November 8, 2013 - EX-99.3 - 8-K/A: Current report filing

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On August 29, 2013, OPKO Health, Inc. (the Company or OPKO) completed its previously announced acquisition of PROLOR Biotech, Inc. (PROLOR), pursuant to an Agreement and Plan of Merger, dated as of April 23, 2013 (the Merger Agreement), by and among OPKO, POM Acquisition, Inc., a wholly owned subsidiary of OPKO (POM), and PROLOR. Under the terms of the Merger Agreement, POM merged with and into PROLOR (the Merger), with PROLOR surviving as a wholly owned subsidiary of OPKO.

As previously reported on Form 8-K/A, the Company completed the share purchase agreement entered into in January 2013 (the Cytochroma Agreement) to acquire the net assets of Cytochroma Inc. (Cytochroma), a corporation located in Markham, Canada, whose two lead products, both in Phase 3 development, are coded CTAP101 Capsules, a vitamin D prohormone to treat secondary hyperparathyroidism in patients with stage 3 or 4 chronic kidney disease and vitamin D insufficiency, and Fermagate Tablets, a non-absorbed phosphate binder to treat hyperphosphatemia in dialysis patients (the Cytochroma Acquisition). The transaction closed on March 4, 2013.

The following unaudited pro forma condensed consolidated financial statements of the Company are presented to comply with Article 11 of 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 June 30, 2013, presents pro forma effects of the transaction as if the acquisition had occurred on June 30, 2013. The unaudited pro forma condensed consolidated statements of operations for the fiscal year ended December 31, 2012 and the six months ended June 30, 2013, present the pro forma effects as if the acquisition occurred on January 1, 2012.

The unaudited pro forma financial statements are presented for informational purposes only and do not purport to present what the Companys results would have been had the acquisition actually occurred on the dates presented or to project the Companys results from operations or financial position for any future period. These unaudited pro forma financial statements and accompanying notes should be read together with the Companys audited consolidated financial statements and the accompanying notes, as of and for the fiscal year ended December 31, 2012 and the Companys unaudited consolidated financial statements and the accompanying notes as of and for the three and six months ended June 30, 2013.

OPKO Health, Inc. and subsidiaries

Pro-Forma Condensed Consolidated Balance Sheets

As of June 30, 2013 (unaudited)

(in thousands, except share and per share data)


				PROLOR
	OPKO Health, Inc.			Biotech, Inc.			Pro Forma			Pro Forma
	As reported			As reported			Adjustments			Combined
ASSETS
Current assets:
Cash and cash equivalents	$	119,061		$	19,017		$			$	138,078
Marketable securities		50,027			5,227						55,254
Accounts receivable, net		22,227									22,227
Inventories, net		19,778									19,778
Prepaid expenses and other current assets		19,023			788						19,811

Total current assets		230,116			25,032						255,148
Property, plant and equipment, and investment properties, net		16,577			1,057						17,634
Intangible assets, net		79,775									79,775
In-process research and development		203,052						597,400	d		800,452
Goodwill		82,086						122,832	d		204,918
Investments, net		26,690									26,690
Other assets		2,784			358						3,142

Total assets	$	641,080		$	26,447		$	720,232		$	1,387,759

LIABILITIES, SERIES D PREFERRED STOCK, AND EQUITY
Current liabilities:
Accounts payable	$	11,646		$	502		$			$	12,148
Accrued expenses		31,045			2,650						33,695
Current portion of lines of credit and notes payable		16,778									16,778

Total current liabilities		59,469			3,152						62,621
3.00% convertible senior notes, net of discount and estimated fair value of embedded derivatives		188,524									188,524
Other long-term liabilities, principally contingent consideration and deferred tax liabilities		80,603			481			156,403			237,487

Total long-term liabilities		269,127			481			156,403			426,011

Total liabilities		328,596			3,633			156,403			488,632

Commitments and contingencies:
Series D Preferred Stock - $0.01 par value, 2,000,000 shares authorized; no shares issued or outstanding
Equity:
Series A Preferred Stock - $0.01 par value, 4,000,000 shares authorized; no shares issued or outstanding
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; 339,045,029 shares issued at June 30, 2013		3,391			1			(1	)b		4,028
								637	a
Treasury Stock - 2,293,056 shares at June 30, 2013		(7,457	)								(7,457	)
Additional paid-in capital		742,097			105,361			(105,361	)b		1,328,103
								586,006	a
Accumulated other comprehensive income		2,830									2,830
Accumulated deficit		(426,379	)		(82,548	)		82,548	b		(426,379	)

Total shareholders equity		314,482			22,814			563,829			901,125

Non-controlling interest		(1,998	)								(1,998	)

Total equity		312,484			22,814			563,829			899,127

Total liabilities, Series D Preferred Stock, and equity	$	641,080		$	26,447		$	720,232		$	1,387,759

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

OPKO Health, Inc. and subsidiaries

Pro-Forma Condensed Consolidated Statement of Operations

For the six months ended June 30, 2013

(unaudited)

(in thousands, except share and per share data)


										Pro Forma
							Cytochroma			Combined
	OPKO						Canada Inc.			Including			PROLOR
	Health, Inc.			Cytochroma			Pro Forma			Cytochroma			Biotech, Inc.			Pro Forma		Pro Forma
	As reported			Canada Inc. e, f			Adjustments			Canada Inc.			As reported			Adjustments		Combined
Revenues:
Product sales	$	34,145		$			$			$	34,145		$			$		$	34,145
Revenue from services		6,280									6,280								6,280
Revenue from transfer of intellectual property		14,772									14,772								14,772

Total revenues		55,197									55,197								55,197

Costs and expenses:
Costs of revenue		24,860									24,860								24,860
Selling, general and administrative		26,303			464						26,767			5,998					32,765
Research and development		19,467			1,304						20,771			8,587					29,358
Contingent consideration		3,921									3,921								3,921
Other operating expenses, principally amortization of intangible assets		5,402			1,484			(1,427	) c,g		5,459								5,459

Total costs and expenses		79,953			3,252			(1,427	)		81,778			14,585					96,363

Operating loss		(24,756	)		(3,252	)		1,427			(26,581	)		(14,585	)				(41,166	)
Fair value changes of derivative instruments, net		(10,898	)								(10,898	)							(10,898	)
Other income (expense), net		3,768			(7,731	)		7,585	g		3,622			(45	)				3,577

Loss before income taxes and investment losses		(31,886	)		(10,983	)		9,012			(33,857	)		(14,630	)				(48,487	)
Income tax (provision) benefit		(968	)		124						(844	)							(844	)

Loss before investment losses		(32,854	)		(10,859	)		9,012			(34,701	)		(14,630	)				(49,331	)
Loss from investments in investees		(6,261	)								(6,261	)							(6,261	)

Net loss		(39,115	)		(10,859	)		9,012			(40,962	)		(14,630	)				(55,592	)
Less: Net loss attributable to noncontrolling interests		(1,506	)								(1,506	)							(1,506	)

Net loss attributable to common shareholders before preferred stock dividend		(37,609	)		(10,859	)		9,012			(39,456	)		(14,630	)				(54,086	)
Preferred stock dividend		(420	)								(420	)							(420	)

Net loss attributable to common shareholders	$	(38,029	)	$	(10,859	)	$	9,012		$	(39,876	)	$	(14,630	)	$		$	(54,506	)

Loss per common share, basic and diluted	$	(0.12	)							$	(0.12	)						$	(0.14	)

Weighted average number of common shares outstanding, basic and diluted		324,898,133						7,027,933	h		331,926,066						63,437,579		395,363,645

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

OPKO Health, Inc. and subsidiaries

Pro-Forma Condensed Consolidated Statement of Operations

For the year ended December 31, 2012

(unaudited)

(in thousands, except share and per share data)


	OPKO Health, Inc. As reported			Cytochroma Canada Inc. e			Cytochroma Canada Inc. Pro Forma Adjustments			Pro Forma Combined Including Cytochroma Canada Inc.			PROLOR Biotech, Inc.			Pro Forma Adjustments		Pro Forma Combined
Revenues:
Product sales	$	45,295		$			$			$	45,295		$			$		$	45,295
Revenue from services		1,749									1,749								1,749
Revenue from transfer of intellectual property					6,551						6,551								6,551

Total revenues		47,044			6,551						53,595								53,595

Costs and expenses:
Costs of revenue		27,878									27,878								27,878
Selling, general and administrative		27,795			3,442						31,237			3,356					34,593
Research and development		19,520			9,499						29,019			15,033					44,052
Contingent consideration		785									785								785
Other operating expenses, principally amortization of intangible assets		8,335			714			(383	)c, g		8,666								8,666

Total costs and expenses		84,313			13,655			(383	)		97,585			18,389					115,974

Operating loss from continuing operations		(37,269	)		(7,104	)		383			(43,990	)		(18,389	)				(62,379	)
Fair value changes of derivative instruments, net		1,340									1,340								1,340
Other income (expense), net		(1,284	)		(2,466	)		1,595	g		(2,155	)		118					(2,037	)

Loss from continuing operations before income taxes and investment losses		(37,213	)		(9,570	)		1,978			(44,805	)		(18,271	)				(63,076	)
Income tax benefit		9,626			839						10,465								10,465

Loss before investment losses		(27,587	)		(8,731	)		1,978			(34,340	)		(18,271	)				(52,611	)
Loss from investments in investees		(2,062	)								(2,062	)							(2,062	)

Loss from continuing operations		(29,649	)		(8,731	)		1,978			(36,402	)		(18,271	)				(54,673	)
Income from discontinued operations, net of tax		109									109								109

Net loss		(29,540	)		(8,731	)		1,978			(36,293	)		(18,271	)				(54,564	)
Less: Net loss attributable to noncontrolling interests		(492	)								(492	)							(492	)

Net loss attributable to common shareholders before preferred stock dividend		(29,048	)		(8,731	)		1,978			(35,801	)		(18,271	)				(54,072	)
Preferred stock dividend		(2,240	)								(2,240	)							(2,240	)

Net loss attributable to common shareholders	$	(31,288	)	$	(8,731	)	$	1,978		$	(38,041	)	$	(18,271	)	$		$	(56,312	)

Loss per common share, basic and diluted:
Loss from continuing operations	$	(0.11	)							$	(0.12	)						$	(0.15	)
Income (loss) from discontinued operations		0.00									0.00								0.00

Net loss per share	$	(0.11	)							$	(0.12	)						$	(0.15	)

Weighted average number of common shares outstanding, basic and diluted		295,750,077						20,517,030			316,267,107						63,437,579		379,704,686

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

Notes:

(a)	Reflects the consideration paid at closing to PROLORs shareholders in OPKO common stock.

(b)	Reflects the elimination of PROLORs equity capital.

(c)	The pro forma amortization expense assumes the transaction closed on January 1, 2012.

(d)	The following table reflects the estimated fair value of the acquired intangible assets determined in the initial purchase price allocation of PROLOR, which is preliminary and subject to change:


Intangible asset	Purchase price allocation		Estimated useful life
In-process research and development	$	597,400	Indefinite
Goodwill		122,832	Indefinite

TOTAL	$	720,232

(e)	All amounts for Cytochroma have been translated into U.S dollars from Canadian dollars.

(f)	Includes the activity for the period from January 1, 2013 through March 3, 2013. The acquisition of Cytochroma was on March 4, 2013; therefore the activity from that date on was recorded on OPKOs condensed consolidated statement of operations for the period ended June 30, 2013.

(g)	OPKO purchased the net assets of Cytochroma. The adjustment is required to remove those assets and liabilities that relate to other entities within the consolidated Cytochroma that were not acquired, as the amortization of deferred financing costs and interest expense.

(h)	Adjusted weighted average number of shares outstanding as if the acquisition of Cytochroma had occurred on January 1, 2013.

Form: 8-K/A

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