APRIA Item 8.01. Other Events.
As previously announced, on
Supplemental Disclosures in Connection with Transaction Litigation
This Current Report on Form 8-K (this "Form 8-K") is being filed to update and
supplement the definitive proxy statement (the "Proxy Statement") filed by the
Company on
Following the announcement of the Merger Agreement and as of the date of this
Form 8-K, five lawsuits have been filed in connection with the Merger on behalf
of purported individual stockholders of the Company-one lawsuit filed on
The Company believes that the Actions are without merit and that no further disclosure is required to supplement the Proxy Statement under applicable law; however, to eliminate the burden, expense, and uncertainties inherent in such litigation, and without admitting any liability or wrongdoing, the Company has agreed to make certain supplemental disclosures to the Proxy Statement as set forth below. Nothing in these supplemental disclosures shall be deemed an admission of the legal necessity or materiality under applicable law of any of the disclosures set forth herein. The defendants have vigorously denied, and continue vigorously to deny, that they have committed any violation of law or engaged in any of the wrongful acts that were alleged in the Actions. In consideration for such supplemental disclosures by the Company, plaintiffs in the Actions have agreed to voluntarily dismiss the Actions.
Supplements to the Proxy Statement
The supplemental disclosures to the Proxy Statement set forth in this Form 8-K below should be read alongside the Proxy Statement, which should be read in its entirety, and to the extent that information in this Form 8-K differs from or updates information contained in the Proxy Statement, this Form 8-K shall supersede the information in the Proxy Statement. Defined terms used but not otherwise defined herein have the meanings set forth in the Proxy Statement.
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1. The section of the Proxy Statement entitled "The Merger-Opinion of
A. By adding the underlined and bolded text, and removing the strikethrough text, below from the first paragraph under the heading entitled "Illustrative Present Value of Future Share Price Analysis":
Goldman Sachs performed an analysis of the implied present value of an
illustrative future value per share of
B. By adding the underlined and bolded text, and removing the strikethrough text, below from the third paragraph under the heading entitled "Illustrative Discounted Cash Flow Analysis":
Goldman Sachs derived ranges of illustrative enterprise values for
C. By adding the underlined and bolded text and summary table below from the first paragraph under the heading entitled "Premia Paid Analysis":
Goldman Sachs reviewed and analyzed, using publicly available information, the
acquisition premia for transactions announced during the period from
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undisturbed closing stock price prior to announcement of the transaction. This
analysis indicated a median premium of 16%, a 25th percentile premium of 7% and
a 75th percentile premium of 25% during such period. Using this analysis,
Goldman Sachs applied a reference range of illustrative premiums of 7% to 25% to
the undisturbed closing price per share of
Premium to
Undisturbed Closing
Price of $30.18 as of
Entire Period January 5, 2022
Top Quartile 25 %
Median 16 %
Bottom Quartile 7 %
Calendar Years
2017 Median 16 %
2018 Median 21 %
2019 Median 12 %
2020 Median 11 %
2021 Median 19 %
2. The section of the Proxy Statement entitled "Certain Financial Projections" is hereby amended and supplemented as follows:
Under the caption "Financial Projections", the table and related footnotes on page 56 of the proxy statement are replaced in their entirety as follows:
Financial Projections(1)
(US$ in millions, except per share data) 2021E 2022E 2023E 2024E
Net Revenue $ 1,136 $ 1,200 $ 1,260 $ 1,321
Net Income $ 64 $ 78 $ 89 $ 99
Interest Expense (Net) $ 8 $ 11 $ 3 $ 3
Income Taxes $ 26 $ 28 $ 32 $ 36
Depreciation and Amortization $ 115 $ 115 $ 123 $ 127
Other Non-Recurring Items $ 18 $ 7 $ 7 $ 7
Adjusted EBITDA(2) $ 232 $ 240 $ 254 $ 272
Patient Equipment Capex(3) $ 91 $ 103 $ 107 $ 123
Adjusted EBITDA Less Patient Equipment Capex $ 141 $ 137 $ 147 $ 149
Estimated Cash Taxes (Net) $ 31 $ 33 $ 35 $ 38
Capital Expenditures $ 102 $ 114 $ 119 $ 135
Other Cash Flow Items $ (4 ) $ (8 ) $ 8 $ 9
Unlevered Free Cash Flow(4) $ 95 $ 85 $ 109 $ 107 (1) Subsequent to the announcement of the merger, on
an ongoing process to refine its preliminary budget for 2022, members of
Apria's management identified an error in the amount of depreciation and
amortization reflected in the Financial Projections for 2022 through 2024.
During the preparation of the Financial Projections, Apria's management
increased the amount of projected Patient Equipment Capex reflected in the
Financial Projections for 2022 through 2024 as a result of an expected change
in Apria's equipment leasing and ownership practices; however, a
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concomitant increase in depreciation (and decrease in cash taxes) was
erroneously not reflected in the Financial Projections. This error does not
affect any of the figures reflected above except Unlevered Free Cash Flow for
2022, 2023 and 2024, which would have been $88 , $110 and $109 , respectively,
as a result of the decrease in cash taxes. Because of this error, Goldman
Sachs reviewed its financial analyses and, if the correct amount of cash
taxes had been taken into account, the discounted cash flow analysis
reflected in Goldman Sachs's financial analyses would have resulted in a
range of illustrative present values per share of Apria common stock of
$32.16 to $44.43 (rather than $31.74 to $43.99 ), as more fully described in
the section of the proxy statement entitled "The Merger Proposal (Proposal
1)-Opinion of Apria's Financial Advisor". Nevertheless, on January 21, 2022 ,
Goldman Sachs confirmed to the Apria Board that, had Goldman Sachs performed
its financial analyses using the corrected Financial Projections, there would
have been no change to the conclusion set forth in the written opinion of
Goldman Sachs.
(2) "Adjusted EBITDA" is defined as net income before the impact of interest
income, interest expense, income taxes, and depreciation and amortization as
well as other non-recurring items typically identified in Apria's financial
statements.
(3) "Patient Equipment Capex" is defined as the patient equipment received less
the net book value of dispositions of patient equipment.
(4) "Unlevered Free Cash Flow" is defined as EBIT (which is Adjusted EBITDA less
depreciation and amortization), less estimated cash taxes, plus depreciation
and amortization, less capital expenditures and other cash flow items. The
calculation of Unlevered Free Cash Flow was not expressly included in the
Financial Projections but was derived from the Financial Projections and is
included for reference.
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