Item 1.01 Entry into a Material Definitive Agreement.
Purchase Agreement
On June 1, 2020, Livongo Health, Inc. ("Livongo" or the "Company") entered into
a purchase agreement (the "Purchase Agreement") with Morgan Stanley & Co. LLC,
Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, as representatives of
the several initial purchasers named therein (the "Initial Purchasers"),
relating to the sale by Livongo of an aggregate of $475 million principal amount
of its 0.875% Convertible Senior Notes due 2025 (the "Notes") to qualified
institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as
amended (the "Securities Act"). Livongo also granted the Initial Purchasers an
option to purchase, within a 13-day period from, and including, the initial
issuance date of the Notes, up to an aggregate of $75.0 million additional
principal amount of Notes. The Initial Purchasers exercised in full this option
to purchase additional Notes on June 2, 2020. Pursuant to the terms of the
Purchase Agreement, the parties have agreed to indemnify each other against
certain liabilities, including certain liabilities under the Securities Act.
A copy of the Purchase Agreement is filed as Exhibit 10.1 to this Current Report
on Form 8-K and is incorporated by reference herein. The foregoing description
of the Purchase Agreement does not purport to be complete and is qualified in
its entirety by reference to such exhibit.
Indenture and Notes
On June 4, 2020, Livongo issued an aggregate of $550 million principal amount of
Notes pursuant to an Indenture, dated June 4, 2020 (the "Indenture"), between
Livongo and U.S. Bank National Association, as trustee (the "Trustee"). The
Notes will bear interest from June 4, 2020 at a rate of 0.875% per annum payable
semiannually in arrears on June 1 and December 1 of each year, beginning on
December 1, 2020. The Notes will mature on June 1, 2025, unless earlier
converted, redeemed or repurchased.
The net proceeds from this offering are expected to be approximately
$534.0 million, after deducting the Initial Purchasers' discount and estimated
offering expenses payable by Livongo. Livongo used approximately $69.9 million
of the net proceeds from this offering to pay the cost of the capped call
transactions described below. Livongo intends to use the remainder of the
proceeds from this offering for general corporate purposes, including working
capital, business development, sales and marketing activities and capital
expenditures.
Holders of the Notes may convert their Notes at their option at any time prior
to the close of business on the business day immediately preceding March 1,
2025, only under the following circumstances: (1) during any fiscal quarter
commencing after the fiscal quarter ending on September 30, 2020 (and only
during such fiscal quarter), if the last reported sale price of Livongo's common
stock for at least 20 trading days (whether or not consecutive) during a period
of 30 consecutive trading days ending on, and including, the last trading day of
the immediately preceding fiscal quarter is greater than or equal to 130% of the
conversion price on each applicable trading day; (2) during the five-business
day period after any five consecutive trading day period (the ''measurement
period'') in which the trading price (as defined in the Indenture) per $1,000
principal amount of Notes for each trading day of the measurement period was
less than 98% of the product of the last reported sale price of Livongo's common
stock and the conversion rate for the Notes on each such trading day; (3) if
Livongo calls such Notes for redemption, at any time prior to the close of
business on the second scheduled trading day immediately preceding the
redemption date; or (4) upon the occurrence of specified corporate events.
On or after March 1, 2025, holders may convert all or any portion of their Notes
at any time prior to the close of business on the scheduled trading day
immediately preceding the maturity date regardless of the foregoing conditions.
Upon conversion, Livongo will satisfy its conversion obligation by paying or
delivering, as the case may be, cash, shares of Livongo's common stock or a
combination of cash and shares of Livongo's common stock, at Livongo's election.
The conversion rate for the Notes is initially 13.2329 shares of Livongo's
common stock per $1,000 principal amount of Notes (equivalent to an initial
conversion price of approximately $75.57 per share of Livongo's common stock).
The conversion rate is subject to adjustment in some events but will not be
adjusted for any accrued and unpaid interest. In addition, following certain
corporate events that occur prior to the maturity date or following Livongo's
issuance of a notice of redemption, Livongo will increase the conversion rate
for a holder who elects to convert its Notes in connection with such a corporate
event or convert its notes called for redemption during the related redemption
period in certain circumstances.
Livongo may not redeem the Notes prior to June 5, 2023. On or after June 5, 2023
and prior to the 41st scheduled trading day immediately preceding the maturity
date, Livongo may redeem for cash all or any portion of the Notes, at its
option, if the last
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reported sale price of Livongo's common stock has been at least 130% of the
conversion price then in effect for at least 20 trading days (whether or not
consecutive) during any 30 consecutive trading day period (including the last
trading day of such period) ending on, and including, the trading day
immediately preceding the date on which Livongo provides notice of redemption at
a redemption price equal to 100% of the principal amount of the Notes to be
. . .
Item 2.03 Creation of a Direct Financial Obligation under an Off-Balance Sheet
Arrangement of a Registrant
The information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 3.02 Unregistered Sale of Equity Securities
The information set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated herein by reference.
The Notes were sold to the Initial Purchasers pursuant to the Purchase Agreement
in reliance on the exemption from the registration requirements provided by
Section 4(a)(2) of the Securities Act and the Notes were resold to qualified
institutional buyers as defined in, and in reliance on, Rule 144A of the
Securities Act. To the extent that any shares of common stock are issued upon
conversion of the Notes, they will be issued in transactions anticipated to be
exempt from registration under the Securities Act by virtue of Section 3(a)(9)
thereof, because no commission or other remuneration is expected to be paid in
connection with conversion of the Notes, and any resulting issuance of shares of
common stock.
The offer and sale of the Notes and the common stock issuable upon conversion of
the Notes have not been and will not be registered under the Securities Act or
the securities laws of any other jurisdiction, and such securities may not be
offered or sold in the United States absent registration or an applicable
exemption from registration requirements. This Current Report on Form 8-K does
not constitute an offer to sell, or a solicitation of an offer to buy, any
security and shall not constitute an offer, solicitation or sale in any
jurisdiction in which such offering would be unlawful.
Item 8.01. Other Events.
On June 1, 2020, Livongo issued a press release announcing the proposed Note
offering. A copy of the press release is filed herewith as Exhibit 99.1.
On January 2, 2020, Livongo issued a press release announcing the pricing of the
Note offering. A copy of the press release is filed herewith as Exhibit 99.2.
Forward-Looking Statements
This Current Report on Form 8-K, including the press releases referenced herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, which are subject to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Statements concerning the capped call transactions and repurchase, redemption or
early conversion of the notes and the anticipated use of proceeds from the
offering and the timing of such events are forward-looking statements that
involve a number of uncertainties and risks. Actual results may differ
materially from these statements and from actual future events or results due to
a variety of factors, including the inability to launch a successful enrollment
program and resulting lower revenue, and such other factors as are described in
reports and documents the Company files from time to time with the Securities
and Exchange Commission, including the factors described
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under the section titled "Risk Factors" in the Company's Quarterly Report on
Form 10-Q filed on May 7, 2020. Undue reliance should not be placed on the
forward-looking statements in this Current Report on Form 8-K, and the press
releases referenced herein, which are based on circumstances as of and
information available to us on the date hereof. Except to the extent required by
applicable law, the Company disclaims any obligation to update information
contained in these forward-looking statements whether as a result of new
information, future events, or otherwise, except as required by law.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Exhibit No. Description
4.1 Indenture, dated as of June 4, 2020, by and between Livongo
Health, Inc. and U.S. Bank National Association, as Trustee.
4.2 Form of Note, representing Livongo Health, Inc.'s 0.875%
Convertible Senior Notes due 2025 (included as Exhibit A to the
Indenture filed as Exhibit 4.1).
10.1 Purchase Agreement, dated as of June 1, 2020, by and among
Livongo Health, Inc. and Morgan Stanley & Co. LLC, Goldman
Sachs & Co. LLC and J.P. Morgan Securities LLC.
10.2 Form of Confirmation for Capped Call Transactions.
10.3 Second Amendment to Loan and Security Agreement, dated as of
June 1, 2020, among the Company, as borrower and Silicon Valley
Bank, as lender.
10.4 Third Amendment to Loan and Security Agreement, dated as of
June 1, 2020, among the Company, as borrower and Silicon Valley
Bank, as lender.
99.1 Press Release issued by Livongo Health, Inc. on June 1, 2020.
99.2 Press Release issued by Livongo Health, Inc. on June 2, 2020.
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