false 0001760173 0001760173 2020-10-23 2020-10-23

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) October 23, 2020

 

 

SURGALIGN HOLDINGS, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

 

Delaware   001-38832   83-2540607

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

520 Lake Cook Road, Suite 315, Deerfield, Illinois   60015
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (224) 303-4651

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐

Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol

 

Name of exchange

on which registered

common stock, $0.001 par value   SRGA   Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 2.01.

Completion of Acquisition or Disposition of Assets.

On October 23, 2020 (the “Closing Date”), pursuant to the previously announced Stock Purchase Agreement (as amended, the “Purchase Agreement”), by and among Surgalign Holdings, Inc. (the “Company”), Roboticine, Inc, a Delaware corporation (the “Seller”), Holo Surgical S.A., a Polish joint-stock company (“Holo S.A.”), Pawel Lewicki, PhD (“Lewicki”), and Krzysztof Siemionow, MD, PhD (“Siemionow”), the Company acquired (the “Acquisition”) from the Seller all of the issued and outstanding equity interests in Holo Surgical Inc., a Delaware corporation.

As consideration for the transactions contemplated by the Purchase Agreement, on the Closing Date, the Company paid to the Seller $30,000,000 in cash and issued to the Seller 6,250,000 shares of common stock, par value $0.001 of the Company (“Common Stock”). In addition, the Seller will be entitled to receive contingent consideration from the Company valued in an aggregate amount of up to $83,000,000, to be paid through the issuance of Common Stock or the payment of cash, contingent upon and following the achievement of certain regulatory, commercial and utilization milestones by specified time periods occurring up to the sixth (6th) anniversary of the Closing Date. The Purchase Agreement provides that the Company will issue Common Stock to satisfy any contingent consideration payable to the Seller, until the total number of shares of Common Stock issued to the Seller pursuant to the Purchase Agreement (including the 6,250,000 shares of Common Stock issued on the Closing Date) is equal to 14,900,000 shares of Common Stock. Following the attainment of that limitation, the post-closing contingent payments would be payable in cash. The number of shares of Common Stock issued as contingent consideration with respect to the achievement of a post-closing milestone, if any, will be calculated based on the volume weighted average price of the Common Stock for the five (5) day trading period commencing on the opening of trading on the third trading day following the achievement of the applicable milestone. For further information regarding the terms of the Purchase Agreement, see the description contained in Item 1.01 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on October 5, 2020.

The description of the Purchase Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreement, a copy of which is filed as Exhibit 2.1 hereto, and the terms of which are incorporated by reference herein. This summary is not intended to modify or supplement any factual disclosures about the Company, and should not be relied upon as disclosure about the Company without consideration of the periodic and current reports and statements that the Company files with the SEC. The terms of the Purchase Agreement govern the contractual rights and relationships between, and allocate risks among, the parties thereto in relation to the transactions contemplated thereby. In particular, the representations and warranties made by the parties to each other in the Purchase Agreement reflect negotiations between, and are solely for the benefit of, the parties thereto and may be limited or modified by a variety of factors, including subsequent events, information included in public filings, disclosures made during negotiations among the parties, correspondence between the parties and disclosure schedules to the Purchase Agreement. Accordingly, such representations and warranties may not describe the actual state of affairs at the date they were made or at any other time and should not be relied upon as statements of fact.

 

Item 3.02.

Unregistered Sales of Equity Securities.

The information contained in Item 2.01 is hereby incorporated into this Item 3.02. In accordance with the Purchase Agreement, a portion of the consideration consists of shares of Common Stock of the Company. On the Closing Date, 6,250,000 shares of Common Stock were issued to the Seller pursuant to the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.

 

Item 7.01.

Regulation FD Disclosure.

On October 23, 2020, the Company issued a press release (the “Press Release”) announcing the consummation of the Acquisition. A copy of the Press Release is furnished herewith as Exhibit 99.1.

The information furnished herewith pursuant to Item 7.01 of this Current Report, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in this Current Report shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing.

 

Item 8.01.

Other Events.

Concurrently with the closing of the Acquisition, the Company entered into that certain First Amendment to Stock Purchase Agreement, with the Seller, Holo S.A., Lewicki and Siemionow, pursuant to which the time period for achievement of a particular milestone was amended.

Item 9.01.

Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The financial statements required by this Item 9.01(a) are not included in this Current Report. The Company intends to file such financial statements by amendment to this Current Report not later than 71 calendar days after the date this Current Report is required to be filed.

(b) Pro Forma Financial Information.

The pro forma financial information required by this Item 9.01(b) is not included in this Current Report. The Company intends to file such pro forma financial information by amendment to this Current Report not later than 71 calendar days after the date this Current Report is required to be filed.

(d) Exhibits.

 

2.1*†    Stock Purchase Agreement, dated as of September 29, 2020, by and among Surgalign Holdings, Inc., Roboticine, Inc, Holo Surgical S.A., Pawel Lewicki and Krzysztof Siemionow (incorporated by reference to Exhibit 2.1 to the Company’s Form 8-K filed on October 5, 2020).
99.1    Press Release of Surgalign Holdings, Inc., issued on October 23, 2020.
99.2†    First Amendment to Stock Purchase Agreement, dated as of October 23, 2020, by and among Surgalign Holdings, Inc., Roboticine, Inc, Holo Surgical S.A., Pawel Lewicki and Krzysztof Siemionow.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

*

Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant agrees to furnish supplementally a copy of any such omitted schedule to the Securities and Exchange Commission upon its request.

†

Portions of this exhibit are redacted pursuant to Item 601(b)(2)(ii) of Regulation S-K. The omitted information is not material and would likely cause competitive harm to the registrant if publicly disclosed. The registrant agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon its request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    SURGALIGN HOLDINGS, INC.
Date: October 23, 2020     By:  

/s/ Joshua H. DeRienzis

    Name:   Joshua H. DeRienzis
    Title:   Vice President, General Counsel and Corporate Secretary

Exhibit 99.1

 

LOGO

Surgalign Holdings, Inc. Announces Completion of Acquisition of Holo Surgical Inc. and its ARAI Digital Surgery Platform Acquisition Delivers on Commitment to the Promise of Digital Surgery to Improve Patient Outcomes Deerfield, Ill., Oct 23, 2020 – Surgalign Holdings, Inc. (Nasdaq: SRGA), a global pure-play spine company focused on advancing spine surgery including through the application of digital technologies to improve patient outcomes, today announces the completion of the acquisition of Holo Surgical Inc., (‘Holosurgical’), a Chicago-based private technology company developing the revolutionary Augmented Reality and Artificial Intelligence platform (‘ARAI™’). “The completion of the Holosurgical acquisition brings an innovative surgical platform and world-class team into our organization, enabling us to advance the standard of care by reimagining what is possible through integrated intelligent technology,” said Terry Rich, President and Chief Executive Officer of Surgalign Holdings. “This acquisition is the first step in accelerating our transformation into a leading digital surgical company in spine. In conjunction with the closing of the transaction, we are pleased to announce that virtual and augmented reality expert Prof. Christian Luciano, PhD has joined the Company as leader of our digital R&D initiatives, and spine surgeon Dr. Kris Siemionow, MD, PhD has joined the Company as Chief Medical Officer. In this role, Dr. Siemionow will continue to lead the development of the ARAI platform as well as drive innovation across the portfolio.” Transaction Overview Under the terms of the agreement, at the close of the transaction, Surgalign paid $30 million in cash and issued 6.25 million shares of Surgalign common stock which were valued at approximately $12 million, based on the volume-weighted average trading price of Surgalign’s shares of common stock during the five trading days ended September 25, 2020. In addition, further consideration valued at up to $83 million may be paid in stock and cash upon achievement of certain regulatory, developmental, and commercial milestones. The closing cash payment was funded through existing cash on the balance sheet. About Surgalign Holdings, Inc. Surgalign Holdings, Inc. is a global medical technology company advancing the science of spine care, focused on delivering innovative solutions that drive superior clinical and economic outcomes. The company is building off a legacy of high quality and differentiated

LOGO

products and continues to invest in clinically validated innovation to deliver better surgical outcomes and improve patient’s lives. Surgalign markets products throughout the United States and in more than 50 countries worldwide through an expanding network of top independent distributors. Surgalign, a member of AdvaMed, is headquartered in Deerfield, IL, with commercial, innovation and design centers in San Diego, CA, Marquette, MI, and Wurmlingen, Germany. Learn more at www.surgalign.com and connect on LinkedIn and Twitter. Forward Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s current expectations, estimates and projections about our industry, our management’s beliefs and certain assumptions made by our management. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. The forward-looking statements are not guarantees of future performance and are based on certain assumptions including general economic conditions, as well as those within the Company’s industry, and numerous other factors and risks identified in the Company’s Form 10-K for the fiscal year ended December 31, 2019 and other filings with the SEC. Our actual results may differ materially from the anticipated results reflected in these forward-looking statements. Important factors that could cause actual results to differ materially from the anticipated results reflected in these forward-looking statements include risks and uncertainties relating to the following: (i) the risk of existing or potential litigation or regulatory action arising from the previously announced SEC and internal investigations and their findings; (ii) the identification of control deficiencies, including material weaknesses in internal control over financial reporting and the impact of the same; (iii) potential reputational damage that the Company has or may suffer as a result of the findings of the investigations; (iv) general worldwide economic conditions and related uncertainties; (v) the anticipated impact of the COVID-19 novel coronavirus pandemic and the Company’s attempts at mitigation; (vi) the failure by the Company to identify, develop and successfully implement immediate action plans and longer-term strategic initiatives; (vii) the reliability of our supply chain; (viii) our ability to meet obligations under our material agreements; (ix) the duration of decreased demand for our products; (x) whether or when the demand for procedures involving our products will increase; (xi) the Company’s access to adequate operating cash flow, trade credit, borrowed funds and equity capital to fund its operations and pay its obligations as they become due, and the terms on which external financing may be available, including the impact of adverse trends or disruption in the global credit and equity markets; (xii) our financial position and results, total revenue,

LOGO

product revenue, gross margin, and operations; (xiii) failure to realize, or unexpected costs in seeking to realize, the expected benefits of the acquisition, including the failure of Holosurgical’s products and services to be satisfactorily developed or achieve applicable regulatory approvals or as a result of the failure to commercialize and distribute Holosurgical’s products; (xiv) the failure to effectively integrate Holosurgical’s operations with those of the Company; (xv) the failure to retain key personnel of Holosurgical; (xvi) the number of shares and amount of cash that will be required in connection with any post-closing milestone payments, including as a result of changes in the trading price of the Company’s common stock and their effect on the amount of cash needed by the Company to fund any post-closing milestone payments in connection with the acquisition; (xvii) the effect of the transaction on relationships with customers, suppliers and other third parties; (xviii) the diversion of management time and attention on the transaction and subsequent integration; (xix) the effect and timing of changes in laws or in governmental regulations; (xx) risks resulting from the Company’s reduced cash levels as a result of the recent redemption of Series A Convertible Preferred Stock; and (xi) other risks described in our public filings with the SEC. These factors should be considered carefully, and undue reliance should not be placed on the forward-looking statements. Each forward-looking statement in this communication speaks only as of the date of the particular statement. Copies of the Company’s SEC filings may be obtained by contacting the Company or the SEC or by visiting Surgalign’s website at www.surgalign.com or the SEC’s website at www.sec.gov. We undertake no obligation to update these forward-looking statements except as may be required by law. Jonathon Singer Investor and Media Contact jsinger@surgalign.com +1 224 303 4651

Exhibit 99.2

Pursuant to Item 601(b)(2)(ii) of Regulation S-K, certain information contained in this document, marked by brackets as [**], has been omitted because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT

This FIRST AMENDMENT TO STOCK PURCHASE AGREEMENT (this “Amendment”) dated October 23, 2020 is by and among Surgalign Holdings, Inc., a Delaware Corporation (“Buyer”), Roboticine, Inc, a Delaware corporation (“Seller”), Holo Surgical S.A., a Polish joint-stock company (“Holo S.A.”), Pawel Lewicki, PhD (“Lewicki”) and Krzysztof Siemionow, MD, PhD (“Siemionow”). Buyer, Seller, Holo S.A., Lewicki and Siemionow will each be referred to herein from time to time as a “Party” and, collectively, as the “Parties.”

RECITALS

WHEREAS, the Parties entered into that certain Stock Purchase Agreement (the “Purchase Agreement”), dated September 29, 2020, pursuant to which, among other things, Buyer agreed to purchase from Seller, and Seller agreed to sell to Buyer, all of the Shares, on the terms and subject to the conditions contained in the Purchase Agreement; and

WHEREAS, the Parties desire to amend the Purchase Agreement as set forth herein in accordance with Section 12.09 of the Purchase Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Parties hereby agree as follows:

AGREEMENTS

1. Defined Terms. Capitalized terms used and not otherwise defined herein have the meanings set forth in the Purchase Agreement.

2. Amendments to Purchase Agreement.

(a) Section 2.05(a)(ii) is hereby amended and restated in its entirety to read as follows:

“Buyer shall issue or pay to Seller the [**] Earnout Consideration, subject to reduction pursuant to Section 2.05(d), if the [**] is obtained on or prior to [**]; provided, however, that if the [**] is not obtained on or prior to [**], no [**] Earnout Consideration shall be payable under this Agreement; provided, further, that once the [**] Earnout Consideration is issued and/or paid to Seller, Buyer shall have no further obligations pursuant to this Section 2.05(a)(ii);”

3. No Other Modifications. Except as expressly set forth herein, the terms and provisions of the Purchase Agreement remain unmodified and in full force and effect. This Amendment and the Purchase Agreement shall be read together as one agreement, and all references to the Purchase Agreement (in the documents contemplated by the Purchase Agreement or otherwise) shall mean the Purchase Agreement as modified and amended by this Amendment.

4. Miscellaneous. Sections 12.05 (Succession and Assignment), 12.06 (Severability), 12.07 (References), 12.08 (Construction), 12.09 (Amendment and Waiver), 12.10 (Entire Agreement), 12.11 (Parties in Interest), 12.12 (Waiver of Trial by Jury), 12.13 (Delivery by Facsimile or Email), 12.14 (Counterparts), 12.15 (Governing Law), 12.16 (Jurisdiction), 12.17 (Remedies Cumulative) and 12.18 (Specific Performances) of the Purchase Agreement are incorporated herein by reference, mutatis mutandis.

*                *                 *                *

 

2

IN WITNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written.

 

SURGALIGN HOLDINGS, INC.
    
By:  

/s/ Terry M. Rich

Name:   Terry M. Rich
Title:   President and Chief Executive Officer

[Signature Page to First Amendment to Stock Purchase Agreement]

IN WITNESS WHEREOF, the Parties have executed this Amendment on the day and year first above written.

 

ROBOTICINE, INC

 

By:  

/s/ Pawel Lewicki

Name:   Pawel Lewicki
Title:   President

 

HOLO SURGICAL S.A.

 

By:  

/s/ Krzysztof Borys Siemionow

Name:   Krzysztof Borys Siemionow
Title:   President of the Management Board
 
By:  

/s/ Maksymilian Fraszka

Name:  

Maksymilian Fraszka

Title:   Proxy of the General Meeting of Shareholders in relation to Krzysztof Siemionow

/s/ Pawel Lewicki

Pawel Lewicki

/s/ Krzysztof Siemionow

Krzysztof Siemionow

[Signature Page to First Amendment to Stock Purchase Agreement]