OPKO HEALTH, INC. 10-K

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, 2021. 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, 2021. 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, 2021, 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, 2021. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2021 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, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 139 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 2022 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of December 31, 2021. 140 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 (15) 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 (5)+ 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. 2 (6) 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. 3 (21) Agreement and Plan of Merger and Reorganization, dated as of January 14, 2022, by and among the Company, Sema4 Holdings Corp., Orion Merger Sub I, Inc., Orion Merger Sub II, LLC, GeneDx Inc. and GeneDx Holding 2, Inc. 3.1 (9) Amended and Restated Certificate of Incorporation, as amended. 3.2 ( 17) Amended and Restated Bylaws. 3.3 (3) Certificate of Designation of Series D Preferred Stock. 3.4 (14) Amendment to Amended and Restated Certificate of Incorporation 4.1 (1) Form of Common Stock Warrant. 4.2 (3) Form of Common Stock Warrant. 4.3 (8) Indenture, dated January 30, 2013, between OPKO Health, Inc. and Wells Fargo Bank, National Association. 4.4 (13) 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 (13) 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 (17) Description of Securities 10. 1 (2) Form of Director Indemnification Agreement. 10. 2 (2) Form of Officer Indemnification Agreement. 141 10. 3 (4)* Form of Restricted Share Award Agreement for Directors. 1 0.4 ( 7 ) + Exclusive License Agreement by and between TESARO, Inc. and OPKO Health, Inc. dated December 10, 2010. 10. 5 (10) OPKO Health, Inc. 2016 Equity Incentive Plan. 10. 6 (11) Development and License Agreement between OPKO Health, Inc. and Vifor Fresenius Medical Care Renal Pharma Ltd., dated May 8, 2016. 10. 7 (12) Form of 5% Convertible Promissory Note dated February 27, 2018. 10. 8 (13) Share Lending Agreement, dated February 4, 2019, by and between the OPKO Health, Inc. and Jefferies Capital Services, LLC. 10. 9 (16) Amendment to Development and License Agreement between EirGen Pharma Ltd. and Vifor Fresenius Medical Care Renal Pharma Ltd., dated May 5, 2020. 10. 1 0 (16) Amended and Restated Development and Commercialization License Agreement by and between Pfizer Inc. and OPKO Ireland Ltd., dated May 12, 2020. 10. 11 (18) Form of Exchange Agreement, dated as of May 6 , 2021, by and between OPKO Health Inc. and the applicable Noteholder. 10. 12 ( 1 9 ) Asset Purchase Agreement, dated June 16, 2021, among EirGen Pharma Limited, Horizon Therapeutics Ireland DAC, and OPKO Health, Inc. (with respect to certain sections). 10. 13 ( 1 9 ) License Agreement by and among EirGen Pharma Limited and Nicoya Macua Limited, dated June 18, 2021. 10. 14 ( 1 9 ) Exclusive License Agreement , dat ed July 6, 2021, by and between OPKO Health, Inc. and CAMP4 Therapeutics Corporation . 10. 15 ( 20 ) Amended and Restated Credit Agreement, dated August 30, 2021, by and among by and among BioReference Laboratories, Inc., certain of its subsidiaries, and JPMorgan Chase Bank, N.A. 10. 16 (21) Shareholder Agreement , dated January 14, 2022, by and between OPKO Health, Inc. and SEMA4 Holdings Corp. 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, 2021. 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, 2021. 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, 2021. 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, 2021. 142 101.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 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. (3) 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. (4) 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. (5) 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. (6) 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. (7) Filed with the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission on July 28, 2011. (8) 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. (9) 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. (10) 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. (11) 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. (12) 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. (13) 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. (14) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 21, 2019. (15) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 29, 2019. (16) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 31, 2020. (17) Filed with the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2021 and incorporated herein by reference. 143 (18) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 7, 2021. (19) Filed with the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 29, 2021. (20) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 3, 2021 (21) Filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2022. Item 16. FORM 10-K SUMMARY. None. 144 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, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 24,592 $ 3,740 Other current assets and prepaid expenses 2,620 2,433 Total current assets 27,212 6,173 Investments 1,870,743 1,901,104 Operating lease right-of-use assets 3,030 3,958 Other assets 1 25 Total assets $ 1,900,986 $ 1,911,260 LIABILITIES AND EQUITY Current liabilities: Accounts payable $ 317 $ 1,194 Accrued expenses 21,484 8,324 Current maturities of operating leases 1,203 1,113 Liabilities associated with assets held for sale — — Current portion of notes payable 2,615 3,765 Total current liabilities 25,619 14,396 Operating lease liabilities 1,827 2,845 Convertible notes 187,935 221,989 Deferred tax liabilities, net 479 479 Total long-term liabilities 190,241 225,313 Total liabilities 215,860 239,709 Equity: Common Stock - $0.01 par value, 1,000,000,000 shares authorized; 690,082,283 and 670,585,576 shares issued at December 31, 2021 and 2020, respectively 6,901 6,706 Treasury Stock, at cost - 8,655,082 and 549,907 shares at December 31, 2021 and 2020, respectively (1,791) (1,791) Additional paid-in capital 3,222,487 3,152,694 Accumulated other comprehensive income (loss) (30,495) (4,225) Accumulated deficit (1,511,976) (1,481,833) Total shareholders’ equity 1,685,126 1,671,551 Total liabilities and equity $ 1,900,986 $ 1,911,260 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 INCOME (In thousands) For the years ended December 31, 2021 2020 2019 Revenues: Revenue from products $ — $ — $ 796 Revenue from transfer of intellectual property and other — 1,069 1,150 Total revenues — 1,069 1,946 Costs and expenses: Costs of revenue 1,279 260 1,382 Selling, general and administrative 66,483 41,736 47,949 Research and development 2,029 1,951 2,027 Total costs and expenses 69,791 43,947 51,358 Operating loss (69,791) (42,878) (49,412) Other income and (expense), net: Interest income 334 967 2,186 Interest expense (21,297) (23,585) (21,172) Fair value changes of derivative instruments, net (58) (46) (601) Other income (expense), net (9,013) 10,354 (8,887) Other income and (expense), net (30,034) (12,310) (28,474) Loss before income taxes and investment losses (99,825) (55,188) (77,886) Income tax provision (2) (175) (5) Net loss before investment losses (99,827) (55,363) (77,891) Loss from investments in investees (629) (480) (2,900) Net income (loss) from subsidiaries, net of taxes 70,313 86,429 (234,134) Net income (loss) $ (30,143) $ 30,586 $ (314,925) The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements. 146 OPKO Health, Inc. PARENT COMPANY CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) For the years ended December 31, 2021 2020 2019 Net income (loss) $ (30,143) $ 30,586 $ (314,925) Other comprehensive income (loss), net of tax: Change in foreign currency translation and other comprehensive income (loss) (26,270) 17,845 (1,939) Comprehensive income (loss) $ (56,413) $ 48,431 $ (316,864) The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements. 147 OPKO Health, Inc. PARENT COMPANY CONDENSED STATEMENTS OF CASH FLOWS (In thousands) For the years ended December 31, 2021 2020 2019 Cash flows from operating activities: Net income (loss) $ (30,143) $ 30,586 $ (314,925) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization — — 59 Non-cash interest 9,389 9,994 8,545 Amortization of deferred financing costs 722 787 922 Losses from investments in investees 629 480 2,900 (Income) loss from subsidiaries (70,313) (86,429) 234,134 Equity-based compensation – employees and non-employees 13,632 8,947 13,421 Non-cash revenue from the transfer of intellectual property (3,801) — — Realized gain on equity securities and disposal of fixed assets (2,981) (10,324) (796) Change in fair value of derivative instruments 4,871 (6) 9,523 Loss on conversion of the 2025 Notes 11,111 — — Adoption of ASC 326 and other — (1,311) — Changes in other assets and liabilities 10,970 (243) 3,907 Net cash used in operating activities (55,914) (47,519) (42,310) Cash flows from investing activities: Investments in investees (2,000) — (1,200) Subsidiary financing 69,608 (23,234) (152,376) Proceeds from sale of equity securities 8,078 15,110 — Net cash provided by (used in) investing activities 75,686 (8,124) (153,576) Cash flows from financing activities: Issuance convertible notes, net — — 200,293 Issuance of common stock — — 76,061 Debt issuance costs — — (7,762) Proceeds from the exercise of Common Stock options and warrants 1,080 756 (3) Borrowings on lines of credit — — 28,800 Repayments of lines of credit — — (28,800) Redemption of 2033 Senior Notes — — (28,800) Net cash provided by financing activities 1,080 756 239,789 Net increase (decrease) in cash and cash equivalents 20,852 (54,887) 43,903 Cash and cash equivalents at beginning of period 3,740 58,627 14,724 Cash and cash equivalents at end of period $ 24,592 $ 3,740 $ 58,627 SUPPLEMENTAL INFORMATION: Interest paid $ 8,515 $ 10,908 $ 5,224 Income taxes paid, net of refunds $ 5,969 $ (903) $ (1,300) 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 The accompanying Notes to Parent Company Condensed Financial Statements are an integral part of these statements. 148 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, 2021 and 2020, approximately $1.9 billion and $1.9 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 A&R Credit Agreement (as defined below), subject to certain exceptions. BioReference and its subsidiaries’ net assets as of December 31, 2021 were approximately $1.1 billion, which includes goodwill of $283.0 million and intangible assets of $204.4 million. BioReference’s restricted net assets exceeds 25% of OPKO’s consolidated net assets of $1.7 billion as of December 31, 2021. 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. The line of credit called for a commitment fee equal to 0.25% per annum of the unused portion of the line. We terminated this line of credit in June 2021 and as of December 31, 2021, no amount was outstanding thereunder. 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. 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 149 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 May 2021, we entered into exchange agreements with certain holders of the 2025 Notes pursuant to which the holders exchanged $55.4 million in aggregate principal amount of the outstanding 2025 Notes for 19,051,270 shares of our Common Stock (the “Exchange”). We recorded an $11.1 million non-cash loss related to the Exchange. 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. Following consummation of the Exchange, the number of outstanding borrowed shares of Common Stock was reduced by approximately 8,105,175 shares. As of December 31, 2021 and 2020, a total of 21,144,825 and 29,250,000 shares were issued under the share lending arrangement, respectively. 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, 2021: (In thousands) 2025 Senior Notes Discount Debt Issuance Costs Total Balance at December 31, 2020 $ 200,000 $ (39,537) $ (4,300) $ 156,163 Amortization of debt discount and debt issuance costs — 6,639 723 7,362 Conversion (55,420) 10,151 1,104 (44,165) Balance at December 31, 2021 $ 144,580 $ (22,747) $ (2,473) $ 119,360 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 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 150 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 a credit agreement with JPMorgan Chase Bank, N.A. (“CB”), as lender and administrative agent, as amended (the “Credit Agreement”). The Credit Agreement 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. On August 30, 2021, the Credit Agreement was amended and restated (the “A&R Credit Agreement”). The A&R Credit Agreement is guaranteed by all of BioReference’s domestic subsidiaries. The A&R Credit Agreement is also 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. Availability under the A&R Credit Agreement is based on a borrowing base composed of eligible accounts receivables of BioReference and certain of its subsidiaries, as specified therein. As of December 31, 2021, $64.8 million remained available for borrowing under the Credit Agreement. Principal under the Credit Agreement is due upon maturity on August 30, 2024. 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 $45 million dividend payments from our consolidated subsidiaries for the year ended December 31, 2021. We received a $12 million dividend payment from BioReference during the year ended December 31, 2020. 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 151 We have reviewed all subsequent events and transactions that occurred after the date of our December 31, 2021 Consolidated Balance Sheet date, through the time of filing this Annual Report on Form 10-K. 152 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: March 1, 2022 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 March 1, 2022 Phillip Frost, M.D. Officer (Principal Executive Officer) /s/ Jane H. Hsiao, Ph.D., MBA Vice Chairman and Chief Technical Officer March 1, 2022 Jane H. Hsiao, Ph.D., MBA /s/ Steven D. Rubin Director and Executive Vice President – March 1, 2022 Steven D. Rubin Administration /s/ Adam Logal Senior Vice President, Chief Financial Officer, March 1, 2022 Adam Logal Chief Accounting Officer and Treasurer (Principal Financial Officer) /s/ Jon R. Cohen Director and Senior Vice President March 1, 2022 Jon R. Cohen, M.D. /s/ Richard Krasno, Ph.D. Director March 1, 2022 Richard Krasno, Ph.D. /s/ Roger J. Medel, M.D. Director March 1, 2022 Roger J. Medel, M.D. /s/ John A. Paganelli Director March 1, 2022 John A. Paganelli /s/ Richard C. Pfenniger, Jr. Director March 1, 2022 Richard C. Pfenniger, Jr. /s/ Alice Lin-Tsing Yu, M.D., Ph.D. Director March 1, 2022 Alice Lin-Tsing Yu, M.D., Ph.D. 153 Exhibit Number Description 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, 202 1 . 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, 202 1 . 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, 202 1 . 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, 202 1 . 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 154