Veradigm Provides Update on its Financial Restatement Process
- Veradigm Inc. anticipates receiving a delisting notice from Nasdaq on February 28, 2024, due to delayed financial filings.
- The Company is working diligently to file required financial statements and regain compliance with Nasdaq Listing Rules.
- Veradigm Inc.'s Board of Directors has adopted a limited duration stockholder rights plan to protect stockholders' interests.
- The Rights Plan aims to prevent any person or group from gaining control of the company without appropriately compensating all stockholders.
- The Rights Plan will issue one preferred share purchase right for each outstanding share of Company common stock to stockholders of record on March 8, 2024.
- Under the Rights Plan, the rights would become exercisable if an acquiring person acquires beneficial ownership of 10% or more of the outstanding shares of Company common stock.
- The Rights Plan is effective immediately and will expire on February 26, 2025, unless terminated earlier by the Board.
- The Board may terminate the Rights Plan if it determines that there is no longer a threat to shareholder value.
- The delayed financial filings may lead to a delisting of Veradigm Inc. from Nasdaq, impacting investor confidence.
- The adoption of the Rights Plan may indicate underlying concerns about potential takeovers or acquisitions of the company.
- The Rights Plan could result in dilution for existing shareholders if exercised in response to an acquiring person's actions.
- The delisting of Company common stock from Nasdaq may lead to substantial and volatile trading activity, further impacting the stock's performance.
Insights
The announcement by Veradigm Inc. regarding its inability to file financial statements by Nasdaq's deadline is a significant concern for investors and analysts. The impending delisting notice from Nasdaq could trigger a negative reaction in the market, often leading to a decrease in investor confidence and a potential drop in the stock's price. The adoption of a stockholder rights plan, commonly referred to as a 'poison pill', is a defensive strategy used by companies to thwart hostile takeovers by diluting the value of shares held by potential acquirers. This move signals the board's intention to protect shareholder value and prevent opportunistic takeovers at undervalued prices.
It is important to monitor the company's progress in regaining compliance with Nasdaq Listing Rules. The company's performance, cash position and profitability will be key factors in determining its ability to recover from this setback. The adoption of the Rights Plan could be a double-edged sword; while it may protect against undervalued buyouts, it could also be seen as a deterrent to potential investors or acquirers who might have been interested in the company at a fair valuation.
The legal implications of Veradigm Inc.'s Rights Plan are substantial. The plan sets a threshold at which certain shareholder rights become exercisable, effectively acting as a deterrent against unsolicited acquisition attempts. The terms of the Rights Plan, including the 10% threshold for general investors and 20% for eligible passive investors, are designed to maintain the current balance of power within the company's ownership structure. The legal mechanisms of the Rights Plan, such as the ability to purchase shares at a discount or the exchange of rights for shares, are complex and can have significant ramifications on shareholder dynamics.
It's crucial to understand the legal framework within which such a plan operates, including the Securities and Exchange Commission (SEC) regulations and case law surrounding poison pills. The grandfathering provision and the potential for redemption or exchange of rights by the board are also key elements that could influence the effectiveness and fairness of the plan. Stakeholders should be aware of these legal intricacies as they can affect the company's governance and control.
The strategic decision by Veradigm Inc. to adopt a stockholder rights plan in the context of a potential delisting from Nasdaq is reflective of broader market trends where companies employ such measures to prevent undervalued acquisitions. The current trading price not reflecting the company's intrinsic value is a concern that could be exacerbated by the uncertainty surrounding the delisting. Market volatility in such scenarios can lead to significant trading activity, as investors may seek to capitalize on the perceived undervaluation or protect their investments from potential losses.
Understanding the market's perception of the company's value versus its intrinsic value is crucial. The Rights Plan may also influence investor sentiment, either by reassuring shareholders that their interests are being protected or by causing concern that the company is not open to potentially beneficial acquisition offers. The long-term impact on the company's market capitalization and stock performance will depend on the effectiveness of its governance strategies and its ability to convey to the market a clear path towards compliance and financial stability.
Expects Not to File Required Financial Statements by Nasdaq’s February 27, 2024 Deadline
Working Diligently to File Required Financial Statements and Restore Listing
Adopts Limited Duration Stockholder Rights Plan
The Company anticipates it will receive a delisting notice from Nasdaq on February 28, 2024, and that its common stock will be suspended from trading on The Nasdaq Global Select Market while Nasdaq proceeds with delisting. The Company plans to provide additional information regarding the anticipated delisting after it receives the expected notice from Nasdaq.
The Company is working diligently to file its required financial statements, and ultimately to regain compliance with all of the Nasdaq Listing Rules and restore its listing as soon as practicable.
Stockholder Rights Plan
The Company also announced that its Board of Directors (the “Board”) has unanimously adopted a limited duration stockholder rights plan (the “Rights Plan”) in anticipation of notification from Nasdaq that it will suspend trading in the Company’s stock.
The Board believes that the current trading price of Company common stock does not reflect the Company’s intrinsic value. The Rights Plan is intended to enable the Company’s stockholders to realize the long-term value of their investment, ensure that all stockholders receive fair and equal treatment in the event of any proposed takeover of the Company and guard against tactics to gain actual or de facto control of the Company without paying all stockholders an appropriate premium for that control. The Rights Plan does not prevent the Company from pursuing any offer that is fair and otherwise in the best interests of stockholders.
The Rights Plan was adopted by the Board following evaluation and consultation with the Company’s advisors and is similar to plans adopted by numerous publicly traded companies. Given the Company’s current market capitalization, the Company’s current cash on-hand, the Company’s anticipated continued profitability, the anticipated delisting of Company common stock from Nasdaq and the anticipated substantial and volatile trading activity in connection with the expected Nasdaq suspension of trading in the Company’s stock, the Board determined that the Company and its stockholders are particularly vulnerable to a creeping acquisition of actual or de facto control, whereby an investor could acquire a substantial percentage of outstanding shares of Company common stock prior to making any public disclosure regarding its control intent and without paying a control premium.
The Rights Plan is intended to enable all Company stockholders to realize the full potential value of their investment in the Company and to protect the interests of the Company and its stockholders by reducing the likelihood that any person or group gains control of the Company through open market accumulation or other tactics without appropriately compensating all stockholders. The Rights Plan was not adopted in response to any specific proposal to acquire control of the Company or any action by any activist investor.
The Rights Plan is effective immediately and, unless terminated earlier pursuant to its terms, will expire on February 26, 2025. So long as no stockholder has exceeded the thresholds described below, the Board may terminate the Rights Plan prior to the scheduled expiration date, including if the Board determines that there is no longer a threat to shareholder value. Pursuant to the Rights Plan, the Company will issue, by means of a dividend, one preferred share purchase right for each outstanding share of Company common stock to stockholders of record on the close of business on March 8, 2024. Initially, these rights will not be exercisable and will trade with, and be represented by, shares of Company common stock.
Under the Rights Plan, the rights would become exercisable only if a person or group (each, an “acquiring person”) acquires beneficial ownership of
If a stockholder beneficially owns
Further details about the Rights Plan will be contained in a Form 8-K to be filed by the Company with the Securities and Exchange Commission.
J.P. Morgan Securities LLC is serving as financial advisor and Sidley Austin LLP is serving as legal counsel to the Company.
About Veradigm®
Veradigm is a healthcare technology company that drives value through its unique combination of platforms, data, expertise, connectivity, and scale. The Veradigm Network features a dynamic community of solutions and partners providing advanced insights, technology, and data-driven solutions for the healthcare provider, payer, and biopharma markets. For more information about how Veradigm is fulfilling its mission of Transforming Health, Insightfully, visit www.veradigm.com, or find Veradigm on LinkedIn, Facebook, Twitter, and YouTube.
Disclaimer and Forward-Looking Statement Information
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements regarding the Company’s efforts to regain compliance with the Nasdaq Listing Rules, the anticipated delisting and suspension of trading (including the timing and effects thereof), expected trading activity in connection with such delisting and suspension, the Company’s expected continued profitability and the Company’s planned communications with stockholders. These forward-looking statements are based on the current beliefs and expectations of the Company’s management with respect to future events, only speak as of the date that they are made and are subject to significant risks and uncertainties. Such statements can be identified by the use of words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “continue,” “can,” “may,” “look forward,” “aim,” “hopes” and similar terms, although not all forward-looking statements contain such words or expressions. Actual results could differ significantly from those set forth in the forward-looking statements. There can be no assurance that the Board will terminate the Rights Plan prior to its expiration date.
Important factors that could cause a delay in filing the required financial statements and restoring the delisting include, but are not limited to, a further material delay in the Company’s financial reporting or ability to hold an annual meeting of stockholders, including as a result of the leadership changes announced in December 2023, an inability to timely prepare restated financial statements, unanticipated factors or factors that the Company currently believes will not cause delay, the impacts of the previously disclosed, ongoing independent investigation by the Audit Committee of the Board that relates to the Company’s financial reporting, internal controls over financial reporting and disclosure controls (the “Audit Committee Investigation”), including on the Company’s remediation efforts and preparation of financial statements or other factors that could cause additional delay or adjustments, the possibility that the ongoing review may identify additional errors and material weaknesses or other deficiencies in the Company’s accounting practices, the likelihood that the control deficiencies identified or that may be identified in the future will result in additional material weaknesses in the Company’s internal control over financial reporting, risks relating to the Company’s voluntary disclosure to the
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View source version on businesswire.com: https://www.businesswire.com/news/home/20240226723847/en/
Investors:
Jenny Gelinas
312-506-1237
jenny.gelinas@veradigm.com
Media:
Concetta Rasiarmos
312-447-2466
concetta.rasiarmos@veradigm.com
Source: Veradigm Inc.
FAQ
Why does Veradigm Inc. expect to receive a delisting notice from Nasdaq?
What is Veradigm Inc. doing to regain compliance with Nasdaq Listing Rules?
Why did Veradigm Inc. adopt a limited duration stockholder rights plan?
When will the Rights Plan issue preferred share purchase rights to stockholders?
Under what conditions would the rights under the Rights Plan become exercisable?
