UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): May 18, 2020
HealthLynked
Corp.
(Exact Name of Registrant as Specified in its Charter)
| Nevada | 47-1634127 | |
| (State of Incorporation) | (I.R.S. Employer Identification No.) | |
| 1726 Medical Blvd., Suite 101, Naples, Florida | 34110 | |
| (Address of Principal Executive Offices) | (ZIP Code) |
(239) 513-1992
(Registrant’s Telephone Number, Including Area Code)
N/A
(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: None.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ☒
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 1.01. Entry into a Material Definitive Agreement
As previously reported on a Current Report on Form 8-K, dated February 11, 2020, HealthLynked Corp. (the “Corporation”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Corporation, HLYK Florida, LLC, a Florida limited liability company and wholly-owned subsidiary of the Corporation (“HLYK FL”), Cura Health Management LLC, a Florida limited liability company (the “Target”), ACO Health Partners, LLC, a Delaware limited liability company, Bradberry Holdings, LLC, a Florida limited liability company, and FocusOne Holdings, LLC, a Florida limited liability company (each a “Seller,” and collectively, the “Sellers”).
On May 18, 2020, the Parties entered into a First Amendment to Agreement and Plan of Merger, which amended certain sections of the Merger Agreement (the “Amendment,” and together with the Merger Agreement, the “Transaction Documents”). The Amendment revises the Merger Consideration (as that term is defined in the Merger Agreement) payable to the Seller at Closing (the “Closing”) to the following: (i) $214,000 in cash; and (ii) 2,240,838 shares of the Corporation’s common stock.
Also on May 18, 2020, the Closing of the transactions contemplated by the Transaction Documents took place, upon which the Target merged with and into HLYK FL, with HLYK FL as the surviving entity.
At the Effective Time set forth in the Transaction Documents: (i) the Seller received the Merger Consideration due at the Closing; (ii) articles of merger were filed with the Florida Department of State, Division of Corporations; (iii) all of the equity of the Target issued and outstanding immediately prior to the Effective Time was cancelled; (iv) HLYK FL continued as the surviving entity; and (v) HLYK FL remains a wholly-owned subsidiary of the Corporation.
Additionally, as a part of the Merger Consideration, the Seller is entitled to: (i) up to $223,500 additional cash consideration payable at the time the Target receives the final assessment from the Centers for Medicare and Medicaid Services (“CMS”) on the calculation of its current year Medicare Shares Savings Program (“MSSP”) payment (estimated to be by September 2020), with the cash consideration payment to be prorated up to but not more than a target MSSP payment of $1,725,000; and (ii) up to $660,000 additional stock consideration payable at the time Target receives the final assessment of CMS on the calculation of MSSP Shared Savings, with the cash payment to be prorated up to but not more than a target MSSP payment of $1,725,000.
The foregoing description of the Transaction Documents does not purport to be complete and is qualified in its entirety by reference to the full text of the Transaction Documents, which are attached as exhibits to this Current Report on Form 8-K and are incorporated herein by reference. Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Transaction Documents.
Item 2.01 Completion of Acquisition or Disposition of Assets
Reference is made to the disclosure under Item 1.01 above which is hereby incorporated in this Item 2.01 by reference.
Item 8.01 Other Events
On May 20, 2020, the Corporation issued a press release announcing the Closing of the Merger Agreement, as amended by the Amendment.
Pursuant to Regulation G, the information below is a reconciliation of certain non-GAAP financial measures used in the press released filed herewith to the most directly comparable GAAP financial measure. Net income is the most direct comparable GAAP financial measure for adjusted net income, a non-GAAP financial measure.
| Years Ended December 31, | ||||||||
| 2019 | 2018 | |||||||
| Unaudited | ||||||||
| Target consolidated net income | $ | 1,047,671 | $ | 337,001 | ||||
| Owner distributions treated as consulting expense in prior periods (1) | (380,000 | ) | --- | |||||
| Target adjusted net income as reported in May 20, 2020 press release | $ | 667,671 | $ | 337,001 | ||||
(1) - Prior to 2019, profits were realized by the owners in the form of consulting fees paid to the owners. Beginning 2019, profit distributions were made. This adjustment is to normalize the net income of Target for comparative purposes as if distributions to owners were treated as charges to income in both periods.
1
A copy of the press release is filed as Exhibit 99.1 to, and incorporated by reference in this Current Report on Form 8-K. The information in this Current Report on Form 8-K is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act, except as shall be expressly set forth by specific reference in any such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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SIGNATURE
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.
| HEALTHLYNKED CORP. | |
| Dated: May 20, 2020 | /s/ George O’Leary |
| George O’Leary | |
| Chief Financial Officer |
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Exhibit 10.1
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the “Amendment”) is made and entered into as of May 18, 2020 (the “Effective Date”), by and between HealthLynked Corp., a Nevada corporation (the “Parent”), HLYK Florida, LLC, a Florida limited liability company (the “Company”), Cura Health Management LLC, a Florida limited liability company (the “Target”), ACO Health Partners, LLC, a Delaware limited liability company (“AHP”), and Bradberry Holdings, LLC, a Florida limited liability company, and FocusOne Holdings, LLC, a Florida limited liability company (each a “Seller” and collectively, the “Sellers”).
RECITALS
WHEREAS, Parent, Company, Target, AHP, and Sellers are parties to that certain Agreement and Plan of Merger, dated as of February 5, 2020 (the “Agreement”) pursuant to which the parties intend to effect a merger of Target with and into Company, at which time Target will cease to exist and Company will continue as the surviving entity and wholly owned subsidiary of Parent; and
WHEREAS, the parties hereto have agreed to amend the terms of the Agreement as set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual agreements contained herein, the parties hereto do hereby agree as follows:
| 1. | Sections 5.1, and 5.2 of the Agreement shall be and are hereby deleted in their entirety and replaced with the following: |
| 5.1. | $214,000 payable to the Sellers at a percentage that is mutually acceptable to Sellers at the Closing, subject to adjustment in accordance with Sections 5.4 and 10.9 (“Initial Payment”) and the remaining $223,500 to be paid to Sellers as follows: at the time Target receives the final assessment of CMS on the calculation of MSSP Shared Savings (estimated to be by September 2020), |
| 5.1.1. | if Shared Savings and/or Alternative Revenue Streams, as defined below, are equal to $1,725,000 or greater, the full $223,500 shall be paid at such time; |
| 5.1.2. | if Shared Savings and/or Alternative Revenue Streams are less than $1,725,000, a prorated amount shall be paid at such time; and the remaining amount will be added to the aggregate earn-out payments set forth in Section 5.3. Any remaining portion of this transfer to earnout will be accelerated once the $1.725M in annual threshold is achieved. |
1
“Alternative Revenue Streams” means consulting revenue, waiver agreement revenue, or other revenue in excess of the $605,000 consulting revenue that currently exists;
| 5.2. | 2,240,838 common shares of Parent with an aggregate value of $214,000 (valued at $0.0955 per common share) shall be issued to the Sellers at a percentage that is mutually acceptable to Sellers at the Closing and the remaining $660,000 of common shares shall be issued to the Sellers as follows: at the time Target receives the final assessment of CMS on the calculation of MSSP Shared Savings (estimated to be by September 2020), |
| 5.2.1. | if Shared Savings and/or Alternative Revenue Streams are equal to $1,725,000 or greater, $660,000 of Common Shares shall be issued at such time; and |
| 5.2.2. | if Shared Savings and/or Alternative Revenue Streams are less than $1,725,000, a prorated amount of common shares shall be issued at such time and the remaining value will be added to the aggregate earn-out payments set forth in Section 5.3. Any remaining portion of this transfer to earnout will be accelerated once the $1.725M in annual threshold is achieved. |
| 2. | Except as otherwise expressly provided herein, all other terms and conditions of the Agreement shall remain unchanged and shall continue to be in full force and effect, and the terms of this Amendment shall be deemed a part of the Agreement as if fully set forth therein. To the extent any provision of this Amendment is inconsistent or shall conflict with any provision in the Agreement, the terms of this Amendment shall prevail. |
| 3. | This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which when taken together shall constitute one and the same instrument. Transmission of images of signed signature pages by facsimile, e-mail, or other electronic means shall have the same effect as the delivery of manually signed documents in person. |
SIGNATURE PAGE TO FOLLOW:
2
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the Effective Date.
| COMPANY: | SELLER: | |||
| HLYK FLORIDA, LLC | BRADBERRY HOLDINGS, LLC | |||
| By: | /s/ George O’Leary | /s/ Nicole Bradberry | ||
| Name: | George O’Leary | Nicole Bradberry, Owner | ||
| Title | CFO | |||
| PARENT: | SELLER: | |||
| HEALTHLYNKED CORP. | FOCUSONE HOLDINGS, LLC | |||
| By: | /s/ George O’Leary | /s/ Marsha Boggess | ||
| Name: | George O’Leary | Marsha Boggess | ||
| Title | CFO | |||
| TARGET: | ||||
| CURA HEALTH MANAGEMENT LLC | ||||
| By: | /s/ Marsha Boggess | |||
| Name: | Marsha Boggess | |||
| Title | Member Manager | |||
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Exhibit 99.1
HealthLynked Closes Acquisition of Cura Health Management, LLC and ACO Health Partners
NAPLES, Florida, May 20, 2020 /PRNewswire/ -- HealthLynked Corp (HLYK), a global healthcare network focused on care management of its members and a provider of healthcare technologies that connect doctors, patients and medical data, today announced that it closed its acquisition of Cura Health Management, LLC (“CHM”) and its wholly owned subsidiary ACO Health Partners, LLC (“AHP”) on May 18, 2020.
“As we expand our global network and focus on improving care and reducing costs through our technologies and related services, it was a natural fit to acquire CHM and AHP. We believe our ACO division will bring significant value to our patients and physician members around the globe,” said Michael Dent, M.D., HealthLynked’s Chairman and CEO. “Closing the acquisition demonstrates HealthLynked’s skill in executing its M&A strategy even during the COVID-19 pandemic.”
Unaudited Financials. CHM’s unaudited consolidated revenue for 2019 and 2018 were $2,075,607 and $2,466,843 respectively. CHM’s unaudited consolidated adjusted net income for the same periods was $667,671 and $337,001, respectively. Anticipated unaudited consolidated CHM net income for the next twelve months is projected to be approximately $437,500. Unaudited assets of CHM as of December 31, 2019 were $661,069. We anticipate having the audit completed in the next 72 days.
Amendment to the Agreement. The acquisition cost of $1.75 million is a combination of cash, HealthLynked common stock, and a four-year performance-based earnout. HLYK and CHM mutually agreed to amend the definitive agreement at closing to defer a portion of the initial payment of cash and stock, an additional payment of cash and stock in September 2020 when the CMS final report of shared savings is received, and the remaining amount in a 4-year earnout. The total consideration of $1.75M did not change. Shared savings in 2019 and 2018 were $2.3M and $1.9M respectively.
George O’Leary, Chief Financial Officer of HealthLynked, stated, “CHM and HLYK agreed that with the uncertainty around COVID19 and the desire to get started working together now, it made more sense to align our interests by delaying a portion of the upfront acquisition consideration until September, when there will be move visibility into the new normal of the ACO marketplace.” He continued, “We are very excited to bring the expertise of the Cura Team into the HealthLynked family. Scott Calhoun, our Corporate Controller, will be overseeing the audit and the transition into HealthLynked’s operating structure.”
About HealthLynked Corporation HLYK
HealthLynked Corp. provides a solution for both patient members and providers to improve healthcare through the efficient exchange of medical information. The HealthLynked Network is a cloud-based platform that allows members to connect with their healthcare providers and take more control of their healthcare. Members enter their medical information, including medications, allergies, past surgeries and personal health records in one convenient online and secure location, free of charge. Participating healthcare providers can connect with their current and future patients through the system. Benefits to in-network providers include the ability to utilize the HealthLynked patent pending patient access hub “PAH” for patient analytics. Other benefits for preferred providers include HLYK marketing tools to connect with their active and inactive patients to improve patient retention, access more accurate and current patient information, provide more efficient online scheduling and to fill last minute cancelations using our “real time appointment scheduling” all within our mobile application. Preferred providers pay a monthly fee to access these HealthLynked services. For additional information about HealthLynked Corp. visit www.healthlynked.com and connect with HealthLynked on Twitter, Facebook, and LinkedIn.
About Cura Health Management CHM
CHM is a healthcare enablement company that empowers local market provider entrepreneurs to own and operate their own Value Service Organizations in a franchise like model that extends their reach and capabilities to maximize revenue, deliver quality care and improve patient outcomes. CHM’s innovative resources and expert solutions are administered as an extension of providers’ current in-practice resources, expanding care coordination and care management services and value-based analytics. These solutions support financial success within both traditional payment models and expansion to new services, allowing partners to succeed within current and ever emerging value-based payment models.
About ACO Health Partners AHP
ACO Health Partners is an Accountable Care Organization (ACO), based out of Jacksonville but with providers all over the country, participating in the Medicare Shared Savings Program. AHP was formed to benefit the patients (Medicare Fee-for-Service Beneficiaries), providers and the communities it serves. AHP is built on a model of coordinated care to ensure that patients, especially the chronically ill and the elderly, receive the right care at the right time, avoiding unnecessary duplication of services and prevention of medical errors.
Forward Looking Statements
Forward-Looking Statements in this press release, which are not historical facts, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results, including as a result of any acquisitions, performance or achievements may differ materially from those expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by the use of words such as “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions. Such forward-looking statements are necessarily based upon estimates and assumptions that, while considered reasonable by our management, and us are inherently uncertain. We caution you not to place undue reliance on any forward-looking statements, which are made as of the date of this press release. We undertake no obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. Certain risks and uncertainties applicable to our operations and us are described in the “Risk Factors” section of our most recent Annual Report on Form 10-K and in other filings we have made with the U.S. Securities and Exchange Commission. These reports are publicly available at www.sec.gov.
Contacts:
George O’Leary
Chief Financial Officer
goleary@healthlynked.com
(800) 928-7144, ext. 99
| Investor Relations Contacts: | |
| Stephanie Prince | Jim Hock |
| PCG Advisory Group | Hanover International Inc. |
| sprince@pcgadvisory.com | jh@hanoverintlinc.com |
| 646-762-4518 | 760-564-7400 |