☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Ontario |
Applicable | |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
8300 W. Sunrise Boulevard | ||
Plantation, Florida 33322 | ||
(844) 730-0050 | ||
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices) |
Title of each class |
Trading Symbol |
Name of each exchange on which registered | ||
Common Shares, no par value |
AKU |
The Nasdaq Stock Market | ||
Common Shares, no par value |
AKU |
The Toronto Stock Exchange |
Large accelerated filer |
☐ |
Accelerated filer | ☒ | |||
Non-accelerated filer |
☐ |
Smaller reporting company |
☒ | |||
Emerging growth company |
☒ |
Page |
||||||
PART I |
FINANCIAL INFORMATION | |||||
Item 1. |
Financial Statements | 3 | ||||
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 | ||||
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk | 35 | ||||
Item 4. |
Controls and Procedures | 35 | ||||
PART II |
OTHER INFORMATION | |||||
Item 1. |
Legal Proceedings | 38 | ||||
Item 1A. |
Risk Factors | 38 | ||||
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds | 38 | ||||
Item 3. |
Defaults Upon Senior Securities | 39 | ||||
Item 4. |
Mine Safety Disclosures | 39 | ||||
Item 5. |
Other Information | 39 | ||||
Item 6. |
Exhibits | 39 | ||||
40 |
• | expected performance and cash flows; |
• | changes in laws and regulations affecting the Company; |
• | expenses incurred by the Company as a public company; |
• | future growth of the outpatient diagnostic imaging and radiation oncology markets; |
• | changes in reimbursement rates by payors; |
• | remediation and effectiveness of the design and effectiveness of our disclosure controls and procedures and internal control over financial reporting; |
• | the outcome of litigation and payment obligations in respect of prior settlements; |
• | competition; |
• | acquisitions and divestitures of businesses; |
• | potential synergies from acquisitions; |
• | non-wholly owned and other business arrangements; |
• | access to capital and the terms relating thereto; |
• | technological changes in our industry; |
• | successful execution of internal plans; |
• | compliance with our debt covenants; |
• | anticipated costs of capital investments; and |
• | future compensation of our directors and executive officers. |
• | our ability to successfully grow the market and sell our services; |
• | general market conditions in our industry; |
• | our ability to service existing debt; |
• | our ability to acquire new centers and, upon acquisition, to successfully integrate market and sell new services that we acquire; |
• | our ability to achieve the financing necessary to complete our acquisitions; |
• | our ability to enforce any claims relating to breaches of indemnities or representations and warranties in connection with any acquisition; |
• | market conditions in the capital markets and our industry that make raising capital or consummating acquisitions difficult, expensive or both, or which may disrupt our annual operating budget and forecasts; |
• | unanticipated cash requirements to support current operations, to expand our business or for capital expenditures; |
• | delays or setbacks with respect to governmental approvals or manufacturing or commercial activities; |
• | changes in laws and regulations; |
• | the loss of key management or personnel; |
• | the risk the Company is not able to arrange sufficient cost-effective financing to repay maturing debt and to fund expenditures, future operational activities and acquisitions, and other obligations; |
• | the risks related to the additional costs and expenses associated with being a U.S. domestic issuer as opposed to a foreign private issuer; and |
• | the risks associated with legislative and regulatory developments that may affect costs, revenues, the speed and degree of competition entering the market, global capital markets activity and general economic conditions in geographic areas where we operate (including the adverse impact of the coronavirus (“COVID-19”) pandemic on the Company). |
• | no unforeseen changes in the legislative and operating framework for our business; |
• | no unforeseen changes in the prices for our services in markets where prices are regulated; |
• | no unforeseen changes in the regulatory environment for our services; |
• | a stable competitive environment; and |
• | no significant event occurring outside the ordinary course of business such as a natural disaster, public health epidemic or other calamity. |
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Revenues |
$ | 186,263 | $ | 63,963 | ||||
Operating expenses: |
||||||||
Cost of operations, excluding depreciation and amortization |
157,479 | 55,142 | ||||||
Depreciation and amortization |
24,731 | 4,490 | ||||||
Stock-based compensation |
1,061 | 427 | ||||||
Other operating losses (gains), net |
(54 | ) | 90 | |||||
|
|
|
|
|||||
Total operating expenses |
183,217 | 60,149 | ||||||
|
|
|
|
|||||
Income from operations |
3,046 | 3,814 | ||||||
Other expense (income): |
||||||||
Interest expense |
28,681 | 8,368 | ||||||
Acquisition-related costs |
382 | 1,279 | ||||||
Settlement and related recoveries |
(137 | ) | (24 | ) | ||||
Other non-operating gains, net |
(11 | ) | (3,366 | ) | ||||
|
|
|
|
|||||
Total other expense, net |
28,915 | 6,257 | ||||||
|
|
|
|
|||||
Loss before income taxes |
(25,869 | ) | (2,443 | ) | ||||
Income tax expense |
563 | 65 | ||||||
|
|
|
|
|||||
Net loss |
(26,432 | ) | (2,508 | ) | ||||
Less: Net income attributable to noncontrolling interests |
4,379 | 369 | ||||||
|
|
|
|
|||||
Net loss attributable to common shareholders |
$ | (30,811 | ) | $ | (2,877 | ) | ||
|
|
|
|
|||||
Comprehensive loss, net of taxes: |
||||||||
Net loss |
$ | (26,432 | ) | $ | (2,508 | ) | ||
Other comprehensive income: |
||||||||
Unrealized gain on hedging transactions, net of taxes |
29 | — | ||||||
Reclassification adjustment for losses included in net loss, net of taxes |
17 | — | ||||||
|
|
|
|
|||||
Other comprehensive income |
46 | — | ||||||
|
|
|
|
|||||
Comprehensive loss, net of taxes |
(26,386 | ) | (2,508 | ) | ||||
Less: Comprehensive income attributable to noncontrolling interests |
4,379 | 369 | ||||||
|
|
|
|
|||||
Comprehensive loss attributable to common shareholders |
$ | (30,765 | ) | $ | (2,877 | ) | ||
|
|
|
|
|||||
Net loss per share attributable to common shareholders: |
||||||||
Basic and diluted |
$ | (0.35 | ) | $ | (0.04 | ) | ||
|
|
|
|
Common Stock |
Accumulated Other Comprehensive |
Accumulated |
Total Shareholders’ |
Noncontrolling |
Total |
|||||||||||||||||||||||
Shares |
Amount |
Income |
Deficit |
Equity |
Interests |
Equity |
||||||||||||||||||||||
Balance, December 31, 2020 |
70,178,428 | $ | 160,965 | $ | — | $ | (80,133 | ) | $ | 80,832 | $ | 4,338 | $ | 85,170 | ||||||||||||||
Net income (loss) |
— | — | — | (2,877 | ) | (2,877 | ) | 369 | (2,508 | ) | ||||||||||||||||||
Stock-based compensation |
— | 427 | — | — | 427 | — | 427 | |||||||||||||||||||||
Distributions paid to noncontrolling interests |
— | — | — | — | — | (449 | ) | (449 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2021 |
70,178,428 | $ | 161,392 | $ | — | $ | (83,010 | ) | $ | 78,382 | $ | 4,258 | $ | 82,640 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock |
Accumulated Other Comprehensive |
Accumulated |
Total Shareholders’ |
Noncontrolling |
Total |
|||||||||||||||||||||||
Shares |
Amount |
Income |
Deficit |
Equity |
Interests |
Equity |
||||||||||||||||||||||
Balance, December 31, 2021 |
89,026,997 | $ | 228,595 | $ | 18 | $ | (123,424 | ) | $ | 105,189 | $ | 178,490 | $ | 283,679 | ||||||||||||||
Net income (loss), net of the net income attributable to redeemable noncontrolling interests |
— | — | — | (30,811 | ) | (30,811 | ) | 3,799 | (27,012 | ) | ||||||||||||||||||
Issuance of common stock under stock-based awards |
489,516 | — | — | — | — | — | — | |||||||||||||||||||||
Stock-based compensation |
— | 1,061 | — | — | 1,061 | — | 1,061 | |||||||||||||||||||||
Other comprehensive income |
— | — | 46 | — | 46 | — | 46 | |||||||||||||||||||||
Distributions paid to noncontrolling interests |
— | — | — | — | — | (5,726 | ) | (5,726 | ) | |||||||||||||||||||
Other equity transactions |
— | — | — | — | — | 161 | 161 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance, March 31, 2022 |
89,516,513 | $ | 229,656 | $ | 64 | $ | (154,235 | ) | $ | 75,485 | $ | 176,724 | $ | 252,209 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Operating activities: |
||||||||
Net loss |
$ | (26,432 | ) | $ | (2,508 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
24,731 | 4,490 | ||||||
Stock-based compensation |
1,061 | 427 | ||||||
Non-cash interest expense |
12,105 | — | ||||||
Amortization of deferred financing costs and accretion of discount on long-term debt |
30 | 478 | ||||||
Deferred income taxes |
307 | — | ||||||
Other non-cash items |
607 | (3,276 | ) | |||||
Changes in operating assets and liabilities, net of acquisitions: |
||||||||
Accounts receivable |
(4,922 | ) | (1,902 | ) | ||||
Prepaid expenses and other assets |
1,510 | 968 | ||||||
Accounts payable and other liabilities |
(207 | ) | 8,627 | |||||
Operating lease liabilities and right-of-use |
528 | 445 | ||||||
|
|
|
|
|||||
Net cash provided by operating activities |
9,318 | 7,749 | ||||||
|
|
|
|
|||||
Investing activities: |
||||||||
Purchases of property and equipment |
(9,878 | ) | (1,173 | ) | ||||
Other investing activities |
3 | (4,588 | ) | |||||
|
|
|
|
|||||
Net cash used in investing activities |
(9,875 | ) | (5,761 | ) | ||||
|
|
|
|
|||||
Financing activities: |
||||||||
Proceeds from revolving loan |
10,000 | — | ||||||
Principal payments on revolving loan |
(10,000 | ) | — | |||||
Proceeds from long-term debt |
5,539 | 78,750 | ||||||
Principal payments on long-term debt |
(4,039 | ) | (99 | ) | ||||
Principal payments on finance leases |
(2,394 | ) | (699 | ) | ||||
Payment of debt issuance costs |
— | (1,162 | ) | |||||
Distributions paid to noncontrolling interests |
(6,726 | ) | (449 | ) | ||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
(7,620 | ) | 76,341 | |||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
(8,177 | ) | 78,329 | |||||
Cash and cash equivalents, beginning of period |
48,419 | 44,396 | ||||||
|
|
|
|
|||||
Cash and cash equivalents, end of period |
$ | 40,242 | $ | 122,725 | ||||
|
|
|
|
|||||
Supplemental disclosure of cash flow information: |
||||||||
Interest paid |
$ | 14,606 | $ | 195 | ||||
Income taxes paid, net |
(10 | ) | (39 | ) | ||||
Supplemental disclosure of non-cash investing and financing activities: |
||||||||
Interest payable-in-kind |
12,105 | — | ||||||
Property and equipment purchases in accounts payable and other accrued liabilities |
6,118 | 306 |
(in thousands) |
||||
Assets acquired: |
||||
Cash and cash equivalents |
$ | 26,125 | ||
Net working capital |
14,221 | |||
Property and equipment |
205,940 | |||
Operating lease right-of-use |
69,919 | |||
Goodwill |
456,281 | |||
Intangibles – Customer contracts |
266,224 | |||
Intangibles – Trade names |
69,108 | |||
Intangibles – Third party management agreements |
10,200 | |||
Intangibles – Certificates of need |
69,558 | |||
Other assets |
8,170 | |||
|
|
|||
1,195,746 | ||||
|
|
|||
Liabilities assumed: |
||||
Equipment debt |
54,673 | |||
Obligations under finance leases |
9,041 | |||
Obligations under operating leases |
74,290 | |||
Deferred tax liabilities |
52,760 | |||
Other liabilities |
7,189 | |||
|
|
|||
197,953 | ||||
|
|
|||
Net assets acquired |
997,793 | |||
Less redeemable noncontrolling interests |
37,040 | |||
Less noncontrolling interests |
175,137 | |||
|
|
|||
Purchase price |
$ | 785,616 | ||
|
|
(in thousands) |
March 31, 2022 |
December 31, 2021 |
||||||
Medical equipment |
$ | 233,510 | $ | 227,796 | ||||
Leasehold improvements |
40,764 | 39,763 | ||||||
Equipment under finance leases |
33,196 | 34,597 | ||||||
Office and computer equipment |
17,794 | 16,701 | ||||||
Transportation and service equipment |
8,980 | 8,996 | ||||||
Furniture and fixtures |
3,336 | 3,130 | ||||||
Construction in progress |
7,257 | 6,423 | ||||||
|
|
|
|
|||||
344,837 | 337,406 | |||||||
Less accumulated depreciation |
97,699 | 78,284 | ||||||
|
|
|
|
|||||
$ | 247,138 | $ | 259,122 | |||||
|
|
|
|
(in thousands) |
Radiology |
Oncology |
Total |
|||||||||
Balance, December 31, 2021 |
$ | 681,993 | $ | 158,360 | $ | 840,353 | ||||||
Adjustments |
360 | 161 | 521 | |||||||||
|
|
|
|
|
|
|||||||
Balance, March 31, 2022 |
$ | 682,353 | $ | 158,521 | $ | 840,874 | ||||||
|
|
|
|
|
|
Weighted Average Useful Life (in years) |
March 31, 2022 |
December 31, 2021 |
||||||||||||||||||||||||||
(dollars in thousands) |
Gross Carrying Amount |
Accumulated Amortization |
Other Intangible Assets, Net |
Gross Carrying Amount |
Accumulated Amortization |
Other Intangible Assets, Net |
||||||||||||||||||||||
Finite-lived intangible assets: |
||||||||||||||||||||||||||||
Customer contracts |
20 | $ | 266,224 | $ | (7,764 | ) | $ | 258,460 | $ | 266,224 | $ | (4,437 | ) | $ | 261,787 | |||||||||||||
Trade names |
18 | 77,466 | (7,337 | ) | 70,129 | 77,466 | (6,054 | ) | 71,412 | |||||||||||||||||||
Management agreements |
17 | 10,200 | (350 | ) | 9,850 | 10,200 | (200 | ) | 10,000 | |||||||||||||||||||
Other |
4 | 4,814 | (3,654 | ) | 1,160 | 4,814 | (3,425 | ) | 1,389 | |||||||||||||||||||
Total |
$ | 358,704 | $ | (19,105 | ) | 339,599 | $ | 358,704 | $ | (14,116 | ) | 344,588 | ||||||||||||||||
Certificates of Need |
69,558 | 69,558 | ||||||||||||||||||||||||||
Total other intangible assets |
$ | 409,157 | $ | 414,146 | ||||||||||||||||||||||||
(in thousands) |
||||
Year ending December 31: |
||||
2022 (remaining nine months) |
$ | 14,825 | ||
2023 |
18,837 | |||
2024 |
18,132 | |||
2025 |
17,475 | |||
2026 |
17,421 | |||
Thereafter |
252,909 | |||
$ | 339,599 | |||
March 31, |
December 31, |
|||||||
(in thousands) |
2022 |
2021 |
||||||
2028 Senior Notes |
$ | 375,000 | $ | 375,000 | ||||
2025 Senior Notes |
475,000 | 475,000 | ||||||
Subordinated Notes |
384,575 | 372,470 | ||||||
Equipment Debt |
60,327 | 58,827 | ||||||
1,294,902 | 1,281,297 | |||||||
Debt discount and deferred issuance costs |
(69,535 | ) | (68,912 | ) | ||||
1,225,367 | 1,212,385 | |||||||
Less current portion |
15,667 | 14,789 | ||||||
Long-term debt, net of current portion |
$ | 1,209,700 | $ | 1,197,596 | ||||
(in thousands) |
||||
Year ending December 31: |
||||
2022 (remaining nine months) |
$ | 11,485 | ||
2023 |
16,900 | |||
2024 |
14,140 | |||
2025 |
485,404 | |||
2026 |
3,732 | |||
Thereafter |
763,241 | |||
$ | 1,294,902 | |||
(in thousands) |
March 31, 2022 |
December 31, 2021 |
||||||
Obligations under finance leases |
$ | 20,017 | $ | 22,411 | ||||
Less current portion |
6,031 | 6,460 | ||||||
Non-current obligations under finance leases |
$ | 13,986 | $ | 15,951 | ||||
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Amortization expense for equipment under finance leases |
$ | 1,271 | $ | 916 | ||||
Interest expense on finance lease liabilities |
298 | 181 | ||||||
Finance lease cost |
$ | 1,569 | $ | 1,097 | ||||
(in thousands) |
||||
Year ending December 31: |
||||
2022 (remaining nine months) |
$ | 5,213 | ||
2023 |
5,666 | |||
2024 |
5,236 | |||
2025 |
3,411 | |||
2026 |
1,760 | |||
Thereafter |
665 | |||
|
|
|||
Total minimum lease payments |
21,951 | |||
Less amount of lease payments representing interest |
1,934 | |||
|
|
|||
Present value of future minimum lease payments |
20,017 | |||
Less current portion |
6,031 | |||
|
|
|||
Non-current obligations under finance leases |
$ | 13,986 | ||
|
|
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Weighted average remaining lease term – finance leases (years) |
3.7 | 4.8 | ||||||
Weighted average discount rate – finance leases |
5.0 | % | 4.6 | % |
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Operating cash flows from finance leases |
$ | 298 | $ | 181 | ||||
Equipment acquired in exchange for finance lease obligations |
— | 617 |
March 31, |
December 31, |
|||||||
(in thousands) |
2022 |
2021 |
||||||
Obligations under operating leases |
$ | 200,418 | $ | 205,169 | ||||
Less current portion |
20,764 | 20,794 | ||||||
|
|
|
|
|||||
Non-current obligations under operating leases |
$ | 179,654 | $ | 184,375 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Operating lease cost |
$ | 9,666 | $ | 5,094 | ||||
Variable lease cost |
1,936 | 959 | ||||||
Short-term lease cost |
475 | 43 | ||||||
|
|
|
|
|||||
Total operating lease cost |
$ | 12,077 | $ | 6,096 | ||||
|
|
|
|
(in thousands) |
||||
Year ending December 31: |
||||
2022 (remaining nine months) |
$ | 20,485 | ||
2023 |
34,247 | |||
2024 |
30,930 | |||
2025 |
27,895 | |||
2026 |
23,377 | |||
Thereafter |
178,953 | |||
|
|
|||
Total minimum lease payments |
315,887 | |||
Less amount of lease payments representing interest |
115,469 | |||
|
|
|||
Present value of future minimum lease payments |
200,418 | |||
Less current portion |
20,764 | |||
|
|
|||
Non-current obligations under operating leases |
$ | 179,654 | ||
|
|
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Weighted average remaining lease term – operating leases (years) |
11.4 | 12.5 | ||||||
Weighted average discount rate – operating leases |
7.7 | % | 7.4 | % |
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Operating cash flows from operating leases |
$ | 9,130 | $ | 4,649 | ||||
Right-of-use |
801 | 656 |
March 31, |
December 31, |
|||||||
(in thousands) |
2022 |
2021 |
||||||
Accrued compensation and related expenses |
$ | 34,283 | $ | 26,486 | ||||
Accrued interest expense |
18,821 | 16,840 | ||||||
MAAPP funds (Note 23) |
1,093 | 2,398 | ||||||
Other |
31,279 | 42,089 | ||||||
|
|
|
|
|||||
Total |
$ | 85,476 | $ | 87,813 | ||||
|
|
|
|
(in thousands) |
||||
Balance, December 31, 2021 |
$ | 37,469 | ||
Net income attributable to redeemable noncontrolling interests |
580 | |||
Distribution paid to redeemable noncontrolling interests |
(1,000 | ) | ||
|
|
|||
Balance, March 31, 2022 |
$ | 37,049 | ||
|
|
Fair Value as of March 31, 2022 |
Fair Value as of December 31, 2021 |
|||||||||||||||||||||||||||||||
(in thousands) |
Level 1 |
Level 2 |
Level 3 |
Total |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||||||||||||||
Current and long-term assets: |
||||||||||||||||||||||||||||||||
Interest rate contracts |
$ | — | $ | 25 | $ | — | $ | 25 | $ | — | $ | 3 | $ | — | $ | 3 | ||||||||||||||||
Current and long-term liabilities: |
||||||||||||||||||||||||||||||||
Derivative in subordinated notes |
$ | — | $ | — | $ | 7,692 | $ | 7,692 | $ | — | $ | — | $ | 7,522 | $ | 7,522 | ||||||||||||||||
Interest rate contracts |
$ | — | $ | 14 | $ | — | $ | 14 | $ | — | $ | 53 | $ | — | $ | 53 |
(in thousands) |
||||
Balance, December 31, 2021 |
$ | 7,522 | ||
Change in fair value |
170 | |||
|
|
|||
Balance, March 31, 2022 |
$ | 7,692 | ||
|
|
March 31, |
December 31, |
|||||||
(in thousands) |
2022 |
2021 |
||||||
2028 Senior Notes |
$ | 292,500 | $ | 345,938 | ||||
2025 Senior Notes |
389,500 | 446,500 | ||||||
Subordinated Notes |
310,376 | 323,620 | ||||||
Equipment Debt |
59,118 | 56,879 | ||||||
|
|
|
|
|||||
Total |
$ | 1,051,494 | $ | 1,172,937 | ||||
|
|
|
|
March 31, |
December 31, |
|||||||
(in thousands) |
2022 |
2021 |
||||||
Financial assets measured at amortized cost: |
||||||||
Cash and cash equivalents |
$ | 40,242 | $ | 48,419 | ||||
Accounts receivable |
126,480 | 121,525 | ||||||
|
|
|
|
|||||
$ | 166,722 | $ | 169,944 | |||||
|
|
|
|
|||||
Financial liabilities measured at amortized cost: |
||||||||
Accounts payable |
$ | 34,118 | $ | 34,326 | ||||
Current portion of long-term debt |
15,667 | 14,789 | ||||||
Current portion of leases |
26,795 | 27,254 | ||||||
Non-current portion of long-term debt |
1,209,700 | 1,197,596 | ||||||
Non-current portion of leases |
193,640 | 200,326 | ||||||
Other accrued liabilities |
85,476 | 87,813 | ||||||
|
|
|
|
|||||
$ | 1,565,396 | $ | 1,562,104 | |||||
|
|
|
|
|||||
Financial liabilities measured at fair value through earnings: |
||||||||
Derivative in subordinated notes |
$ | 7,692 | $ | 7,522 | ||||
|
|
|
|
|||||
Financial assets measured at fair value through other comprehensive income: |
||||||||
Interest rate contracts |
$ | 25 | $ | 3 | ||||
|
|
|
|
|||||
Financial liabilities measured at fair value through other comprehensive income: |
||||||||
Interest rate contracts |
$ | 14 | $ | 53 | ||||
|
|
|
|
Number of RSUs |
Weighted- Average Grant Date Fair Value |
Aggregate Fair Value (in thousands) |
||||||||||
Outstanding and unvested at December 31, 2021 |
2,029,032 | $ | 2.41 | |||||||||
Granted |
799,085 | 1.10 | $ | 875 | ||||||||
Vested |
(489,516 | ) | 3.19 | $ | 1,561 | |||||||
|
|
|||||||||||
Outstanding and unvested at March 31, 2022 |
2,338,601 | $ | 1.80 | $ | 4,210 | |||||||
|
|
|
|
|
|
Number of Options |
Weighted- Average Exercise price |
Weighted- Average Remaining Contractual Term (Years) |
Aggregate Intrinsic Value (in thousands) |
|||||||||||||
Outstanding at December 31, 2021 |
5,680,120 | $ | 2.54 | 4.4 | $ | 2,344 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Outstanding at March 31, 2022 |
5,680,120 | $ | 2.54 | 4.1 | $ | 1,144 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Exercisable at March 31, 2022 |
5,084,519 | $ | 2.45 | 4.0 | $ | 1,144 | ||||||||||
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Patient fee payors: |
||||||||
Commercial |
$ | 69,101 | $ | 50,799 | ||||
Medicare |
21,172 | 8,184 | ||||||
Medicaid |
3,102 | 1,831 | ||||||
Other patient revenue |
3,274 | 2,652 | ||||||
|
|
|
|
|||||
96,649 | 63,466 | |||||||
Hospitals and healthcare providers |
87,459 | — | ||||||
Other revenue |
2,155 | 497 | ||||||
|
|
|
|
|||||
$ | 186,263 | $ | 63,963 | |||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Employee compensation |
$ | 77,365 | $ | 23,118 | ||||
Third-party services and professional fees |
29,177 | 6,859 | ||||||
Rent and utilities |
12,477 | 7,684 | ||||||
Reading fees |
11,498 | 9,984 | ||||||
Administrative |
11,624 | 4,356 | ||||||
Medical supplies and other |
15,338 | 3,141 | ||||||
|
|
|
|
|||||
$ | 157,479 | $ | 55,142 | |||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Loss on disposal of property and equipment, net |
$ | 202 | $ | 90 | ||||
Other, net |
(256 | ) | — | |||||
|
|
|
|
|||||
$ | (54 | ) | $ | 90 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Earnings from equity method investments |
$ | (240 | ) | $ | — | |||
Fair value adjustment on derivative |
170 | — | ||||||
Gain on conversion of debt to equity investment (Note 19) |
— | (3,360 | ) | |||||
Other, net |
59 | (6 | ) | |||||
$ | (11 | ) | $ | (3,366 | ) | |||
Three Months Ended March 31, |
||||||||
(in thousands, except share and per share amounts) |
2022 |
2021 |
||||||
Net loss attributable to common shareholders |
$ | 30,811 | $ | (2,877 | ) | |||
Weighted average common shares outstanding: |
||||||||
Basic and diluted |
89,074,282 | 70,178,428 | ||||||
Net loss per share attributable to common shareholders: |
||||||||
Basic and diluted |
$ | (0.35 | ) | $ | (0.04 | ) | ||
Employee stock options, warrants and restricted stock units excluded from the computation of diluted per share amounts as their effect would be antidilutive |
1,844,044 | 1,811,298 | ||||||
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Radiology |
$ | 155,340 | $ | 63,963 | ||||
Oncology |
30,923 | — | ||||||
$ | 186,263 | $ | 63,963 | |||||
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Adjusted EBITDA: |
||||||||
Radiology |
$ | 28,589 | $ | 10,843 | ||||
Oncology |
10,033 | — | ||||||
Corporate |
(6,604 | ) | (1,640 | ) | ||||
$ | 32,018 | $ | 9,203 | |||||
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Net loss |
$ | (26,432 | ) | $ | (2,508 | ) | ||
Interest expense |
28,681 | 8,368 | ||||||
Income tax expense |
563 | 65 | ||||||
Depreciation and amortization |
24,731 | 4,490 | ||||||
EBITDA |
27,543 | 10,415 | ||||||
Adjustments: |
||||||||
Stock-based compensation |
1,061 | 427 | ||||||
Acquisition-related costs |
382 | 1,279 | ||||||
Loss on disposal of property and equipment, net |
202 | 90 | ||||||
Settlement and related recoveries |
(137 | ) | (24 | ) | ||||
Gain on conversion of debt to equity investment |
— | (3,360 | ) | |||||
Severance, restructuring and other charges |
2,453 | — | ||||||
Other losses (gains), net |
182 | (69 | ) | |||||
Deferred rent expense |
332 | 445 | ||||||
Adjusted EBITDA |
$ | 32,018 | $ | 9,203 | ||||
March 31, |
December 31, |
|||||||
(in thousands) |
2022 |
2021 |
||||||
Identifiable assets: |
||||||||
Radiology |
$ | 1,434,449 | $ | 1,451,905 | ||||
Oncology |
432,931 | 440,416 | ||||||
Corporate |
24,103 | 26,505 | ||||||
Total |
$ | 1,891,483 | $ | 1,918,826 | ||||
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Capital expenditures: |
||||||||
Radiology |
$ | 8,812 | $ | 1,173 | ||||
Oncology |
976 | — | ||||||
Corporate |
90 | — | ||||||
Total |
$ | 9,878 | $ | 1,173 | ||||
Three Months Ended March 31, |
||||||||
2022 |
2021 |
|||||||
Radiology |
83 | % | 100 | % | ||||
Oncology |
17 | % | — | |||||
|
|
|
|
|||||
100 | % | 100 | % | |||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Patient fee payors: |
||||||||
Commercial |
$ | 69,101 | $ | 50,799 | ||||
Medicare |
21,172 | 8,184 | ||||||
Medicaid |
3,102 | 1,831 | ||||||
Other patient revenue |
3,274 | 2,652 | ||||||
|
|
|
|
|||||
96,649 | 63,466 | |||||||
Hospitals and healthcare providers |
87,459 | — | ||||||
Other revenue |
2,155 | 497 | ||||||
|
|
|
|
|||||
$ | 186,263 | $ | 63,963 | |||||
|
|
|
|
March 31, |
December 31, |
|||||||
2022 |
2021 |
|||||||
Radiology sites |
201 | 199 | ||||||
Oncology sites |
33 | 34 | ||||||
|
|
|
|
|||||
234 | 233 | |||||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Revenues |
$ | 186,263 | $ | 63,963 | ||||
Operating expenses: |
||||||||
Cost of operations, excluding depreciation and amortization |
157,479 | 55,142 | ||||||
Depreciation and amortization |
24,731 | 4,490 | ||||||
Stock-based compensation |
1,061 | 427 | ||||||
Other operating losses (gains), net |
(54 | ) | 90 | |||||
|
|
|
|
|||||
Total operating expenses |
183,217 | 60,149 | ||||||
|
|
|
|
|||||
Income from operations |
3,046 | 3,814 | ||||||
Other expense (income): |
||||||||
Interest expense |
28,681 | 8,368 | ||||||
Acquisition-related costs |
382 | 1,279 | ||||||
Settlement and related recoveries |
(137 | ) | (24 | ) | ||||
Other non-operating gains, net |
(11 | ) | (3,366 | ) | ||||
|
|
|
|
|||||
Total other expense, net |
28,915 | 6,257 | ||||||
|
|
|
|
|||||
Loss before income taxes |
(25,869 | ) | (2,443 | ) | ||||
Income tax expense |
563 | 65 | ||||||
|
|
|
|
|||||
Net loss |
(26,432 | ) | (2,508 | ) | ||||
Less: Net income attributable to noncontrolling interests |
4,379 | 369 | ||||||
|
|
|
|
|||||
Net loss attributable to common shareholders |
$ | (30,811 | ) | $ | (2,877 | ) | ||
|
|
|
|
|||||
Net loss per share attributable to common shareholders: |
||||||||
Basic and diluted |
$ | (0.35 | ) | $ | (0.04 | ) | ||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Radiology |
$ | 155,340 | $ | 63,963 | ||||
Oncology |
30,923 | — | ||||||
|
|
|
|
|||||
$ | 186,263 | $ | 63,963 | |||||
|
|
|
|
Three Months Ended March 31, |
||||||||||||||||
(in thousands) |
2022 |
2021 |
Change |
% Change |
||||||||||||
MRI scans |
214 | 87 | 127 | 146 | % | |||||||||||
PET/CT scans |
32 | 2 | 30 | 1,500 | % | |||||||||||
Other modalities |
294 | 259 | 35 | 14 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
540 | 348 | 192 | 55 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Oncology patient starts |
3 | — | 3 | nmf | ||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Employee compensation |
$ | 77,365 | $ | 23,118 | ||||
Third-party services and professional fees |
29,177 | 6,859 | ||||||
Rent and utilities |
12,477 | 7,684 | ||||||
Reading fees |
11,498 | 9,984 | ||||||
Administrative |
11,624 | 4,356 | ||||||
Medical supplies and other |
15,338 | 3,141 | ||||||
|
|
|
|
|||||
$ | 157,479 | $ | 55,142 | |||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Net loss |
$ | (26,432 | ) | $ | (2,508 | ) | ||
Interest expense |
28,681 | 8,368 | ||||||
Income tax expense |
563 | 65 | ||||||
Depreciation and amortization |
24,731 | 4,490 | ||||||
|
|
|
|
|||||
EBITDA |
27,543 | 10,415 | ||||||
Adjustments: |
||||||||
Stock-based compensation |
1,061 | 427 | ||||||
Acquisition-related costs |
382 | 1,279 | ||||||
Loss on disposal of property and equipment, net |
202 | 90 | ||||||
Settlement and related recoveries |
(137 | ) | (24 | ) | ||||
Gain on conversion of debt to equity investment |
— | (3,360 | ) | |||||
Severance, restructuring and other charges |
2,453 | — | ||||||
Other losses (gains), net |
182 | (69 | ) | |||||
Deferred rent expense |
332 | 445 | ||||||
|
|
|
|
|||||
Adjusted EBITDA |
$ | 32,018 | $ | 9,203 | ||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Adjusted EBITDA: |
||||||||
Radiology |
$ | 28,589 | $ | 10,843 | ||||
Oncology |
10,033 | — | ||||||
Corporate |
(6,604 | ) | (1,640 | ) | ||||
|
|
|
|
|||||
$ | 32,018 | $ | 9,203 | |||||
|
|
|
|
Three Months Ended March 31, |
||||||||
(in thousands) |
2022 |
2021 |
||||||
Cash and cash equivalents at beginning of period |
$ | 48,419 | $ | 44,396 | ||||
Net cash provided by operating activities |
9,318 | 7,749 | ||||||
Net cash used in investing activities |
(9,875 | ) | (5,761 | ) | ||||
Net cash provided by (used in) financing activities |
(7,620 | ) | 76,341 | |||||
|
|
|
|
|||||
Cash and cash equivalents at end of period |
$ | 40,242 | $ | 122,725 | ||||
|
|
|
|
Exhibit Number |
Description of Exhibit | |
10.1 | Separation Agreement and General Release by and between Alliance HealthCare Services, Inc., Akumin Inc. and Rhonda Longmore-Grund, dated as of April 15, 2022 | |
31.1 | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) | |
31.2 | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) | |
32.1 | Certification of the Chief Executive Officer and the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 | |
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101) |
AKUMIN INC. | ||
By: | /s/ Riadh Zine | |
Riadh Zine Chairman, Chief Executive Officer and Director |
Exhibit 10.1
CONFIDENTIAL SEPARATION AGREEMENT
AND GENERAL RELEASE
This Separation Agreement and Release of (Agreement) is made by and between Rhonda Longmore-Grund (Executive), Alliance HealthCare Services, Inc., a Delaware corporation (Alliance HealthCare Services), and Akumin Inc., an Ontario corporation (Akumin) (collectively referred to herein as the Parties), with reference to the following facts:
A. On or about March 10, 2016, Executive became an Executive of Alliance HealthCare Services.
B. On or about March 10, 2016, Alliance HealthCare Services and Executive executed an Executive Severance Agreement (the Severance Agreement), which is incorporated herein by reference.
C. In September 2021, Akumin acquired Alliance HealthCare Services and Alliance HealthCare Services became an indirect wholly-owned subsidiary of Akumin.
D. Following its acquisition of Alliance HealthCare Services, Akumin named Executive the President and Co-CEO of Akumin.
E. Effective March 18, 2022 (the Separation Date), Executives employment with Alliance HealthCare Services, and all of their affiliated and related entities (collectively, Company) was terminated Without Cause, as that term is defined in the Severance Agreement.
F. As of the Separation Date, Executive no longer is an Officer of Company, such that all signing authorities held by Executive in connection with and in furtherance of Executives Officer duties ended on the Separation Date.
G. As of the Separation Date, Executive no longer is a Director of Company, except that Executive remains a Director of Akumin Inc., the publicly traded entity (referred to herein as Corporation), until the Effective Date of this Agreement set forth in paragraph 16 below. All signing authorities held by Executive in connection with and in furtherance of Executives Director duties (with the exception of Executives duties as a Director of Corporation) ended on the Separation Date.
H. Under the terms of the Severance Agreement, Executive is entitled to certain severance pay and benefits if Executive signs (and does not revoke) a release of all claims that Executive may have against Company, and their past or current officers, directors, and/or employees, relating to or arising out of Executives employment (or termination of employment) with Company in a form prescribed by Company. For purposes of the severance pay and benefits due under the Severance Agreement, the Parties agree that Executives most recent annual base salary was $730,012.50 and that Executives 2021 Target Bonus was $620,510.63 (85% of Executives annual base salary of $732,012.50).
I. It is the intention of the Parties that Executive receive the severance pay and benefits set forth in the Severance Agreement under the terms and conditions set forth therein.
2
J. In entering into this Agreement, none of the Parties makes any admissions whatsoever as to any allegations or claims that may have been made by the other nor does this Agreement constitute an admission that Company or any other Release (as defined herein) has violated any law, rule, regulation, contractual right, or any other legal duty or obligation or that Executive has any viable claim against Company or any other Release. Each Release denies all liability.
NOW, THEREFORE, the Parties agree as follows:
1. General Release. In consideration for the severance pay and benefits to be provided under the Severance Agreement, Executive, for Executive and Executives agents, representatives, successors, heirs and assigns, does hereby unconditionally release and forever discharge Company (plus its parents, subsidiaries, affiliates, predecessors, successors, and any other entity related to it and all of its and their past and present officers, directors, shareholders, attorneys, employees, agents, representatives, assigns, and anyone else acting for any of them all together Releases), of and from any and all claims, demands, claims for relief, actions or causes of action of any type or nature whatsoever that now exist, known or unknown, suspected or unsuspected, to the fullest extent allowed by law, based upon, relating to, and/or arising out of Executives employment with Company (including, but not limited to, any claims arising out of Executives Officer and/or Director positions with Company); and/or termination thereof. Such claims include, but are not limited to, (i) any and all claims related to discrimination, harassment, or retaliation based on age (including Age Discrimination in Employment Act or ADEA claims), benefit entitlement, sex, sexual orientation, gender, gender identity, gender
3
expression, race, color, concerted activity, religion, national origin, ethnicity, citizenship, immigration status, genetic information, disability, income source, jury duty, leave rights, military status, veteran status, parental status, protected off-duty conduct, union activity, whistleblower activity (including Sarbanes-Oxley, Dodd-Frank, and False Claims Act claims), other legally protected status or activity; or any allegation that payment under this Agreement was affected by any such discrimination, harassment or retaliation;; (ii) all claims for breach of any express or implied contracts, covenants, promises or duties, intellectual property or other proprietary rights; (iii) all claims for pay, compensation, wages or benefits, including bonuses, commissions, equity, expenses, incentives, insurance, paid/unpaid leave, profit sharing, or separation pay/benefits; (iv) all claims for compensatory, emotional or mental distress damages, punitive or liquidated damages, costs, fees or other expenses, including attorneys fees; (v) unlawful or tortious conduct such as assault or battery; background check violations; defamation; detrimental reliance; fiduciary breach; fraud; indemnification; intentional or negligent infliction of emotional distress; interference with contractual or other legal rights; invasion of privacy; loss of consortium; misrepresentation; negligence (including negligent hiring, retention, or supervision); personal injury; promissory estoppel; public policy violation; retaliatory discharge; safety violations; posting or records-related violations; wrongful discharge; or other federal, state or local statutory or common law matters; and (vi) any participation in any class or collective action against any Release.
4
2. Release Exclusions and Other Exceptions. The release provisions of this Agreement exclude (i) claims arising after Executive signs this Agreement; (ii) claims for breach of this Agreement; and (iii) claims that cannot be waived, such as Executives entitlement, if any, to medical insurance, workers compensation benefits, retirement benefits, unemployment benefits or continuation coverage under COBRA. Nothing in any part of this Agreement limits Executives rights to: (i) file a charge or complaint with any administrative agency, such as the U.S. Equal Employment Opportunity Commission, or a state fair employment practices agency or communicate directly with or provide information (including testimony) to an agency, or otherwise participate in an agency proceeding; (ii) testify accurately in administrative, legislative, or judicial proceeding relating to alleged criminal conduct or alleged sexual harassment, pursuant to a written request from an administrative agency or legislature, or in court pursuant to subpoena or court order; or (iii) communicate with law enforcement or Executives attorney. Executive nonetheless give up all rights to any money or other individual relief based on any agency or judicial decision, including class or collective action rulings. However, Executive may receive money properly awarded by the U.S. Securities and Exchange Commission (SEC) as a reward for providing information to that agency.
3. Release of Unknown Claims. This Agreement is intended to encompass all claims, known and unknown, foreseen and unforeseen, that Executive may have, whether arising in tort, contract, law, equity, or whether based upon a violation of any federal, state, local or administrative statute, law, regulation or ordinance. It is further understood that all rights under Section 1542 of the California Civil Code, and any similar state or federal law, are hereby expressly waived. Section 1542 provides as follows:
5
A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party.
4. Indemnification. Executive understands and agrees that Company and its attorneys are neither providing tax or legal advice, nor making representations regarding tax obligations or consequences, if any, related to this Agreement. Executive further agrees to assume any such tax obligations or consequences that may arise from this Agreement and to not seek any indemnification from Company in this regard. Executive agrees that in the event that any taxing body determines that additional taxes are due from Executive, Executive acknowledges and assumes all responsibility for the payment of any such taxes and agree to indemnify, defend and hold Company harmless for the payment of such taxes, and any failure to withhold. Executive further agrees to pay, on Companys behalf, any interest or penalties imposed as a consequence of such tax obligations, and to pay any judgments, penalties, taxes, costs and attorneys fees incurred by Company as a consequence of Executives failure to pay any taxes due.
5. Resignation from Publicly Traded Entitys Board of Directors. On the Effective Date of this Agreement set forth in paragraph 16 below, Executive agrees to resign as a Director of Akumin Inc., the publicly traded entity (referred to herein as Corporation). Executive agrees to execute all required documentation to effect such resignation on a timely basis. Executive acknowledges and confirms that all signing authorities held by Executive in connection with and in furtherance of her Director duties with Corporation shall immediately cease and terminate on the Effective Date of this Agreement.
6
6. Non-Disparagement. The Parties agree that they shall not, directly or indirectly through others, identifiably or anonymously, make any statement or engage in any conduct that has the purpose or effect of disparaging or reflecting negatively upon the other or, in the case of Company, any of its representatives, officers, directors, shareholders or employees. Specifically, and without limiting the generality of the foregoing, the Parties are prohibited from posting to the Internet or any website, dispersing through any electronic or printed medium, conveying to any member of the press or public (whether with or without attribution, anonymously or otherwise), any comment, information, documents, pictures, or any other content in any form that has the intent or is reasonably construed to have the intent to discredit, defame, harm, embarrass, or harass the other. However, nothing in this Agreement prevents Executive from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that Executive believes to be unlawful. The Parties agree that the remedy at law for any breach of the covenants contained in this paragraph would be inadequate, and that therefore the non-breaching party shall be entitled to injunctive relief thereon, in addition to such partys right to monetary damages.
7. Enhanced 2022 Target Bonus. In consideration for Executives additional promises set forth in Schedule A to this Agreement, which is hereby incorporated by reference herein, Company agrees to calculate the Target Bonus payment due under the Severance Agreement in an amount equal to one-and-one-half (1 1⁄2) times Executives
7
2021 Target Bonus (85% of Executives annual base salary of $732,012.50 ($620,510.63) x 1.5 = $930,765.95, minus legally required withholdings). Executive acknowledges and agrees that this calculation results in a larger Target Bonus payment than otherwise owed to Executive under the Severance Agreement as it is calculated based on the 2021 Target Bonus. The Parties agree that the Target Bonus payment in the gross amount of $930,765.95, minus legally required withholdings, is payable to Executive in accordance with the terms set forth in paragraphs 1 and 3(d) of the Severance Agreement.
8. Schedule A. In consideration for the Enhanced 2022 Target Bonus set forth in paragraph 7 of this Agreement, Executive agrees to the provisions set forth in Schedule A to this Agreement, which is incorporated by reference herein.
9. Severance Payments: To the fullest extent possible, the Parties intend that each payment or portion of a payment that is called for under this Agreement that could be treated as exempt from Internal Revenue Code Section 409A shall be treated as exempt from Code Section 409A and this Agreement shall be administered in a manner consistent with that intent, as reflected on Schedule B to this Agreement which is incorporated by reference herein.
10. Prevailing Party Attorneys Fees. In the event that any action or any other proceeding is instituted to enforce any right or obligation arising out ofthis Agreement, the prevailing party shall be entitled to recover such partys attorneys fees and other costs incurred, including those incurred in any appeal.
11. Heirs, Successors, and Assigns. This Agreement, and the terms and conditions herein, inure to the benefit of and are binding upon, the heirs, successors and assigns of the Parties.
8
12. No Representations/Entire Agreement. The Parties declare and represent that no promise, inducement or agreement not herein expressed or incorporated herein by reference has been made to them and they are relying on none; that this Agreement, including Schedule A to this Agreement, the Severance Agreement, and the Confidentiality and Non-Solicitation Agreement (collectively referred to herein as the Agreements),
9
which are hereby incorporated by reference, contain the entire agreement between the Parties; and that these Agreements supersede any and all alleged prior or contemporaneous written or oral agreements, representations, or promises on the subject matters covered herein and therein. This Agreement cannot be modified except in a written document signed by all Parties.
13. Governing Law. This Agreement shall be interpreted and enforced under federal law if that law governs, and otherwise under the laws of the State of California, without regard to its choice of law provisions.
14. Severability. Should any provision of this Agreement be declared or determined by any court to be illegal or invalid, the validity of the remaining parts, terms, or provisions shall not be affected thereby and any said illegal or invalid part, term or provision shall be deemed not to be a part of this Agreement.
15. Voluntary Agreement. Executive understands and acknowledges that Executive has a period of twenty-one (21) days within which to review and decide whether to sign this Agreement after receiving it, although Executive may sign the Agreement at any time during the twenty-one (21)-day consideration period. Executive must sign and return this Agreement to Company within the twenty-one (21)-day consideration period if Executive wants to receive the severance pay and benefits provided in the Severance Agreement. If Executive signs this Agreement, Executive has seven (7) days from the date Executive signs this Agreement to revoke the Agreement. Any revocation must be in writing and must be delivered to Matthew Cameron (Chief Legal Officer and Corporate Secretary) at matt.cameron@akumin.com, on or before the seventh (7th) day after
10
Executives execution of the Agreement. If Executive revokes this Agreement, then this Agreement shall not be effective or enforceable, and Executive will not be entitled to receive the severance pay and benefits set forth in the Severance Agreement.
16. Other Representations. Executive agrees: (i) Executive was advised in writing, by getting a copy of this Agreement, to consult with an attorney before signing below; (ii) Executive acknowledges that this Agreement is a negotiated severance agreement under California law because it is voluntary, deliberate, and informed; provides consideration of value to Executive; and provides Executive with notice and an opportunity to retain an attorney to the extent that Executive is not already represented by an attorney; (iii) Executive has relied on Executives own informed judgment, or that of Executives attorney (if any), in deciding whether to sign this Agreement; and (iv) Executive is signing this Agreement knowingly and voluntarily.
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11
17. Effective Date. This Agreement shall be effective upon the expiration of the seven (7)-day revocation period set forth in paragraph 14 above.
Dated: April 13, 2022 | ||
/s/ RHONDA LONGMORE-GRUND | ||
RHONDA LONGMORE-GRUND |
Dated: April 15, 2022 | ALLIANCE HEALTHCARE SERVICES, INC. | |||||
By: | /s/ Riadh Zine | |||||
Name: | Riadh Zine | |||||
Its: | Director |
Dated: April 15, 2022 | AKUMIN, INC. | |||||
By: | /s/ Riadh Zine | |||||
Name: | Riadh Zine | |||||
Its: | Chief Executive Officer |
12
SCHEDULE A
to CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE
Payment of All Compensation Owed. Executive acknowledges and agrees that Executive has been paid all compensation earned through the Separation Date (as defined in the Confidential Separation Agreement and General Release (Release Agreement)), including any accrued, unused vacation or PTO.
Treatment of Stock Options and Equity Entitlements. Executives stock options and equity entitlements will be treated in accordance with the applicable grant agreement and applicable plans related thereto.
Acknowledgment of Consideration. Executive acknowledges that the severance pay and benefits described in the Executive Severance Agreement represent amounts and benefits above and beyond those to which Executive would be entitled if Executive did not enter into the Release Agreement.
Promise Not to Sue. Executive promises not to sue any Release (as that term is defined in the Release Agreement) in court (Promise Not to Sue). This is different from the General Release in paragraph 1 of the Release Agreement. Besides releasing claims covered by the General Release, Executive agrees never to sue any Release for any reason covered by the General Release. Despite this Promise Not to Sue, however, Executive may file suit to enforce the Release Agreement or to challenge its validity under the ADEA. If Executive sues a Releasee in violation of this provision: (i) Executive shall be required to pay that Releases reasonable attorneys fees and other litigation costs incurred in defending against Executives suit; or alternatively (ii) Company can require Executive to return all but $100.00 of the severance pay and benefits provided to Executive under the Executive Severance Agreement and General Release. In that event, Company shall be excused from any remaining obligations that exist solely because of the Executive Severance Agreement and General Release.
Whistleblowing. Executive agrees that (i) no one has interfered with Executives ability to report within Company possible violations of any law, and (ii) it is Companys policy to encourage such reporting.
Future Cooperation. Executive agrees to be reasonably available to assist Company with transitioning Executives duties as well as with any investigations, legal claims, or other matters concerning anything related to Executives employment. Executive specifically agrees to use reasonable effort to be available to Company upon reasonable notice for interviews and fact investigations; to testify; and to voluntarily provide Company with any Company-related documents Executive possesses or controls. Cooperation does not mean Executive must provide information favorable to Company; it means only that you will upon Companys request provide information Executive possesses or controls. If Company requests Executives cooperation, Company will reimburse Executive for reasonable time at $1,000.00 per hour plus expenses, provided Executive submits appropriate documentation.
Confidentiality of Agreement. Executive will not communicate the terms of the Release Agreement to any third party, whether verbally or in writing, by any means, including by social
media such as Twitter and Facebook and the like. Any disclosure by Executive will cause Company irreparable harm that money cannot undo. Accordingly, violation of this section will entitle Company to temporary and permanent injunctive relief. Except as required by law, Executive has not disclosed and will not disclose any term of the Release Agreement to anyone except Executives immediate family members and/or legal/financial advisors. Each of them is bound by this provision, and a disclosure by any of them is a disclosure by Executive.
Individual Agreement. This Release Agreement has been negotiated individually and is not part of a group exit incentive or other termination program.
Other Representations. Executive agrees:
| Executive has been reimbursed for all reasonable and necessary business expenses that Executive incurred in the course and scope of her employment with Company; |
| Executive has not suffered any on the-job injury for which Executive has not already filed a claim, and the end of Executives employment is not related to any such injury; |
| Executive does not have any pending lawsuits against Company (as defined in the Release Agreement) or any other Releasee (as defined in the Release Agreement); |
Counterparts. The Release Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Furthermore, signatures delivered via facsimile transmission shall have the same force and effect as the originals thereof, except that any party has the right to insist on receipt of the original signature of the other party before complying with its own obligations under the Release Agreement.
2
Schedule B Severance Payments 409A Exemptions Severance Payment
Schedule Payment Exemption Status 5/17/2022 5/28/2022 6/11/2022 6/25/2022 7/9/2022 7/23/2022 8/6/2022 8/20/2022 9/3/2022 9/17/2022 10/1/2022 10/15/2022 10/29/2022 11/12/2022 11/26/2022 12/10/2022 12/24/2022 1/7/2023 1/21/2023 2/4/2023 2/18/2023 3/4/2023 3/18/2023 4/1/2023 4/15/2023 4/29/2023 5/13/2023 5/27/2023 6/10/2023 6/24/2023 7/8/2023 7/22/2023 8/5/2023 8/19/2023 9/2/2023 9/16/2023
Health Benefits Continuation
Annual salary
$
730,012.50
Gold HAS
$
2,546.00
x1.5 (18 months)
$
1,095,018.75
Dental Gold DPPO
$
163.99
Vision
$
26.07
Annual Target Bonus
$
620,510.63
Monthly Cost
$
2,736.06
x1.5 (18 months)
$
930,765.94
Total Benefits Payment 18 Months
$
49,249.08
Total Severance Payment - 18 months
$
2,025,784.69
Short term deferral (payment by March 15 2023)
$
(1,305,505.69
)
Separation pay (2 x 401K exemption)
$
(610,000.00
)
Compensation Exempt from 409A
$
(1,915,505.69
)
Compensation Subject to 409A
$
110,279.00
Severance Payment
Cumulative
Benefits Payment Schedule
Cumulative
60 days from termination date
$225,087.19
$
225,087.19
Short term deferral
$5,472.12
$
5,471.12
bi weekly payroll run
$ 51,448.50
$
276,535.69
Short term deferral
$1,250.77
$
6,722.89
bi weekly payroll run
$ 51,448.50
$
327,984.19
Short term deferral
$1,250.77
$
7,973.66
bi weekly payroll run
$ 51,448.50
$
379,432.69
Short term deferral
$1,250.77
$
9,224.43
bi weekly payroll run
$ 51,448.50
$
430,881.19
Short term deferral
$1,250.77
$
10,475.20
bi weekly payroll run
$ 51,448.50
$
482,329.69
Short term deferral
$1,250.77
$
11,725.97
bi weekly payroll run
$ 51,448.50
$
533,778.19
Short term deferral
$1,250.77
$
12,976.74
bi weekly payroll run
$ 51,448.50
$
585,226.69
Short term deferral
$1,250.77
$
14,227.51
bi weekly payroll run
$ 51,448.50
$
636,675.19
Short term deferral
$1,250.77
$
15,478.28
bi weekly payroll run
$ 51,448.50
$
688,123.69
Short term deferral
$1,250.77
$
16,729.05
bi weekly payroll run
$ 51,448.50
$
739,572.19
Short term deferral
$1,250.77
$
17,979.82
bi weekly payroll run
$ 51,448.50
$
791,020.69
Short term deferral
$1,250.77
$
19,230.59
bi weekly payroll run
$ 51,448.50
$
842,469.19
Short term deferral
$1,250.77
$
20,481.36
bi weekly payroll run
$ 51,448.50
$
893,917.69
Short term deferral
$1,250.77
$
21,732.13
bi weekly payroll run
$ 51,448.50
$
945,366.19
Short term deferral
$1,250.77
$
22,982.90
bi weekly payroll run
$ 51,448.50
$
996,814.69
Short term deferral
$1,250.77
$
24,233.67
bi weekly payroll run
$ 51,448.50
$
1,048,263.19
Short term deferral
$1,250.77
$
25,484.44
bi weekly payroll run
$ 51,448.50
$
1,099,711.69
Short term deferral
$1,250.77
$
26,735.21
bi weekly payroll run
$ 51,448.50
$
1,151,160.19
Short term deferral
$1,250.77
$
27,985.99
bi weekly payroll run
$ 51,448.50
$
1,202,608.69
Short term deferral
$1,250.77
$
29,236.76
bi weekly payroll run
$ 51,448.50
$
1,254,057.19
Short term deferral
$1,250.77
$
30,487.53
bi weekly payroll run
$ 51,448.50
$
1,305,505.69
Short term deferral
$1,250.77
$
31,738.30
bi weekly payroll run
$ 51,448.50
$
1,356,954.19
Separation pay
$1,250.77
$
32,989.07
bi weekly payroll run
$ 51,448.50
$
1,408,402.69
Separation pay
$1,250.77
$
34,239.84
bi weekly payroll run
$ 51,448.50
$
1,459,851.19
Separation pay
$1,250.77
$
35,490.61
bi weekly payroll run
$ 51,448.50
$
1,511,299.69
Separation pay
$1,250.77
$
36,741.38
bi weekly payroll run
$ 51,448.50
$
1,562,748.19
Separation pay
$1,250.77
$
37,992.15
bi weekly payroll run
$ 51,448.50
$
1,614,196.69
Separation pay
$1,250.77
$
39,242.92
bi weekly payroll run
$ 51,448.50
$
1,665,645.19
Separation pay
$1,250.77
$
40,493.69
bi weekly payroll run
$ 51,448.50
$
1,717,093.69
Separation pay
$1,250.77
$
41,744.46
bi weekly payroll run
$ 51,448.50
$
1,768,542.19
Separation pay
$1,250.77
$
42,995.23
bi weekly payroll run
$ 51,448.50
$
1,819,990.69
Separation pay
$1,250.77
$
44,246.00
bi weekly payroll run
$ 51,448.50
$
1,871,439.19
Separation pay
$1,250.77
$
45,496.77
bi weekly payroll run
$ 51,448.50
$
1,922,887.69
Partially Separation pay/partially subject to Section 409A
$1,250.77
$
46,747.54
bi weekly payroll run
$ 51,448.50
$
1,974,336.19
Subject to Section 409A
$1,250.77
$
47,998.31
bi weekly payroll run
$ 51,448.50
$
2,025,784.69
Subject to Section 409A
$1,250.77
$
49,249.08
Exhibit 31.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Riadh Zine, certify that:
1. | I have reviewed this report on Form 10-Q of Akumin Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Akumin Inc. | ||||||
Date: May 10, 2022 | By: | /s/ Riadh Zine | ||||
Riadh Zine Chief Executive Officer |
Exhibit 31.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, William Edward Larkin, certify that:
1. | I have reviewed this report on Form 10-Q of Akumin Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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; |
c. | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting. |
5. | The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
Akumin Inc. | ||||||
Date: May 10, 2022 | By: | /s/ William Edward Larkin | ||||
William Edward Larkin Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350 of chapter 63 of title 18 of the United States Code), the undersigned officer of Akumin Inc. (the Company), hereby certifies, to such officers knowledge, that:
This quarterly report on Form 10-Q for the quarterly period ended March 31, 2022 (the Report) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 10, 2022 | By: | /s/ Riadh Zine | ||||
Riadh Zine | ||||||
Chief Executive Officer |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350 of chapter 63 of title 18 of the United States Code), the undersigned officer of Akumin Inc. (the Company), hereby certifies, to such officers knowledge, that:
This quarterly report on Form 10-Q for the quarterly period ended March 31, 2022 (the Report) of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: May 10, 2022 | By: | /s/ William Edward Larkin | ||||
William Edward Larkin | ||||||
Chief Financial Officer |