Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act ) as of December 31, 2020. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, management concluded that our disclosure controls and procedures were effective as of December 31, 2020.
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 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. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined effective could provide only reasonable assurance with respect to financial statement preparation and presentation.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2020, based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “2013 Internal Control-Integrated Framework”). Based on our evaluation under the 2013 Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2020 has been audited by Ernst & Young LLP, our independent registered public accounting firm, who also audited our Consolidated Financial Statements included in this Annual Report on Form 10-K, as stated in their report which appears with our accompanying Consolidated Financial Statements.
Changes to 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.
ITEM 9B. 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. Mr. 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. Mr. 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. Mr. Logal is otherwise entitled to receive such benefits of employment as
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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.
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PART III
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.
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PART IV.
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
(a) (1) Financial Statements: See Part II, Item 8 of this report.
Schedule I - Condensed Financial Information of Registrant. Additionally, the financial statement schedule entitled “Schedule II – Valuation and Qualifying Accounts” has been omitted since the information required is included in the consolidated financial statements and notes thereto. Other schedules are omitted because they are not required.
(2) Exhibits: See Index to Exhibits below.
INDEX TO EXHIBITS
Exhibit
Number Description
1.1 (12)
Underwriting Agreement, dated March 9, 2011, by and among OPKO Health, Inc., Jefferies & Company, Inc. and J.P. Morgan Securities LLC, as representatives for the underwriters named therein.
1.2 (43)
Underwriting Agreement, dated October 24, 2019, by and among OPKO Health, Inc., Jeffries LLC, Piper Jaffray & Co., and Guggenheim Securities, LLC as representatives of underwriters named therein.
2.1 (1)
Merger Agreement and Plan of Reorganization, dated as of March 27, 2007, by and among Acuity Pharmaceuticals, Inc., Froptix Corporation, eXegenics Inc., e-Acquisition Company I-A, LLC, and e-Acquisition Company II-B, LLC.
2.2 (3)+
Securities Purchase Agreement, dated May 2, 2008, by and among Vidus Ocular, Inc., OPKO Instrumentation, LLC, OPKO Health, Inc., and the individual sellers and noteholders named therein.
2.3 (9)
Purchase Agreement, dated February 17, 2010, by and among Ignacio Levy García and José de Jesús Levy García, Inmobiliaria Chapalita, S.A. de C.V., Pharmacos Exakta, S.A. de C.V., OPKO Health, Inc., OPKO Health Mexicana S. de R.L. de C.V., and OPKO Manufacturing Facilities S. de R.L. de C.V.
2.4 (14)+
Agreement and Plan of Merger, dated January 28, 2011, by and among CURNA, Inc., KUR, LLC, OPKO Pharmaceuticals, LLC, OPKO CURNA, LLC, and certain individuals named therein.
2.5 (15)
Agreement and Plan of Merger, dated October 13, 2011, by and among OPKO Health, Inc., Claros Merger Subsidiary, LLC, Claros Diagnostics, Inc., and Ellen Baron, Marc Goldberg and Michael Magliochetti on behalf of the Shareholder Representative Committee.
2.6 (17)+
Stock Purchase Agreement, dated December 20, 2011, by and among FineTech Pharmaceutical Ltd., Arie Gutman, OPKO Holdings Israel Ltd, and OPKO Health, Inc.
2.7 (18)
Purchase Agreement, dated January 20, 2012, by and among OPKO Health, Inc., OPKO Chile S.A., Samuel Alexandre Arama, Inversiones SVJV Limitada, Bruno Sergiani, Inversiones BS Limitada, Pierre-Yves LeGoff, and Inversiones PYTT Limitada.
2.8 (19)+
Stock Purchase Agreement, dated August 2, 2012, by and among Farmadiet Group Holding, S.L., the Sellers party thereto, OPKO Health, Inc., and Shebeli XXI, S.L.U.
2.9 (21)+
Agreement and Plan of Merger, dated October 18, 2012, by and among Prost-Data, Inc. d/b/a OurLab, Our Labs, Endo Labs and Gold Lab, Jonathan Oppenheimer, M.D., OPKO Health, Inc., OPKO Laboratories Inc., and OPKO Labs, LLC.
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2.10 (22)+
Share Purchase Agreement, dated January 8, 2013, by among Cytochroma Inc., Cytochroma Holdings ULC, Cytochroma Canada Inc., Cytochroma Development Inc., Proventiv Therapeutics, LLC, Cytochroma Cayman Islands, Ltd., OPKO Health, Inc., and OPKO IP Holdings, Inc.
2.11 (23)
Asset Purchase Agreement, dated March 1, 2013, by and between RXi Pharmaceuticals Corporation and OPKO Health, Inc.
2.12 (24)
Agreement and Plan of Merger, dated April 23, 2013, by and among OPKO Health, Inc., POM Acquisition Inc., and PROLOR Biotech, Inc.
2.13 (27)+
Agreement for the Sale and Purchase of Shares in EirGen Pharma Limited, dated May 5, 2015 by and among OPKO Ireland Limited, OPKO Health, Inc. and the Sellers named therein.
2.14 (27)+
Form of Additional Agreement for the Sale and Purchase of Shares in EirGen Pharma Limited, dated May 5, 2015 by and among OPKO Ireland Limited and the Sellers named therein.
2.15 (28)+
Agreement and Plan of Merger by and among the Company, Bamboo Acquisition, Inc. and Bio-Reference Laboratories, Inc. dated as of June 3, 2015.
2.16 (31)
Arrangement Agreement by and among the Company, OPKO Global Holdings, Inc. and Transition Therapeutics Inc. dated as of June 29, 2016.
3.1 (26)
Amended and Restated Certificate of Incorporation, as amended.
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3.2 **
Amended and Restated Bylaws.
3.3 (7)
Certificate of Designation of Series D Preferred Stock.
3.4 (42)
Amendment to Amended and Restated Certificate of Incorporation
4.1 (1)
Form of Common Stock Warrant.
4.2 (7)
Form of Common Stock Warrant.
4.3 (25)
Indenture, dated January 30, 2013, between OPKO Health, Inc. and Wells Fargo Bank, National Association.
4.4 (39)
Base Indenture related to the 4.50% Convertible Senior Notes due 2025, dated as of February 7, 2019, by and between OPKO Health, Inc. and U.S. Bank National Association, as trustee.
4.5 (39)
Supplemental Indenture related to the 4.50% Convertible Senior Notes due 2025, dated as of February 7, 2019, by and between OPKO Health, Inc. and U.S. Bank National Association, as trustee.
4.6 **
Description of Securities
10.1 (1)
Form of Lockup Agreement.
10.2 (2)
Stock Purchase Agreement, dated December 4, 2007, by and between OPKO Health, Inc. and the members of The Frost Group, LLC.
10.3 (3)
Form of Director Indemnification Agreement.
10.4 (3)
Form of Officer Indemnification Agreement.
10.5 (4)
Stock Purchase Agreement, dated August 8, 2008 by and between OPKO Health, Inc. and the Purchasers named therein.
10.6 (5)
Stock Purchase Agreement, dated February 23, 2009 by and between OPKO Health, Inc. and Frost Gamma Investments Trust.
10.7 (6)
Form of Stock Purchase Agreement for transactions between OPKO Health, Inc. and Nora Real Estate SA., Vector Group Ltd., Oracle Partners LP, Oracle Institutional Partners, LP., Chung Chia Company Limited, Gold Sino Assets Limited, and Grandtime Associates Limited.
10.8 (6)
Stock Purchase Agreement, dated June 10, 2009, by and among OPKO Health, Inc. and Sorrento Therapeutics, Inc.
10.9 (7)
Form of Securities Purchase Agreement for Series D Preferred Stock.
10.10 (8)*
Form of Restricted Share Award Agreement for Directors.
10.11 (8)
Cocrystal Discovery, Inc. Agreements.
10.12 (11)
Stock Purchase Agreement, dated October 1, 2009, by and among the Laboratoria Volta S.A., Farmacias Ahumada S.A., FASA Chile S.A., OPKO Chile Limitada and Inversones OPKO Limitada, subsidiaries of OPKO Health, Inc.
10.13 (10)+
Asset Purchase Agreement, dated October 12, 2009, by and between OPKO Health, Inc. and Schering Corporation.
10.14 (10)
Letter Agreement, dated June 29, 2010, by and between OPKO Health, Inc. and Schering Corporation.
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10.15 (16)+
Exclusive License Agreement by and between TESARO, Inc. and OPKO Health, Inc. dated December 10, 2010.
10.16 (13)
Third Amended and Restated Subordinated Note and Security Agreement, dated February 22, 2011, between OPKO Health, Inc. and The Frost Group, LLC.
10.17 (15)+
Asset Purchase Agreement dated September 21, 2011, by and among Optos plc, Optos Inc., OPKO Health, Inc., OPKO Instrumentation, LLC, Ophthalmic Technologies, Inc., and OTI (UK) Limited.
10.18 (20)
Form of Note Purchase Agreement, dated as of January 25, 2013, by and among OPKO Health, Inc. and each purchaser a party thereto.
10.19 (29)+
Development and Commercialization License Agreement by and between OPKO Ireland, Ltd., a subsidiary of OPKO Health, Inc., and Pfizer, Inc. dated December 13, 2014.
10.20 (32)
Credit Agreement by and between Bio-Reference Laboratories, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A. dated November 5, 2015.
10.21 (33)
OPKO Health, Inc. 2016 Equity Incentive Plan.
10.22 (34)
Development and License Agreement between OPKO Health, Inc. and Vifor Fresenius Medical Care Renal Pharma Ltd., dated May 8, 2016.
10.23 (35)
Amendment No. 3 to Credit Agreement, dated as of March 17, 2017, among Bio-Reference Laboratories, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A.
10.24 (36)
Amendment No. 4 to Credit Agreement, dated as of August 7, 2017, among Bio-Reference Laboratories, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A.
10.25 (36)
Commitment Letter by and between OPKO Health, Inc. and Veterans Accountable Care Group, LLC, dated August 15, 2017 .
10.26 (37)+
Development and License Agreement by and between EirGen Pharma Limited, a subsidiary of OPKO Health, Inc., and Japan Tobacco Inc., dated October 12, 2017.
10.27 (37)
Amendment No. 5 to Credit Agreement, dated as of November 8, 2017, among Bio-Reference Laboratories, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A.
10.28 (37)
Amendment No. 6 to Credit Agreement, dated as of December 22, 2017, among Bio-Reference Laboratories, Inc. and certain of its subsidiaries and JPMorgan Chase Bank, N.A.
10.29 (37)
Form of 5% Convertible Promissory Note dated February 27, 2018.
10.30 (38)
Amendment No. 7 to Credit Agreement by and between BioReference Laboratories, Inc. and certain of its subsidiaries, and JPMorgan Chase, N.A. dated February 28, 2018.
10.31 (39)
Share Lending Agreement, dated February 4, 2019, by and between the OPKO Health, Inc. and Jefferies Capital Services, LLC.
10.32 (40)
Credit Agreement, dated as of November 8, 2018, by and between the OPKO Health, Inc. and Frost Gamma Investments Trust.
10.33 (40)
Stock Purchase Agreement, dated as of November 8, 2018, between certain investors and OPKO Health, Inc.
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10.34 (41)
Amendment No. 8 to Credit Agreement by and between BioReference Laboratories, Inc. and certain of its subsidiaries, and JPMorgan Chase, N.A. dated February 26, 2019.
10.35 (44)
Amendment No. 9 to Credit Agreement by and between BioReference Laboratories, Inc. and certain of its subsidiaries, and JPMorgan Chase, N.A. dated August 6, 2019.
10.36 (45)
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.
10.37 (45)
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.
10.38 (45)
Credit Agreement, dated as of February 25, 2020, by and between OPKO Health, Inc. and Frost Gamma Investment Trust.
1 0.39 (46)
Amendment to Development and License Agreement between EirGen Pharma Ltd. and Vifor Fresenius Medical Care Renal Pharma Ltd., dated May 5, 2020.
1 0.40 (46)
Amended and Restated Development and Commercialization License Agreement by and between Pfizer Inc. and OPKO Ireland Ltd., dated May 12, 2020.
21
Subsidiaries of the Company.
23.1
Consent of Ernst & Young LLP.
31.1
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 .
31.2
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 .
32.1
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 .
32.2
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 .
140
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.
** Filed herewith.
+ Certain confidential material contained in the document has been omitted and filed separately with the Securities and Exchange Commission.
(1) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 2, 2007, and incorporated herein by reference.
(2) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2008 and incorporated herein by reference.
(3) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2008 for the Company’s three-month period ended June 30, 2008, and incorporated herein by reference.
(4) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 12, 2008 for the Company’s three-month period ended September 30, 2008, and incorporated herein by reference.
(5) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2009 for the Company’s three-month period ended March 31, 2009, and incorporated herein by reference.
(6) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 7, 2009 for the Company’s three-month period ended June 30, 2009, and incorporated herein by reference.
(7) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 24, 2009, and incorporated herein by reference.
(8) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2009 for the Company’s three-month period ended September 30, 2009, and incorporated herein by reference.
(9) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2010 for the Company’s three-month period ended March 31, 2010, and incorporated herein by reference.
(10) Filed with the Company’s Amendment to Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 3, 2011.
(11) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2010.
(12) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 10, 2011, and incorporated herein by reference.
(13) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2011 for the Company’s three-month period ended March 31, 2011, and incorporated herein by reference.
(14) Filed with the Company’s Quarterly Report on Form 10-Q/A filed with the Securities and Exchange Commission on July 5, 2011, and incorporated herein by reference.
(15) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2011 for the Company’s three-month period ended September 30, 2011, and incorporated herein by reference.
(16) Filed with the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on July 28, 2011.
(17) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2012.
(18) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2012 for the Company’s three-month period ended March 31, 2012, and incorporated herein by reference.
(19) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 9, 2012 for the Company’s three-month period ended September 30, 2012, and incorporated herein by reference.
(20) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 29, 2013, and incorporated herein by reference.
141
(21) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 18, 2013.
(22) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 10, 2013 for the Company’s three-month period ended March 31, 2013, and incorporated herein by reference.
(23) Filed with the Company’s Schedule 13D filed with the Securities and Exchange Commission on March 22, 2013, and incorporated herein by reference.
(24) Filed as Annex A to the Company’s Preliminary Joint Proxy Statement/Prospectus, Form S-4, with the Securities Exchange Commission on June 27, 2013, as amended, and incorporated herein by reference.
(25) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 5, 2013, and incorporated herein by reference.
(26) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 12, 2013 for the Company’s three month period ended September 30, 2013, and incorporated herein by reference.
(27) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 5, 2015 for the Company’s three month period ended June 30, 2015, and incorporated herein by reference.
(28) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 4, 2015, and incorporated herein by reference.
(29) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2015, and incorporated herein by reference.
(30) Filed under Part II, Item 8, of the Bio-Reference Laboratories, Inc. Form 10-K filed with the Securities and Exchange Commission on January 13, 2015 (File No. 0-15266), and incorporated herein by reference.
(31) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2016 and incorporated herein by reference.
(32) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 29, 2016, and incorporated herein by reference.
(33) Filed with the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on March 25, 2016, and incorporated herein by reference.
(34) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2016 for the Company’s three month period ended June 30, 2016, and incorporated herein by reference.
(35) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on March 23, 2017 and incorporated herein by reference.
(36) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 2017 and incorporated herein by reference.
(37) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2018 and incorporated herein by reference.
(38) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 7, 2018 for the Company’s three month period ended June 30, 2018, and incorporated herein by reference
(39) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 7, 2019 and incorporated herein by reference.
(40) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2019 and incorporated herein by reference.
(41) Filed with the Company’s Annual Report on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2019 and incorporated herein by reference.
(42) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 21, 2019.
(43) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2019.
(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.
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Schedule I - Condensed Financial Information of Registrant
OPKO Health, Inc.
PARENT COMPANY CONDENSED BALANCE SHEETS
(In thousands, except share and per share data)
December 31,
2020 2019
ASSETS
Current assets:
Cash and cash equivalents $ 3,740 $ 58,627
Other current assets and prepaid expenses 2,433 12,463
Total current assets 6,173 71,090
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
Current liabilities:
Accounts payable $ 1,194 $ 1,791
Accrued expenses 8,324 18,280
Current maturities of operating leases 1,113 1,075
Current portion of notes payable 3,765 3,524
Total current liabilities 14,396 24,670
Operating lease liabilities 2,845 3,597
Convertible notes 221,989 211,208
Deferred tax liabilities, net 479 479
Total long-term liabilities 225,313 215,284
Total liabilities 239,709 239,954
Equity:
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
6,706 6,704
Treasury Stock, at cost - 549,907 shares at December 31, 2020 and 2019, respectively (1,791) (1,791)
Additional paid-in capital 3,152,694 3,142,993
Accumulated other comprehensive income (loss) (4,225) (22,070)
Accumulated deficit (1,481,833) (1,511,077)
Total shareholders’ equity 1,671,551 1,614,759
Total liabilities and equity $ 1,911,260 $ 1,854,713
The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.
143
OPKO Health, Inc.
PARENT COMPANY CONDENSED STATEMENTS OF INCOME
(In thousands)
For the years ended December 31,
2020 2019 2018
Revenues:
Revenue from products $ — $ 796 $ —
Revenue from transfer of intellectual property and other 1,069 1,150 1,069
Total revenues 1,069 1,946 1,069
Costs and expenses:
Costs of revenue 260 1,382 2,358
Selling, general and administrative 41,736 47,949 52,397
Research and development 1,951 2,027 4,184
Total costs and expenses 43,947 51,358 58,939
Operating loss (42,878) (49,412) (57,870)
Other income and (expense), net:
Interest income 967 2,186 631
Interest expense (23,585) (21,172) (8,608)
Fair value changes of derivative instruments, net (46) (601) 1,991
Other income (expense), net 10,354 (8,887) 3,906
Other income and (expense), net (12,310) (28,474) (2,080)
Loss before income taxes and investment losses (55,188) (77,886) (59,950)
Income tax provision (175) (5) (11)
Net loss before investment losses (55,363) (77,891) (59,961)
Loss from investments in investees (480) (2,900) (10,822)
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.
144
OPKO Health, Inc.
PARENT COMPANY CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
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:
Change in foreign currency translation and other comprehensive income (loss) 17,845 (1,939) (14,727)
Investments:
Change in unrealized gain (loss), net of tax — — —
Reclassification adjustments due to adoption of ASU 2016-01 — — (4,876)
Reclassification adjustments for losses included in net loss, net of tax — — —
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.
145
OPKO Health, Inc.
PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
For the years ended December 31,
2020 2019 2018
Cash flows from 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
Non-cash interest 9,994 8,545 4,564
Amortization of deferred financing costs 787 922 551
Losses from investments in investees 480 2,900 10,822
(Income) loss from subsidiaries (86,429) 234,134 82,257
Equity-based compensation – employees and non-employees 8,947 13,421 21,761
Realized loss (gain) on equity securities and disposal of fixed assets (10,324) (796) 208
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
Net cash used in operating activities (47,519) (42,310) (32,064)
Cash flows from investing activities:
Investments in investees — (1,200) (1,000)
Subsidiary financing (23,234) (152,376) (123,787)
Proceeds from sale of equity securities 15,110 — 1,516
Net cash used in investing activities (8,124) (153,576) (123,271)
Cash flows from financing activities:
Issuance convertible notes, net — 200,293 55,000
Issuance of common stock — 76,061 92,500
Debt issuance costs — (7,762) —
Proceeds from the exercise of Common Stock options and warrants 756 (3) 1,174
Borrowings on lines of credit — 28,800 —
Repayments of lines of credit — (28,800) —
Redemption of 2033 Senior Notes — (28,800) —
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)
Cash and cash equivalents at beginning of period 58,627 14,724 21,385
Cash and cash equivalents at end of period $ 3,740 $ 58,627 $ 14,724
SUPPLEMENTAL INFORMATION:
Interest paid $ 10,908 $ 5,224 $ 956
Income taxes paid, net of refunds $ (903) $ (1,300) $ (578)
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:
Shares issued upon the conversion of:
Common Stock options and warrants, surrendered in net exercise $ — $ 20 $ 806
The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements.
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OPKO Health, Inc.
Notes to Parent Company Condensed Financial Statements
Note 1. Organization and Basis of Presentation
We are a diversified healthcare company that seeks to establish industry-leading positions in large and rapidly growing medical markets. The parent company condensed financial statements included in this Schedule I represent the financial statements of OPKO Health, Inc., the parent company (or “OPKO”), on a stand-alone basis and do not include results of operations from our consolidated subsidiaries. The Parent Company Condensed Financial Statements should be read in conjunction with our audited consolidated financial statements included in Item 8 of Part II of this Form 10-K. As of December 31, 2020 and 2019, approximately $1.9 billion and $1.8 billion, respectively, of our Investments, net have not been eliminated in the parent company condensed financial statements.
The Parent Company Condensed Financial Statements included herein have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, as substantially all the assets of BioReference, a wholly-owned subsidiary, and its subsidiaries are restricted from sale, transfer, lease, disposal or distributions to OPKO under the credit agreement with JPMorgan Chase Bank, N.A. (the “Credit Agreement”), subject to certain exceptions. 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.
Note 2 Debt
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 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; (3) if we call any or all of the 2025 Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; 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 conditions. 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 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.
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We may not redeem the 2025 Notes prior to February 15, 2022. We may redeem for cash any or all of the notes, at our option, on or after February 15, 2022, if the last reported sale price of our Common Stock has been at least 130% of the then current conversion price for the notes for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the 2025 Notes.
If we undergo a fundamental change, as defined in the indenture governing the 2025 Notes, prior to the maturity date of the 2025 Notes, holders may require us to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The 2025 Notes are our senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the 2025 Notes; equal in right of payment to any of our existing and future liabilities that are not so subordinated; effectively junior in right of payment to any of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables) of our current or future subsidiaries.
In conjunction with the issuance of the 2025 Notes, we agreed to loan up to 30,000,000 shares of our Common Stock to affiliates of the underwriter in order to assist investors in the 2025 Notes to hedge their position. As of December 31, 2020, a total of 29,250,000 shares were issued under the share lending arrangement. We will not receive any of the proceeds from the sale of the borrowed shares, but we received a one-time nominal fee of $0.3 million for the newly issued shares. Shares of our Common Stock outstanding under the share lending arrangement are excluded from the calculation of basic and diluted earnings per share. See Note 4.
As required by ASC 470-20, “Debt with Conversion and Other Options,” we calculated the equity component of the 2025 Notes, taking into account both the fair value of the conversion option and the fair value of the share lending arrangement. The equity component was valued at $52.6 million at issue date and this amount was recorded as Additional paid-in capital, which resulted in a discount on the 2025 Notes. 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 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
Amortization of debt discount and debt issuance costs — 7,237 786 8,023
Balance at December 31, 2020 $ 200,000 $ (39,537) $ (4,300) $ 156,163
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 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.
In February 2018, we issued a series of 5% Convertible Promissory Notes (the “2023 Convertible Notes”) in the aggregate principal amount of $55.0 million. The 2023 Convertible Notes mature 5 years from the date of issuance. Each holder of a 2023 Convertible Note has the option, from time to time, to convert all or any portion of the outstanding principal balance of such 2023 Convertible Note, together with accrued and unpaid interest thereon, into shares of our Common Stock at a conversion price of $5.00 per share of Common Stock. We may redeem all or any part of the then issued and outstanding 2023 Convertible Notes, together with accrued and unpaid interest thereon, pro rata among the holders, upon no fewer than 30 days, and no more than 60 days, notice to the holders. The 2023 Convertible Notes contain customary events of default and representations and warranties of OPKO.
Purchasers of the 2023 Convertible Notes included an affiliate of Dr. Phillip Frost, M.D., our Chairman and Chief Executive Officer, and Dr. Jane H. Hsiao, Ph.D., MBA, our Vice-Chairman and Chief Technical Officer.
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
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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. 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 described above.
The terms of the 2033 Senior Notes, include, among others: (i) rights to convert the notes into shares of our Common Stock, including upon a fundamental change; and (ii) a coupon make-whole payment in the event of a conversion by the holders of the 2033 Senior Notes on or after February 1, 2017 but prior to February 1, 2019. We determined that these specific terms were embedded derivatives. Embedded derivatives are required to be separated from the host contract, the 2033 Senior Notes, and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. We concluded that the embedded derivatives within the 2033 Senior Notes met these criteria and, as such, were valued separate and apart from the 2033 Senior Notes and recorded at fair value each reporting period.
For accounting and financial reporting purposes, we combined these embedded derivatives and valued them together as one unit of accounting. In 2017, certain terms of the embedded derivatives expired pursuant to the original agreement and the embedded derivatives no longer met the criteria to be separated from the host contract and, as a result, the embedded derivatives were no longer required to be valued separate and apart from the 2033 Senior Notes and were reclassified to additional paid in capital.
In November 2015, BioReference and certain of its subsidiaries entered into the Credit Agreement, as amended from time to time, with JPMorgan Chase Bank, which provides for a $75.0 million secured revolving credit facility and includes a $20.0 million sub-facility for swingline loans and a $20.0 million sub-facility for the issuance of letters of credit. The Credit Agreement matures on November 5, 2021 and is secured by substantially all assets of BioReference and its domestic subsidiaries, as well as a non-recourse pledge by us of our equity interest in BioReference.
Note 3 Commitments and Contingencies
See Note 14 of our Consolidated Financial Statements in Item 8 of Part II of this Form 10-K for a discussion of our commitments and contingencies.
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.
Note 5 Income Taxes
The Parent Company Condensed Financial Statements recognize the current and deferred income tax consequences that result from our activities during the current and preceding periods pursuant to the provisions of Accounting Standards Codification Topic 740, Income Taxes (ASC 740), as if we were a separate taxpayer rather than a member of the consolidated income tax return group. The tax expense and benefit recorded in OPKO’s consolidated financial statements was the result of activity at the subsidiaries and therefore all tax benefit and expense was reported in the Net income (loss) from subsidiaries, net of taxes line in the Condensed Statement of Income.
Note 6 Subsequent Events
We have reviewed all subsequent events and transactions that occurred after the date of our December 31, 2020 Consolidated Balance Sheet date, through the time of filing this Annual Report on Form 10-K.
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SIGNATURES
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.
Date: February 18, 2021 OPKO HEALTH, INC.
By: /s/ Phillip Frost, M.D.
Phillip Frost, M.D.
Chairman of the Board and
Chief Executive Officer
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 February 18, 2021
Phillip Frost, M.D. Officer
(Principal Executive Officer)
/s/ Jane H. Hsiao, Ph.D., MBA Vice Chairman and Chief Technical Officer February 18, 2021
Jane H. Hsiao, Ph.D., MBA
/s/ Steven D. Rubin Director and Executive Vice President – February 18, 2021
Steven D. Rubin Administration
/s/ Adam Logal Senior Vice President, Chief Financial Officer, February 18, 2021
Adam Logal Chief Accounting Officer and Treasurer
(Principal Financial Officer)
/s/ Jon R. Cohen Director and Senior Vice President February 18, 2021
Jon R. Cohen, M.D.
/s/ Robert S. Fishel, M.D. Director February 18, 2021
Robert S. Fishel, M.D.
/s/ Richard Krasno, Ph.D. Director February 18, 2021
Richard Krasno, Ph.D.
/s/ Richard A. Lerner, M.D. Director February 18, 2021
Richard A. Lerner, M.D.
/s/ Roger J. Medel, M.D. Director February 18, 2021
Roger J. Medel, M.D.
/s/ John A. Paganelli Director February 18, 2021
John A. Paganelli
/s/ Richard C. Pfenniger, Jr. Director February 18, 2021
Richard C. Pfenniger, Jr.
/s/ Alice Lin-Tsing Yu, M.D., Ph.D. Director February 18, 2021
Alice Lin-Tsing Yu, M.D., Ph.D.
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Exhibit Number Description
3.2
Amended and Restated Bylaws
4.6
Description of Securities
21
Subsidiaries of the Company.
23.1
Consent of Independent Registered Public Accounting Firm .
31.1
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 .
31.2
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 .
32.1
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.
32.2
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 .
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
151