, 2019, Tabula Rasa HealthCare,Inc., a Delaware corporation (“TRHC”), CareKinesis,Inc., a Delaware corporation (“CareKinesis”), Careventions,Inc., a Delaware corporation (“Careventions”), Capstone Performance Systems, LLC, a Delaware limited liability company (“Capstone”), J.A. Robertson,Inc., a California corporation (“Robertson”), Medliance LLC, an Arizona limited liability company (“Medliance”), CK Solutions, LLC, a Delaware limited liability company (“CK Solutions”), TRSHC Holdings, LLC, a Delaware limited liability company (“TRSHC”), SinfoniaRX,Inc., an Arizona corporation (“SinfoniaRX”), TRHC MEC Holdings, LLC, a Delaware limited liability company (“TRHC MEC”), Mediture LLC, a Minnesota limited liability company (“Mediture”), eClusive L.L.C., a Minnesota limited liability company (“eClusive”), TRHC DM Holdings, LLC, a Delaware limited liability company (“TRHC DM”) and Cognify, LLC, a Delaware limited liability company (“Cognify” and, together with TRHC, CareKinesis, Careventions, Capstone, Robertson, Medliance, CK Solutions, TRSHC, SinfoniaRX, TRHC MEC, Mediture, TRHC DM and eClusive, the “Borrowers”) entered into a Loan and Security Modification Agreement (the “Amendment”) with the several banks and other financial institutions or entities party thereto (the “Lenders”) and Western Alliance Bank, an Arizona corporation, as a Lender and as administrative agent and collateral agent for the Lenders (the “Agent”). The Amendment amends that certain Amended and Restated Loan and Security Agreement, dated September6, 2017, by and among the Borrowers, the Lenders and the Agent (as amended, the “Amended Loan Agreement”). Capitalized terms used herein but not otherwise defined have the meaning set forth in the Amended Loan Agreement.
The Amendment amends, among other things, certain defined terms used in the Amended Loan Agreement (including the definitions of “Subordinated Debt” and “Permitted Indebtedness”) and certain negative covenants contained within the Amended Loan Agreement (including restrictions on the Borrowers’ ability to make certain distributions and investments) in order to permit (i)our potential offering, subject to market and other conditions, of convertible senior subordinated notes due 2026 (the “Notes”) in a private placement to qualified institutional buyers (the “Convertible Note Offering”) to Rule144A under the Securities Act of 1933, as amended (the “Securities Act”), and (ii)our potential entry into certain convertible note hedge transactions with one or more of the initial purchasers of the Notes or their respective affiliates (the “Option Counterparties”), and certain warrant transactions with the Option Counterparties (the “Hedging Transactions” and, together with the “Convertible Note Offering”, the “Offering Transactions”). For more information on the Offering Transactions, see Item 8.01 below under the heading “Convertible Note Offering.”
The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendment, which will be filed at a later date.
Item 8.01 Other Events.
Convertible Note Offering
On February7, 2019, TRHC issued a press release announcing its intention to offer, subject to market and other conditions, $250,000,000 aggregate principal amount of Notes in a private placement to qualified institutional buyers to Rule144A under the Securities Act. A copy of the press release is attached hereto as Exhibit99.1 and is incorporated herein by reference.
Material Weakness
Additionally, beginning with the year ended December31, 2017 as required by Rule13a-15(b)and Rule15d-15(b)of the Exchange Act, our management, including our Chief Executive Officer and our Chief Financial Officer, conducted an evaluation as of the end of the period of the effectiveness of the design and operation of our disclosure controls and procedures. Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting as of December31, 2017. In conducting this evaluation, we used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based upon that evaluation and those criteria, management concluded that, as of December31, 2017, our internal controls over financial reporting were effective. Our assessment as of December31, 2017 excluded the operations of the SinfoníaRx business (as permitted under the applicable SEC rulesand regulations), which we acquired on September6, 2017.
Under the supervision of and with the participation of our management, we are in the process of completing our assessment of the effectiveness of our internal control over financial reporting as of December31, 2018, using the criteria set forth by COSO in Internal Control—Integrated Framework (2013). While we have no requirement to disclose the preliminary results of our assessment for the year ended December31, 2018, and we are still in the process of evaluation all internal controls over financial reporting, we have voluntarily elected to disclose preliminary results of our assessment of the effectiveness of our internal control over financial reporting as of December31, 2018. Based upon the results of our testing to date, we identified a material weakness in internal control related to ineffective information technology general controls (“ITGCs”) in the area of program change-management over a certain information technology (“IT”) system that supports our financial reporting processes related to the revenue associated with the SinfoníaRx business. Our business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Based upon the assessment by management this material weakness did not result in any identified misstatements to the financial statements, and there will be no changes to any previously released financial results.
Management has been implementing and continues to implement measures designed to ensure that the control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively going forward. The remediation actions include: (i)creating and filling an IT compliance oversight function; (ii)developing a training program addressing ITGCs and policies, including educating control owners concerning the principles and requirements of each control, with a focus on those related to change-management over IT systems impacting financial reporting; (iii)developing and maintaining documentation underlying ITGCs to promote knowledge transfer upon personnel and function changes; (iv)developing enhanced risk assessment procedures and controls related to changes in IT systems; (v)implementing an IT management review and testing plan to monitor ITGCs with a specific focus on systems supporting our financial reporting processes; and (vi)enhanced quarterly reporting on the remediation measures to the Audit Committee of the Board of Directors.
We believe that these actions will remediate the material weakness. The material weakness will not be considered remediated, however, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Tabula Rasa HealthCare, Inc. Exhibit
EX-99.1 2 a19-4210_1ex99d1.htm EX-99.1 Exhibit 99.1 FOR IMMEDIATE RELEASE Tabula Rasa HealthCare Announces Proposed $250 Million Offering of Convertible Notes MOORESTOWN,…
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About TABULA RASA HEALTHCARE,INC (NASDAQ:TRHC)
Tabula Rasa HealthCare, Inc. (Tabula Rasa), formerly CareKinesis, Inc., is a provider of patient-specific, data-driven technology and solutions that enable healthcare organizations to optimize medication regimens to improve patient outcomes, reduce hospitalizations and manage risk. The Company delivers its solutions through a suite of technology-enabled products and services for medication risk management, which includes bundled prescription fulfillment and adherence packaging services for client populations with complex prescription needs. It also provides risk adjustment services, which help its clients to properly characterize a patient’s acuity, or severity of health condition, and optimize the associated payments for care. The Company serves approximately 100 healthcare organizations that focus on populations with complex healthcare needs and extensive medication requirements. Its products and services are built around the Medication Risk Mitigation Matrix, or MRM Matrix.
