TABULA RASA HEALTHCARE,INC (NASDAQ:TRHC) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
Stock Purchase Agreement
On October19, 2018 (the “Closing Date”), TRHC MEC Holdings, LLC, a Delaware limited liability company (“Purchaser”) and wholly-owned subsidiary of Tabula Rasa HealthCare,Inc., a Delaware corporation (“TRHC”), entered into, and consummated the transactions contemplated by, a Stock Purchase Agreement (the “Purchase Agreement”) by and among Purchaser, each stockholder (each, a “Seller” and collectively, the “Sellers”) of Cognify,Inc., a California corporation (“Cognify”), and Mace Wolf, solely in his capacity as the Sellers’ Representative. to the Purchase Agreement, each Seller assigned, transferred and sold to Purchaser, and Purchaser purchased from the Sellers, all of the issued and outstanding capital stock of Cognify (the “Transaction”). Capitalized terms used herein and not otherwise defined have the meaning set forth in the Purchase Agreement.
At the closing of the Transaction, TRHC paid (i)$10.8 million in cash consideration, subject to adjustments set forth in the Purchase Agreement, and (ii)issued 93,579 shares of TRHC common stock (valued at $76.94 per share) (together, the “Closing Consideration”). A portion of the cash consideration is being held in escrow to secure potential claims by Purchaser for indemnification under the Purchase Agreement and in respect of adjustments to the Purchase Price.
In addition to the Closing Consideration, the Sellers will be eligible to earn additional consideration, payable one-half in cash consideration and one-half in shares of TRHC common stock, with an aggregate value of up to a total of $14,000,000 (the “Contingent Consideration”) based on the financial results of the acquired business and certain other factors as more fully described in the Purchase Agreement. Additionally, to the terms of the Purchase Agreement, the Contingent Consideration may be accelerated in certain circumstances.
The Purchase Agreement includes customary terms and conditions, including provisions that require the Sellers to indemnify the Indemnified Purchaser Parties for certain losses incurred, including as a result of a breach by any Seller of such Seller’s respective representations, warranties or covenants under the Purchase Agreement. The foregoing description of the terms and conditions of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement. TRHC expects to file a copy of the Purchase Agreement with its Annual Report on Form10-K for the year ended December31, 2018.
The representations, warranties and covenants of the parties contained in the Purchase 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 Purchase Agreement, (ii)have been qualified by confidential disclosures made by the Sellers and Cognify to Purchaser in connection with the Purchase Agreement, (iii)are subject to materiality qualifications contained in the Purchase Agreement which may differ from what may be viewed as material by investors, (iv)were made only as of the date of the Purchase Agreement or such other date as is specified in the Purchase Agreement and (v)have been included in the Purchase Agreement for the purpose of allocating risk between the contracting parties rather than establishing matters as facts. Investors should not rely on the representations, warranties or covenants, or any descriptions thereof, as characterizations of the actual state of facts or condition of the parties or any of their respective subsidiaries or affiliates.
Item 1.01 Completion of Acquisition or Disposition of Assets
The disclosures set forth in Item 1.01 above are incorporated by reference into this Item 1.01.
Item 1.01 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The disclosures set forth in Item 1.01 above with respect to the Contingent Consideration are incorporated by reference into this Item 1.01.
Item 1.01 Unregistered Sales of Equity Securities
The disclosures set forth in Item 1.01 above are incorporated by reference into this Item 1.01. TRHC issued common stock in connection with the closing of the Transaction in a private placement exempt from registration to Section4(a)(2)of the Securities Act of 1933, as amended. TRHC relied on representations made by the individuals who received TRHC common stock to the effect that they were acquiring the TRHC common stock for investment