What changed in this filing

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Item 9A. Controls and Procedures

2021-02-18 compared with 2020-03-02 · 107 added, 85 removed, 396 unchanged (33% of the section changed)

6 unchanged sentences

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

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Changes to the Company’s Internal Control Over Financial Reporting

We have implemented new controls as part of our effort to adopt Accounting Standards Update (“ASU”) No.

2016-02, “Leases (Topic 842)”.

The adoption of the ASU required the implementation of new accounting processes which necessitated changes to our internal controls over financial reporting.

These changes to the Company’s internal control over financial reporting that occurred since the beginning of 2019 have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

There have been no changes to the Company’s internal control over financial reporting that occurred during quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

OTHER INFORMATION

On February 12, 2021, the Board of Directors of the Company appointed Adam Logal, the Company’s current Senior Vice President, Chief Financial Officer, as the Company’s Chief Accounting Officer and Treasurer.

Logal previously served as the Company’s Senior Vice President, Chief Financial Officer, Chief Accounting Officer, and Treasurer from March 2014 until July 2020 when he ceased to be the Chief Accounting Officer and Treasurer.

Logal also served as Vice President of Finance, Chief Accounting Officer and Treasurer from July 2012 until March 2014, and Director of Finance, Chief Accounting Officer and Treasurer from March 2007 until July 2012.

There are no family relationships between Mr.

Logal and any director or executive officer of the Company.

Since the beginning of the Company’s last fiscal year, the Company has not engaged in any transaction, or any currently proposed transaction, in which Mr.

Logal had or will have a direct or indirect material interest that would require disclosure under Item 404(a) of Regulation S-K promulgated by the SEC.

No new compensatory plan arrangements were entered into with Mr.

Logal in connection with his appointment as the Company’s Chief Accounting Officer and Treasurer.

Logal is otherwise entitled to receive such benefits of employment as

are generally available to the Company’s other executive officers, as described in the Company’s definitive proxy statement on Schedule 14A for the Company’s 2020 Annual Meeting of Stockholders, as filed with the SEC on April 29, 2020.

On February 12, 2021 the Board of Directors of the Company approved an amendment to the Company’s Amended and Restated Bylaws (the “Bylaws”) to enhance the advance notice provisions for director nominations and stockholder proposals.

Under the amended Bylaws, a stockholder who wishes to nominate a director must include (1) a written questionnaire in the form required by the Company, (2) additional information about the structure, ownership and trading in Company’s securities or any related derivative agreements and (3) any associated performance-related fees.

The recommending stockholder also has obligations to update any notice provided to the Company in a timely manner.

The Bylaws are effective February 12, 2021.

The preceding summary does not purport to be complete and is qualified in its entirety by reference to the complete text of the Bylaws, which are filed as Exhibit 3.2 to this Form 10-K and incorporated herein by reference.

The information required in Items 10 (Directors, Executive Officers and Corporate Governance), Item 11 (Executive Compensation), Item 12 (Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters), Item 13 (Certain Relationships and Related Transactions, and Director Independence), and Item 14 (Principal Accounting Fees and Services) is incorporated by reference to the Company’s definitive proxy statement for the 2020 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of December 31, 2020.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Financial Statements:

(a) (1) Financial Statements:

See Part II, Item 8 of this report.

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Other schedules are omitted because they are not required.

(2) Exhibits:

See Index to Exhibits below.

INDEX TO EXHIBITS

Number Description

Underwriting Agreement, dated March 9, 2011, by and among OPKO Health, Inc., Jefferies & Company, Inc.

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and Frost Gamma Investment Trust.

Amendment to Development and License Agreement between EirGen Pharma Ltd.

and Vifor Fresenius Medical Care Renal Pharma Ltd., dated May 5, 2020.

Amended and Restated Development and Commercialization License Agreement by and between Pfizer Inc.

and OPKO Ireland Ltd., dated May 12, 2020.

Subsidiaries of the Company.

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Certification by Adam Logal, Chief Financial Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 20 20 .

Certification by Phillip Frost, Chief Executive Officer pursuant to 18 U.S.C.

Certification by Phillip Certification by Phillip Frost, Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 2020.

, Chief Executive Officer pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 20 20 .

Certification by Adam Logal, Chief Financial Officer, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 20 20 .

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

* Denotes management contract or compensatory plan or arrangement.

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(44) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 5, 2019.

(45) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2020 and incorporated herein by reference.

(46) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 31, 2020.

Schedule I - Condensed Financial Information of Registrant

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Total current assets 6,173 71,090

Property, plant and equipment, net

Investments 1,901,104 1,778,885

Operating lease right-of-use assets 3,958 4,672

Other assets 25 66

Total assets $ 1,911,260 $ 1,854,713

LIABILITIES AND EQUITY

3 unchanged sentences

Current maturities of operating leases 1,113 1,075

Current portion of convertible notes

Current portion of notes payable 3,765 3,524

5 unchanged sentences

Total liabilities 239,709 239,954

Common Stock - $0.01 par value, 1,000,000,000 and 750,000,000 shares authorized at December 31, 2019 and 2018, respectively;

Common Stock - $0.01 par value, 1,000,000,000 shares authorized;

670,585,576 and 670,378,701 shares issued at December 31, 2020 and 2019, respectively

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For the years ended December 31,

2020 2019 2018

Revenue from products $ — $ 796 $ —

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Loss before income taxes and investment losses (55,188) (77,886) (59,950)

Income tax benefit (provision)

Income tax provision (175) (5) (11)

Net loss before investment losses (55,363) (77,891) (59,961)

1 unchanged sentence

Net income (loss) from subsidiaries, net of taxes 86,429 (234,134) (82,257)

Net income (loss) $ 30,586 $ (314,925) $ (153,040)

The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.

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For the years ended December 31,

2020 2019 2018

Net income (loss) $ 30,586 $ (314,925) $ (153,040)

Other comprehensive income (loss), net of tax:

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Reclassification adjustments for losses included in net loss, net of tax — — —

Comprehensive loss

Comprehensive income (loss) $ 48,431 $ (316,864) $ (172,643)

The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.

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For the years ended December 31,

2020 2019 2018

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Net income (loss) $ 30,586 $ (314,925) $ (153,040)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization — 59 91

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Change in fair value of derivative instruments (6) 9,523 (6,124)

Adoption of ASC 326 and other (1,311) — —

Changes in other assets and liabilities (243) 3,907 6,846

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Proceeds from sale of equity securities 15,110 — 1,516

Net cash provided by (used in) investing activities

Net cash used in investing activities (8,124) (153,576) (123,271)

Cash flows from financing activities:

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Redemption of 2033 Senior Notes — (28,800) —

Net cash provided by financing activities

Net cash provided (used in) by financing activities 756 239,789 148,674

Net increase (decrease) in cash and cash equivalents (54,887) 43,903 (6,661)

5 unchanged sentences

Operating lease right-of-use assets due to adoption of ASU No.

2016-02 $ — $ 4,855 $ —

Operating lease liabilities due to adoption of ASU No.

2016-02 $ — $ 4,855 $ —

Non-cash financing:

1 unchanged sentence

Common Stock options and warrants, surrendered in net exercise $ — $ 20 $ 806

Issuance of capital stock to acquire or contingent consideration settlement:

OPKO Health Europe

The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.

8 unchanged sentences

(the “Credit Agreement”), subject to certain exceptions.

BioReference and its subsidiaries’ net assets as of December 31, 2019 were approximately $885.2 million , which includes goodwill of $434.8 million and intangible assets of $365.7 million .

BioReference and its subsidiaries’ net assets as of December 31, 2020 were approximately $1.0 billion, which includes goodwill of $434.8 million and intangible assets of $329.5 million.

BioReference’s restricted net assets exceeds 25% of OPKO’s consolidated net assets of $2.5 billion as of December 31, 2020.

In February 2019, we issued $200.0 million aggregate principal amount of Convertible Senior Notes due 2025 (the “2025 Notes”) in an underwritten public offering.

The 2025 Notes bear interest at a rate of 4.50% per year, payable semiannually in arrears on February 15 and August 15 of each year, beginning on August 15, 2019.

On February 25, 2020, we entered into a credit agreement with an affiliate of Dr.

Frost, pursuant to which the lender committed to provide us with an unsecured line of credit in the amount of $100 million.

Borrowings under this line of credit will bear interest at a rate of 11% per annum and may be repaid and reborrowed at any time.

The credit agreement includes various customary remedies for the lender following an event of default, including the acceleration of repayment of outstanding amounts under this line of credit.

This line of credit matures on February 25, 2025.

This line of credit also calls for a commitment fee equal to 0.25% per annum of the unused portion of the line.

As of December 31, 2020, no funds were borrowed under this line of credit.

In February 2019, we issued $200.0 million aggregate principal amount of Senior Convertible Notes due 2025 (the “2025 Notes”) in an underwritten public offering.

The 2025 Notes bear interest at a rate of 4.50% per year, payable semiannually in arrears on February 15 and August 15 of each year.

The 2025 Notes mature on February 15, 2025, unless earlier repurchased, redeemed or converted.

Holders may convert their 2025 Notes into shares of Common Stock at their option at any time prior to the close of business on the business day immediately preceding November 15, 2024 only under the following circumstances:

(1) during any calendar quarter commencing after the calendar quarter ended on March 31, 2019 (and only during such calendar quarter), if the last reported sale price of our Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(1) during any calendar quarter commencing after the calendar quarter ended March 31, 2019 (and only during such calendar quarter), if the last reported sale price of our Common Stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(2) during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our Common Stock and the conversion rate on each such trading day;

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or (4) upon the occurrence of specified corporate events set forth in the indenture governing the 2025 Notes.

On or after November 15, 2024, until the close of business on the business day immediately preceding the maturity date, holders of the 2025 Notes may convert their notes at any time, regardless of the foregoing circumstances.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our Common Stock, or a combination of cash and shares of our Common Stock, at our election.

The initial and current conversion rate for the 2025 Notes is 236.7424 shares of Common Stock per $1,000 principal amount of 2025 Notes (equivalent to a conversion price of approximately $4.22 per share of Common Stock).

The conversion rate for the 2025 Notes will be subject to adjustment in some events, but will not be adjusted for any accrued and unpaid interest.

In addition, following certain corporate events that occur prior to the maturity date of the notes or if we deliver a notice of redemption, in certain circumstances we will increase the conversion rate of the 2025 Notes for a holder who elects to convert its notes in connection with such a corporate event or notice of redemption, as the case may be.

The conversion rate for the 2025 Notes is subject to adjustment in certain events, but will not be adjusted for any accrued and unpaid interest.

In addition, following certain corporate events that occur prior to the maturity date of the 2025 Notes or if we deliver a notice of redemption, in certain circumstances the indenture governing the 2025 Notes requires an increase in the conversion rate of the 2025 Notes for a holder who elects to convert its notes in connection with such a corporate event or notice of redemption, as the case may be.

We may not redeem the 2025 Notes prior to February 15, 2022.

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The discount is being amortized to Interest expense over the term of the 2025 Notes, which results in an effective interest rate on the 2025 Notes of 11.2%.

The following table sets forth information related to the 2025 Notes which is included in our Condensed Consolidated Balance Sheet as of December 31, 2019 :

(In thousands)

2025 Senior Notes

Debt Issuance Cost

The following table sets forth information related to the 2025 Notes which is included in our Consolidated Balance Sheet as of December 31, 2020:

(In thousands) 2025 Senior Notes Discount Debt Issuance Costs Total

Balance at December 31, 2019 $ 200,000 $ (46,774) $ (5,086) $ 148,140

Issuance of 4.50% convertible notes

Amortization of debt discount and debt issuance costs — 7,237 786 8,023

1 unchanged sentence

On November 8, 2018, we entered into a credit agreement with an affiliate of Dr.

Frost, pursuant to which the lender committed to provide us with an unsecured line of credit in the amount of $60 million .

Frost, pursuant to which the lender committed to provide us with an unsecured line of credit in the aggregate principal amount of $60 million.

The credit agreement was terminated on or around February 20, 2019 and we repaid the $28.8 million outstanding thereunder from the proceeds of the 2025 Notes offering.

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The 2023 Convertible Notes contain customary events of default and representations and warranties of OPKO.

The issuance of the 2023 Convertible Notes and the issuance of the Shares, if any, upon conversion thereof was not, and will not be, respectively, registered under the Securities Act, pursuant to the exemption provided by Section 4(a)(2) thereof, and we have not agreed to register the Shares if or when such Shares are issued.

Purchasers of the 2023 Convertible Notes include an affiliate of Dr.

Purchasers of the 2023 Convertible Notes included an affiliate of Dr.

Phillip Frost, M.D., our Chairman and Chief Executive Officer, and Dr.

Hsiao, Ph.D., MBA, our Vice-Chairman and Chief Technical Officer.

In January 2013, we entered into note purchase agreements (the “2033 Senior Notes”) with qualified institutional buyers and accredited investors (collectively, the “Purchasers”) in a private placement in reliance on exemptions from registration under the Securities Act.

The 2033 Senior Notes were issued on January 30, 2013 .

In January 2013, we entered into note purchase agreements with respect to the issuance and sale of our 3.0% Senior Notes due 2033 (the “2033 Senior Notes”) in a private placement exempt from registration under the Securities Act.

We issued the 2033 Senior Notes on January 30, 2013.

The 2033 Senior Notes, which totaled $175.0 million in original principal amount, bear interest at the rate of 3.0% per year, payable semiannually on February 1 and August 1 of each year.

The 2033 Senior Notes will mature on February 1, 2033 , unless earlier repurchased, redeemed or converted.

Upon a fundamental change as defined in that certain Indenture, dated as of January 30, 2013, by and between the Company and Wells Fargo Bank N.A., as trustee, governing the 2033 Senior Notes (the “Indenture”), subject to certain

exceptions, the holders may require us to repurchase all or any portion of their 2033 Senior Notes for cash at a repurchase price equal to 100% of the principal amount of the 2033 Senior Notes being repurchased, plus any accrued and unpaid interest to but not including the related fundamental change repurchase date.

From 2013 to 2016, holders of the 2033 Senior Notes converted $143.2 million in aggregate principal amount into an aggregate of 21,539,873 shares of the Company’s Common Stock.

On February 1, 2019, approximately $28.8 million aggregate principal amount of 2033 Senior Notes were tendered by holders pursuant to such holders’ option to require us to repurchase the 2033 Senior Notes as set forth in the indenture, following which repurchase only $3.0 million aggregate principal amount of the 2033 Senior Notes remained outstanding.

Holders of the remaining $3.0 million principal amount of the 2033 Senior Notes may require us to repurchase such notes for 100% of their principal amount, plus accrued and unpaid interest, on February 1, 2023, on February 1, 2028, or following the occurrence of a fundamental change as defined in the indenture governing the 2033 Senior Notes.

The 2033 Senior

Notes mature on February 1, 2033, unless earlier repurchased, redeemed or converted.

Upon a fundamental change as defined in the indenture, governing the 2033 Senior Notes, subject to certain exceptions, the holders may require us to repurchase all or any portion of their 2033 Senior Notes for cash at a repurchase price equal to 100% of the principal amount of the 2033 Senior Notes being repurchased, plus any accrued and unpaid interest to but not including the related fundamental change repurchase date.

From 2013 to 2016, holders of the 2033 Senior Notes converted $143.2 million in aggregate principal amount into an aggregate of 21,539,873 shares of Common Stock.

On February 1, 2019, approximately $28.8 million aggregate principal amount of 2033 Senior Notes were tendered by holders pursuant to such holders’ option to require us to repurchase the 2033 Senior Notes as set forth in the indenture, governing the 2033 Senior Notes, following which repurchase only $3.0 million aggregate principal amount of the 2033 Senior Notes remained outstanding.

The terms of the 2033 Senior Notes, include, among others:

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Note 4 Dividends

We received a $12 million dividend payment from BioReference during the year ended December 31, 2020.

We did not receive any dividend payments from our consolidated subsidiaries for the years ended December 31, 2019 and 2018.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

March 2, 2020

OPKO HEALTH, INC.

February 18, 2021 OPKO HEALTH, INC.

/s/ Phillip Frost, M.D.

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature Title Date

/s/ Phillip Frost, M.D.

Chairman of the Board and Chief Executive

March 2, 2020

Chairman of the Board and Chief Executive February 18, 2021

Phillip Frost, M.D.

(Principal Executive Officer)

Hsiao, Ph.D., MBA

Vice Chairman and Chief Technical Officer

March 2, 2020

Hsiao, Ph.D., MBA Vice Chairman and Chief Technical Officer February 18, 2021

Hsiao, Ph.D., MBA

/s/ Steven D.

Director and Executive Vice President –

March 2, 2020

Administration

/s/ Adam Logal

Senior Vice President, Chief Financial Officer,

March 2, 2020

Chief Accounting Officer and Treasurer

Rubin Director and Executive Vice President – February 18, 2021

Rubin Administration

/s/ Adam Logal Senior Vice President, Chief Financial Officer, February 18, 2021

Adam Logal Chief Accounting Officer and Treasurer

(Principal Financial Officer)

Cohen Director and Senior Vice President February 18, 2021

/s/ Robert S.

March 2, 2020

/s/ Anthony Japour, M.D.

March 2, 2020

Anthony Japour, M.D.

Director February 18, 2021

/s/ Richard Krasno, Ph.D.

March 2, 2020

Director February 18, 2021

Richard Krasno, Ph.D.

/s/ Richard A.

March 2, 2020

Director February 18, 2021

Paganelli Director February 18, 2021

/s/ Richard C.

Pfenniger, Jr.

March 2, 2020

Director February 18, 2021

Pfenniger, Jr.

/s/ Alice Lin-Tsing Yu, M.D., Ph.D.

March 2, 2020

Director February 18, 2021

Alice Lin-Tsing Yu, M.D., Ph.D.

Exhibit Number

Exhibit Number Description

Amended and Restated Bylaws

Description of Securities

Amendment No.

10 to Credit Agreement by and between BioReference Laboratories, Inc.

and certain of its subsidiaries, and JPMorgan Chase, N.A.

dated November 4, 2019.

Amendment No.

11 to Credit Agreement by and between BioReference Laboratories, Inc.

and certain of its subsidiaries, and JPMorgan Chase, N.A.

dated February 25, 2020.

Credit Agreement, dated as of February 25, 2020, by and between OPKO Health, Inc.

and Frost Gamma Investment Trust.

Subsidiaries of the Company.

Consent of Independent Registered Public Accounting Firm .

Certification by Phillip Frost, Chief Executive Officer, pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities and Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 20 20 .

4 unchanged sentences

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the year ended December 31, 20 20 .

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Label Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

101.INS XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema Document

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF XBRL Taxonomy Extension Definition Linkbase Document

101.LAB XBRL Taxonomy Extension Label Linkbase Document

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures