Form: 8-K/A

Current report filing

November 14, 2011

Documents

Exhibit 99.2

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On October 13, 2011, OPKO Health, Inc. (the “Company”) completed the acquisition of Claros Diagnostics, Inc. (“Claros”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Claros Merger Subsidiary LLC, a wholly-owned subsidiary of the Company (“Merger Sub”), Claros and certain shareholders of Claros, in each case in his or her capacity as a member of the Shareholder Representative Committee constituted under the Merger Agreement. Pursuant to the Merger Agreement, the Company paid $10 million in cash, subject to certain set-offs and deductions, and $20 million in shares of the Company’s common stock (the “Stock Consideration”), based on the average closing sales price per share of the Company’s Common Stock as reported by the New York Stock Exchange for the ten trading days immediately preceding the closing date of the merger, or $4.45 per share. In addition, the Merger Agreement provides for the payment of up to an additional $19.125 million in shares of the Company’s common stock upon and subject to the achievement of certain milestones by the surviving company.

The following unaudited pro forma financial statements of the Company are presented to comply with Article 11 Regulation S-X and follow proscribed SEC guidelines. The historical condensed consolidated financial statements of the Company have been adjusted in the unaudited pro forma condensed consolidated financial statements to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) expected to have a continuing impact on the Company.

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2011, presents pro forma effects of the transaction as if the acquisition had occurred on September 30, 2011. The unaudited pro forma condensed consolidated statements of operations for the fiscal year ended December 31, 2010 and the nine months ended September 30, 2011, present the pro forma effects as if the acquisition occurred on January 1, 2010.

The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and do not purport to present what the Company’s results would have been had the acquisition actually occurred on the dates presented or to project the Company’s results from operations or financial position for any future period. These unaudited pro forma condensed consolidated financial statements and accompanying notes should be read together with the Company’s audited consolidated financial statements and the accompanying notes, as of and for the fiscal year ended December 31, 2010 and the Company’s unaudited condensed consolidated financial statements and the accompanying notes as of and for the three and nine months ended September 30, 2011.

OPKO Health, Inc.

Pro Forma Condensed Consolidated Balance Sheet

As of September 30, 2011

(unaudited)

(in thousands, except share and per share data)

 

     OPKO Health,
Inc.
As reported 		    Claros
Diagnostics,
Inc.		     Pro forma
adjustments		     Pro forma  

ASSETS

         

Current assets

         

Cash and cash equivalents

    $ 47,235      $ 77      $ (10,000 )  a    $ 37,312   

Marketable securities

      40,182        —          —          40,182   

Accounts receivable, net

      12,688        —          —          12,688   

Inventory, net

      10,516        —          —          10,516   

Prepaid expenses and other current assets

      1,729        10        —          1,739   

Current assets of discontinued operations

      5,279        —          —          5,279   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total current assets

      117,629        87        (10,000 )      107,716   

Property and equipment, net

      3,271        349        —          3,620   

Intangible assets, net

      14,252        —          39,082    e      53,334   

Goodwill

      6,234        —          —          6,234   

Investment

      5,862        —          —          5,862   

Other assets

      824        24          848   

Assets of discontinued operations

      2,929        —          —          2,929   
  

 

 

    

 

 

    

 

 

    

 

 

  

TOTAL ASSETS

    $ 151,001      $ 460      $ 29,082      $ 180,543   
  

 

 

    

 

 

    

 

 

    

 

 

  

LIABILITIES, SERIES D PREFERRED STOCK, AND SHAREHOLDERS’ EQUITY

         

Current liabilities

         

Accounts payable

    $ 2,556      $ 611      $ (475 )  a    $ 2,692   

Accrued expenses

      3,678        106        —          3,784   

Current portion of notes payable

      12,547        4,299        (4,299 )  a      12,547   

Current liabilities of discontinued operations

      1,460        —          —          1,460   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total current liabilities

      20,241        5,016        (4,774 )      20,483   

Long-term liabilities

      2,154        —          9,300    f      11,454   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

      22,395        5,016        4,526        31,937   

Commitments and contingencies

         

Series D Preferred Stock - $0.01 par value, 2,000,000 shares authorized; 1,209,677 shares issued and outstanding (liquidation value of $34,813)

      26,128          —          26,128   

Shareholders’ equity

         

Series A Preferred Stock - $0.01 par value, 4,000,000 shares authorized; No shares issued or outstanding

      —          3,335        (3,335 )  b      —     

Series C Preferred Stock - $0.01 par value, 500,000 shares authorized; No shares issued or outstanding

      —          —          —          —     

Common Stock - $0.01 par value, 500,000,000 shares authorized, 288,141,824 shares issued

      2,881        4        (4 )  b      2,926   
         45    a   

Treasury stock – 2,443,894 shares

      (7,893 )      —          —          (7,893 ) 

Additional paid-in capital

      485,181        12,057        (12,057 )  b      505,136   
         19,955    a   

Accumulated other comprehensive income

      434        (41 )      41    b      434   

Accumulated deficit

      (378,125 )      (19,911 )      19,911    b      (378,125 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Total shareholders’ equity (deficit)

      102,478        (4,556 )      24,556        122,478   
  

 

 

    

 

 

    

 

 

    

 

 

  

TOTAL LIABILITIES SERIES D PREFERRED STOCK AND SHAREHOLDERS’ EQUITY

    $ 151,001      $ 460      $ 29,082      $ 180,543   
  

 

 

    

 

 

    

 

 

    

 

 

  

The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.

OPKO Health, Inc.

Pro Forma Condensed Consolidated Statement of Operations

For the nine months ended September 30, 2011

(unaudited)

(in thousands, except share and per share data)

 

     OPKO
Health, Inc. 		    Claros
Diagnostics,
Inc.		     Pro forma
adjustments		     Pro forma  

Revenue

    $ 22,185      $ —        $ —        $ 22,185   

Cost of goods sold

      13,085        —          —          13,085   
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross margin

      9,100        —          —          9,100   

Operating expenses

         

Selling, general and administrative

      14,102        2,349        —          16,451   

Research and development

      7,097        514        —          7,611   

Other operating expenses, principally amortization of intangible assets

      2,615        —          2,400    d      5,015   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      23,814        2,863        2,400        29,077   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating loss

      (14,714 )      (2,863 )      (2,400 )      (19,977 ) 

Other expense, net

      (757 )      (4 )      (825 )  c      (1,586 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss before provision for income taxes, investment loss and discontinued operations

      (15,471 )      (2,867 )      (3,225 )      (21,563 ) 

Income tax provision

      199        —          —          199   
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss before investment loss and discontinued operations

      (15,670 )      (2,867 )      (3,225 )      (21,762 ) 

Loss from investment in investee

      (1,175 )      —          —          (1,175 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss before discontinued operations

      (16,845 )      (2,867 )      (3,225 )      (22,937 ) 

Discontinued operations

      (2,841 )      —          —          (2,841 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss

      (19,686 )      (2,867 )      (3,225 )      (25,778 ) 

Preferred stock dividend

      (1,860 )      —          —          (1,860 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss attributable to common shareholders

    $ (21,546 )    $ (2,867 )    $ (3,225 )    $ (27,638 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss per common share from continuing operations, basic and diluted

    $ (0.06 )        $ (0.08 ) 
  

 

 

        

 

 

  

Loss per common share, basic and diluted

    $ (0.08 )        $ (0.10 ) 
  

 

 

        

 

 

  

Weighted average number of common shares outstanding, basic and diluted

      277,359,789          4,494,380        281,854,169   

The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.

OPKO Health, Inc.

Pro Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2010

(unaudited)

(in thousands, except share and per share data)

 

     OPKO
Health, Inc. 		    Claros
Diagnostics, Inc.		     Pro forma
adjustments		     Pro forma  

Revenue

    $ 28,494      $ —        $ —        $ 28,494   

Cost of goods sold

      13,495        —          —          13,495   
  

 

 

    

 

 

    

 

 

    

 

 

  

Gross margin

      14,999        —          —          14,999   

Operating expenses

         

Selling, general and administrative

      18,133        3,206        —          21,339   

Research and development

      5,949        1,051        —          7,000   

Other operating expenses, principally amortization of intangible assets

      2,053        —          3,200    d      5,253   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

      26,135        4,257        3,200        33,592   
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating loss

      (11,136 )      (4,257 )      (3,200 )      (18,593 ) 

Other (expense) income, net

      (844 )      181        (1,100 )  c      (1,763 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss before provision for income taxes, investment loss and discontinued operations

      (11,980 )      (4,076 )      (4,300 )      (20,356 ) 

Income tax benefit

      (18 )      —          —          (18 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss before investment loss and discontinued operations

      (11,962 )      (4,076 )      (4,300 )      (20,338 ) 

Loss from investment in investee

      (714 )      —          —          (714 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss before discontinued operations

      (12,676 )      (4,076 )      (4,300 )      (21,052 ) 

Discontinued operations

      (6,250 )        —          (6,250 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss

      (18,926 )      (4,076 )      (4,300 )      (27,302 ) 

Preferred stock dividend

      (2,624 )      —          —          (2,624 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss attributable to common shareholders

    $ (21,550 )    $ (4,076 )    $ (4,300 )    $ (29,926 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss per common from continuing operations share, basic

    $ (0.05 )        $ (0.08 ) 
  

 

 

        

 

 

  

Loss per common from continuing operations share, basic

    $ (0.08 )        $ (0.12 ) 
  

 

 

        

 

 

  

Weighted average number of common shares outstanding, basic and diluted

      255,095,586          4,494,380        259,589,966   

The accompanying notes are an integral part of these pro forma condensed consolidated financial statements.

Notes:

 

(a) Reflects the consideration paid at closing representing $10.0 million in cash and $20.0 million in OPKO Common Stock. A portion of the cash paid at closing paid certain liabilities of Claros Diagnostics, Inc.
(b) Reflects the elimination of Claros Diagnostics, Inc. equity capital
(c) The pro forma interest expense assumes borrowing funds at an 11% annual interest rate for the purchase price of $10.0 million. The annual interest rate is based on OPKO’s US based line of credit. The interest expense assumes the closing of the transaction and funds were borrowed on January 1, 2010.
(d) The pro forma amortization expense assumes the transaction closed on January 1, 2010.
(e) The following table reflects the initial purchase price allocation, which is preliminary and subject to change:

 

Intangible asset

    Purchase price allocation      Estimated useful life

Technology

    $ 32,000       10 years

In-process research and development

      7,082       Indefinite
  

 

 

     

TOTAL

    $ 39,082      

 

(f) Reflects the estimated contingent consideration to be paid to the sellers upon the achievement of certain milestones. This amount represents the estimated fair value of the contingent consideration, which is preliminary and subject to change.