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Debt | 12 Months Ended
--- | ---
Dec. 31, 2021
Debt Disclosure [Abstract] |
Debt |
8. | Debt
Our debt consisted of the following (in thousands):
|  | As of December 31, |
|  | 2021 |  |  | 2020 |
Financing Agreement |  | $ | 200,000 |  |  | $ | 250,000 |
Less: deferred financing fees |  |  | 11,731 |  |  |  | 12,302 |
Debt, net |  |  | 188,269 |  |  |  | 237,698 |
Current maturities of long-term debt |  |  | 188,269 |  |  |  | — |
Long-term debt |  | $ | - |  |  | $ | 237,698 |
Financing agreement We are party to a Financing Agreement with Sixth Street Specialty Lending, Inc., as administrative agent (the “Administrative Agent”), various lenders from time-to-time party thereto, and certain of our subsidiaries party thereto from time to time as guarantors. In connection with the initial borrowing under the Financing Agreement, we paid, for the benefit of the lenders, a facility fee equal to 2.5% of the initial amount borrowed and were required to pay such a facility fee in connection with subsequent borrowings under the Financing Agreement. Borrowings under the Financing Agreement accrue interest at either (i) 3-month LIBOR plus 7.75%, subject to a LIBOR floor of 2.70% or (ii) the prime rate plus 6.75%, subject to a prime rate floor of 5.2% as selected by us. As of December 31, 2021, our interest rate was 10.45%. Interest on amounts borrowed under the Financing Agreement is due and payable quarterly in arrears. In addition, we are required to pay an annual administrative fee, and other fees and expense. We have the right to prepay borrowings under the Financing Agreement in whole or in part at any time, subject to a prepayment fee on the principal amount being prepaid. The Financing Agreement was entered into in April 2019, and it provided us with up to a $300.0 million first lien secured term loan credit facility. The credit facility provided for availability to us in three tranches: (i) $200.0 million was drawn upon entering into the Financing Agreement; (ii) $50.0 million was drawn in February 2020 and (iii) $50.0 million was previously available to us in the Administrative Agent’s sole and absolute discretion either contemporaneously with the delivery of our financial statements for the quarterly period ended June 30, 2020 or at such earlier date as the Administrative Agent may have consented to. In the third quarter of 2020, the Administrative terminated the undrawn $50.0 million tranche under the Financing Agreement, therefore, such amount was no longer available to us to borrow. In August 2020, we entered into Amendment No. 5 to the Financing Agreement (“Amendment No. 5”) pursuant to which, among other amendments, the covenant in the Financing Agreement regarding our achievement of minimum consolidated net revenue attributable to commercial sales of our IMVEXXY, BIJUVA and ANNOVERA products were adjusted in order to reflect the impact of COVID-19 on our business. In lieu of a cash amendment fee, we issued to the Administrative Agent and the lenders under the Financing Agreement warrants to purchase an aggregate of 4,752,116 shares of our common stock with an exercise price of $1.58 per share and a ten-year term (the “Lender Warrants”). The Lender Warrants were issued pursuant to an exemption from registration under the Securities Act of 1933, as amended, and no registration rights were issued. The estimated fair value of the Lender Warrants was $7.4 million, and was recorded as deferred financing cost since Amendment No. 5 was accounted for a s a debt modification. In November 2020, in connection with Amendment No. 6 to the Financing Agreement (“Amendment No. 6”), we amended the Lender Warrants to provide for an adjustment to the exercise price if we conduct certain dilutive issuances prior to December 31, 2020, or if the volume-weighted average price of our common stock for the fifteen trading days ending December 31, 2020 is lower than the then current exercise price. Also, in November 2020, we concluded an underwritten public offering of our common stock and received consideration of $1.19 per share, after deducting for underwriting discounts and commissions. This offering of our common stock automatically triggered the down round provision to the exercise price of the Lender Warrants, which lowered the exercise price from $1.58 to $1.19 per share. The estimated fair value of the adjustment to the exercise price of Lender Warrants was $0.2 million and was recorded as deferred financing cost since Amendment No. 6 was accounted for as a debt modification. No other amendment financing fees were paid. In January 2021, we entered into Amendment No. 7 to the Financing Agreement (“Amendment No. 7”) pursuant to which, among other amendments, the minimum quarterly product net revenue requirements attributable to commercial sales of IMVEXXY, BIJUVA, and ANNOVERA for the fiscal quarters ending March 31, 2021 and June 30, 2021 were reduced, and we paid amendment financing fees of $5.0 million, which was recorded as deferred financing fees since Amendment No 7 was accounted for as debt modification. Additionally, in connection with entering into Amendment No. 7, the warrants issued to the Administrative Agent and the lenders under the Financing Agreement in August 2020 were further amended to provide for an additional adjustment to the exercise price if we conducted certain dilutive issuances prior to March 31, 2021. No adjustments were made to the exercise price of these warrants prior to the expiration of such period. In March 2021, we entered into Amendment No. 8 to the Financing Agreement (“Amendment No. 8”) pursuant to which, among other amendments, the minimum quarterly product net revenue requirements attributable to commercial sales of IMVEXXY, BIJUVA, and ANNOVERA were revised, the amortization and prepayment terms of the borrowings under the Financing Agreement were revised, and the Administrative Agent consented to a framework for our potential disposition of our vitaCare business. In connection with Amendment No. 8, we (i) repaid $50.0 million in principal under the Financing Agreement during the three months ended March 31, 2021, plus a 5.0% prepayment fee and (ii) agreed to make additional quarterly principal repayments plus the prepayment fees as follows: (a) $5.0 million due in March 2022, June 2022 and September 2022; (b) $10.0 million due in December 2022 and March 2023; and (c) $41.25 million due in June 2023, September 2023, December 2023 and March 2024. Additionally, the prepayment fees on principal amounts being prepaid under the Financing Agreement were revised as follows: (i) 30.0% of the principal amount being repaid through March 31, 2022 (excluding the scheduled $5.0 million principal repayment on such date, which is subject to a 5.0% prepayment fee); (ii) 5.0% of the principal amount being repaid from April 2022 through March 2023; (iii) 3.0% of the principal amount being repaid from April 2023 through March 2024; and (iv) thereafter, none, in each case subject to certain limited exceptions, including with respect to a repayment in full of the obligations under the Financing Agreement. Based on the contractual quarterly principal repayments in Amendment No. 8, as of December 31, 2021, we recorded an accrual of $2.2 million related to future prepayment fee obligations, of which $1.3 million is included in accrued expenses and other current liabilities and $0.9 million is included in other non-current liabilities in the accompanying consolidated balance sheets. In March 2022, we entered into Amendment No. 9 to the Financing Agreement (“Amendment No. 9”). See Note 17 – Subsequent events. In accordance with Amendment No. 9, the maturity date of the Financing Agreement was amended to June 1, 2022. Accordingly, the entire debt balance of $200.0 million as of December 31, 2021 will be due and payable in June 2022. The Financing Agreement also includes other representations, warranties, indemnities, restrictions on the payment of dividends, and events of default that are customary for financings of this type, including an event of default relating to a change of control of the Company. Upon or after an event of default, the Administrative Agent and the lenders may declare all or a portion of our obligations under the Financing Agreement to be immediately due and payable and exercise other rights and remedies provided for under the Financing Agreement. The obligations of our company and its subsidiaries under the Financing Agreement are secured, subject to customary permitted liens and other agreed upon exceptions, by a first priority perfected security interest in all existing and after acquired assets of our company and its subsidiaries. The obligations under the Financing Agreement will be guaranteed by each of our future direct and indirect subsidiaries, subject to certain exceptions. Since the inception of the Financing Agreement, we have incurred a total of $18.8 million in deferred financing fees related to the Financing Agreement. As of December 31, 2021, our unamortized deferred financing fees was $11.7 million, which will be entirely amortized upon the maturity of the Financing Agreement in 2022. Additionally, in connection with Amendment No. 9, we will pay financing fees of $30.0 million, which will be paid in kind (“PIK”) by being added to the principal balance of the Financing Agreement, and future prepayment fees were waived. Of the total PIK financing fees, $16.0 million will be waived if one of the two milestones specified in Amendment No. 9 is achieved. Debt covenants The Financing Agreement contains customary restrictions and covenants applicable to us that are customary for financings of this type. Among other requirements, prior to execution of Amendment No. 9 in March 2022, we were required to achieve certain minimum quarterly consolidated net revenue amounts attributable to commercial sales of our IMVEXXY, BIJUVA and ANNOVERA products. We were not in compliance with our covenant to achieve certain minimum quarterly product net revenue requirements for the quarterly period ended December 31, 2021 of $26.5 million. In connection with Amendment No 9, this event of default was waived by the Administrative Agent and lenders, and the minimum product net revenue requirement for the quarterly period ending March 31, 2022, which is the final quarterly reporting period, was removed. The Financing Agreement also required us to maintain a minimum unrestricted cash balance. As of December 31, 2021, our cash balance was in excess of the required minimum balance. However, beginning on February 7, 2022, we did not maintain the required minimum unrestricted cash balance of $ 60.0 million. In connection with Amendment No. 9, this event of default was waived by the Administrative Agent and lenders, and the required minimum unrestricted cash balance was reduced. Credit agreement In April 2019, we terminated and repaid all amounts outstanding under a Credit and Security Agreement (the “Credit Agreement”), as amended, with MidCap Financial Trust, as agent and as lender and the additional lenders party thereto using a portion of the initial tranche of borrowing under the Financing Agreement. The aggregate amount paid of $81.7 million included a prepayment fee of 4%, a repayment fee of 4% and other fees and expenses payable to the lenders under the Credit Agreement. As a result of the termination of the Credit Agreement, we recorded a $10.1 million loss on extinguishment of debt in 2019. Interest and financing costs Interest expense and other financing costs consisted of the following (in thousands):
|  | 2021 |  |  | 2020 |  |  | 2019 |
Interest expense |  | $ | 22,568 |  |  | $ | 26,049 |  |  | $ | 16,526 |
Prepayment fees |  |  | 4,660 |  |  |  | — |  |  |  | — |
Financing fees amortization |  |  | 5,689 |  |  |  | 2,532 |  |  |  | 856 |
Interest expense and other financing costs |  | $ | 32,917 |  |  | $ | 28,581 |  |  | $ | 17,382 |

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