8-K: FOXO Technologies Completes Acquisition of Myrtle Recovery Centers and Issues Shares

FOXO Technologies finalized the acquisition of Myrtle Recovery Centers for $500,000, paid primarily in stock, and issued additional shares for a senior note.

Summary

• FOXO Technologies has completed the acquisition of Myrtle Recovery Centers, a transaction that was initially agreed upon on June 10, 2024.
• The acquisition was finalized on July 17, 2024, with an effective date of June 14, 2024.
• FOXO acquired 98.4% of Myrtle's outstanding shares from Rennova Health, Inc. for a total consideration of $500,000.
• The payment was made through the issuance of 1,023,629 shares of FOXO's Class A Common Stock.
• The number of shares issued was determined by dividing $500,000 by the volume weighted average price (VWAP) of FOXO's stock on the day before closing, with a cap of 19.99% of outstanding shares.
• If the value of the issued shares was less than $500,000, FOXO will pay the difference in cash within 12 months.
• The purchase price may be adjusted based on Myrtle's audited EBITDA, with a dollar-for-dollar adjustment if it varies by more than 10% from the agreed financial statements.
• FOXO also issued 80,600 shares to Smithline Family Trust II on June 25, 2024, and 1,108,755 shares to a note purchaser for a senior note of $840,000.
• As of June 28, 2024, FOXO had 11,280,154 shares of Class A Common Stock outstanding.

Sentiment

Score: 6

Explanation: The document reports a completed acquisition and share issuances, which are generally neutral events. The potential for purchase price adjustments and share dilution introduces some uncertainty, but overall the tone is factual and not overly positive or negative.

Positives

• The acquisition of Myrtle Recovery Centers expands FOXO's business portfolio.
• The use of stock for the majority of the acquisition reduces immediate cash outflow for FOXO.
• The potential adjustment to the purchase price based on EBITDA provides a safeguard for FOXO.

Negatives

• The issuance of a significant number of new shares could dilute existing shareholders' ownership.
• The potential cash payment if the share value is less than $500,000 could impact FOXO's cash reserves.
• The purchase price adjustment based on EBITDA could result in additional share issuance or cash payments.

Risks

• The integration of Myrtle Recovery Centers may present operational challenges.
• The potential for a cash payment if the share value is less than $500,000 could strain FOXO's finances.
• The adjustment to the purchase price based on Myrtle's EBITDA could lead to unexpected financial obligations.

Future Outlook

The document does not provide specific forward-looking statements beyond the completion of the acquisition and the potential purchase price adjustment based on EBITDA.

Industry Context

The acquisition of Myrtle Recovery Centers suggests FOXO is expanding its operations into the healthcare sector, specifically in recovery services. This could be a strategic move to diversify its business and revenue streams.

Comparison to Industry Standards

• Acquisitions in the healthcare sector often involve complex valuation methods, similar to the EBITDA-based adjustment in this deal.
• The use of stock as a primary form of payment is common in acquisitions, especially for companies looking to conserve cash.
• The issuance of shares for debt is also a common practice, particularly for smaller companies seeking to raise capital.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of new shares.
• Employees of Myrtle Recovery Centers will become part of FOXO Technologies.
• The acquisition could potentially impact the customers and suppliers of Myrtle Recovery Centers.

Next Steps

• FOXO will integrate Myrtle Recovery Centers into its operations.
• The company will finalize the audited financial statements of Myrtle to determine if a purchase price adjustment is required.
• FOXO will pay any cash deficit related to the acquisition within 12 months.

Key Dates

Keywords

acquisition, FOXO Technologies, Myrtle Recovery Centers, stock issuance, EBITDA, share dilution, senior note, Rennova Health, Class A Common Stock