SS&C Technologies Holdings Inc

Previous wording

Our results of operations below include the results of our recent acquisition from the date which it was acquired. The Iress Managed Funds Administration Business (“2023 acquisition”) was acquired in October 2023.

Current wording

Our results of operations below include the results of our recent acquisition from the date which it was acquired. The Iress Managed Funds Administration Business (“2023 acquisition”) was acquired in October 2023 and Battea-Class Action Services, LLC (“Battea”) was acquired in September 2024.

Previous wording

Three Months Ended June 30, 2024 and 2023. Our revenues increased $88.9 million, or 6.5%, primarily due to an increase of $86.4 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, Global Investor and Distribution Solutions, Wealth and Investment Technologies and virtual data room services businesses. Our revenues also increased due to the 2023 acquisition, which contributed $4.1 million in revenues, partially offset by the unfavorable impact from foreign currency translation of $1.6 million. Software-enabled services revenues increased $85.9 million, or 7.8%, primarily due to an increase in organic revenues of $83.1 million and the 2023 acquisition, which added $3.4 million in revenues, partially offset by the unfavorable impact from foreign currency translation of $0.6 million. License, maintenance and related revenues increased $3.0 million, or 1.2%, primarily due to an increase in organic revenues of $3.3 million and the 2023 acquisition, which added $0.7 million in revenues. Those increases were partially offset by the unfavorable impact from foreign currency translation of $1.0 million.

Current wording

Three Months Ended September 30, 2024 and 2023. Our revenues increased $99.9 million, or 7.3%, primarily due to an increase of $87.5 million in organic revenues driven by strength in the SS&C GlobeOp fund administration, Global Investor and Distribution Solutions, Wealth and Investment Technologies and virtual data room services businesses. Our revenues also increased due to acquisitions, which contributed $7.7 million in revenues and the favorable impact from foreign currency translation of $4.7 million. Software-enabled services revenues increased $84.1 million, or 7.5%, primarily due to an increase in organic revenues of $73.4 million, acquisitions, which added $7.0 million in revenues, and the favorable impact from foreign currency translation of $3.7 million. License, maintenance and related revenues increased $15.8 million, or 6.5%, primarily due to an increase in organic revenues of $14.1 million, the favorable impact from foreign currency translation of $1.0 million and acquisitions, which added $0.7 million in revenues.

Previous wording

Six Months Ended June 30, 2024 and 2023. Our revenues increased $161.2 million, or 5.9%, primarily due to an increase of $150.2 million in organic revenues driven by strength in the SS&C GlobeOp fund administration and virtual data room services businesses. Our revenues also increased due to the 2023 acquisition, which contributed $7.0 million in revenues and the favorable impact from foreign currency translation of $4.0 million. Software-enabled services revenues increased $159.4 million, or 7.2%, primarily due to an increase in organic revenues of $148.7 million, the 2023 acquisition, which added $6.0 million in revenue and the favorable impact from foreign currency translation of $4.7 million. License, maintenance and related revenues increased $1.8 million, or 0.4%, primarily due to an increase in organic revenues of $1.5 million and the 2023 acquisition, which added $1.0 million in revenue. Those increases were partially offset by the unfavorable impact from foreign currency translation of $0.7 million.

Current wording

Nine Months Ended September 30, 2024 and 2023. Our revenues increased $261.1 million, or 6.4%, primarily due to an increase of $237.7 million in organic revenues driven by strength in the SS&C GlobeOp fund administration and virtual data room services businesses. Our revenues also increased due to acquisitions, which contributed $14.7 million in revenues and the favorable impact from foreign currency translation of $8.7 million. Software-enabled services revenues increased $243.5 million, or 7.3%, primarily due to an increase in organic revenues of $222.1 million, acquisitions, which added $13.0 million in revenue and the favorable impact from foreign currency translation of $8.4 million. License, maintenance and related revenues increased $17.6 million, or 2.4%, primarily due to an increase in organic revenues of $15.6 million, acquisition, which added $1.7 million in revenue and the favorable impact from foreign currency translation of $0.3 million.

Previous wording

Six Months Ended June 30, 2024 and 2023. Our total cost of revenues increased by $33.8 million, or 2.3%, primarily due to an increase of $21.6 million in organic costs and the 2023 acquisition, which added costs of $10.0 million, and the unfavorable impact from foreign currency translation, which increased costs by $2.2 million. Our organic cost increase reflects continued investment in delivering client service. Cost of software-enabled services revenues increased $28.2 million, or 2.2%, primarily due to an increase of $16.3 million in organic costs, the 2023 acquisition, which added $10.0 million in costs, and the unfavorable impact from foreign currency translation of $1.9 million. Cost of license, maintenance and related revenues increased $5.6 million, or 3.0%, primarily due to an increase of $5.3 million in organic costs and the unfavorable impact from foreign currency translation of $0.3 million.

Current wording

Three Months Ended September 30, 2024 and 2023. Our total cost of revenues increased by $50.1 million, or 7.0%, primarily due to an increase of $41.1 million in organic costs, acquisitions, which added costs of $6.3 million and the unfavorable impact from foreign currency translation, which increased costs by $2.7 million. Our organic cost increase reflects continued investment in delivering client service. Cost of software-enabled services revenues increased $44.1 million, or 7.1%, primarily due to an increase of $35.8 million in organic costs, acquisitions, which added $6.3 million in costs and the unfavorable impact from foreign currency translation of $2.0 million. Cost of license, maintenance and related revenues increased $6.0 million, or 6.4%, primarily due to an increase of $5.3 million in organic costs and the unfavorable impact from foreign currency translation of $0.7 million.

Previous wording

Three Months Ended June 30, 2024 and 2023. Our total cost of revenues increased by $31.7 million, or 4.4%, primarily due to an increase of $27.4 million in organic costs and the 2023 acquisition, which added costs of $5.3 million, partially offset by the favorable impact from foreign currency translation, which decreased costs by $1.0 million. Our organic cost increase reflects continued investment in delivering client service. Cost of software-enabled services revenues increased $25.4 million, or 4.0%, primarily due to an increase of $20.9 million in organic costs and the 2023 acquisition, which added $5.3 million in costs, partially offset by the favorable impact from foreign currency translation of $0.8 million. Cost of license, maintenance and related revenues increased $6.3 million, or 6.8%, primarily due to an increase of $6.5 million in organic costs, partially offset by the favorable impact from foreign currency translation of $0.2 million.

Current wording

Nine Months Ended September 30, 2024 and 2023. Our total cost of revenues increased by $83.9 million, or 3.9%, primarily due to an increase of $62.8 million in organic costs, acquisitions, which added costs of $16.2 million, and the unfavorable impact from foreign currency translation, which increased costs by $4.9 million. Our organic cost increase reflects continued investment in delivering client service. Cost of software-enabled services revenues increased $72.3 million, or 3.9%, primarily due to an increase of $52.1 million in organic costs, acquisitions, which added $16.2 million in costs, and the unfavorable impact from foreign currency translation of $4.0 million. Cost of license, maintenance and related revenues increased $11.6 million, or 4.1%, primarily due to an increase of $10.7 million in organic costs and the unfavorable impact from foreign currency translation of $0.9 million.

Previous wording

Selling and marketing expenses consist primarily of the personnel costs associated with the selling and marketing of our products, including salaries, commissions and travel and entertainment. Such expenses also include amortization of intangible assets, the cost of branch sales offices, trade shows and marketing and promotional materials. Research and development expenses consist primarily of personnel costs attributable to the enhancement of existing products and the development of new software products. General and administrative expenses consist primarily of personnel costs related to management, accounting and finance, information management, human resources and administration and associated overhead costs, as well as fees for professional services.

Current wording

Selling and marketing expenses consist primarily of the personnel costs associated with the selling and marketing of our products, including salaries, commissions and travel and entertainment. Such expenses also include amortization of intangible assets, the cost of branch sales offices, trade shows and marketing and promotional materials. Research and development expenses consist primarily of personnel costs attributable to the enhancement of existing products and the development of new software products.

Previous wording

Six Months Ended June 30, 2024 and 2023. Operating expenses increased $35.2 million, or 5.0%, due to an increase of $33.5 million in organic operating expenses, the 2023 acquisition, which added $1.1 million in expenses, and the unfavorable impact from foreign currency translation of $0.6 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to shifting resources to support organic growth and an adjustment recorded in the three months ended June 30, 2023 to stock-based compensation expense related to performance awards.

Current wording

Three Months Ended September 30, 2024 and 2023. Operating expenses increased $31.1 million, or 8.9%, due to an increase of $26.5 million in organic operating expenses, acquisitions, which added $2.3 million in expenses, and the unfavorable impact from foreign currency translation of $2.3 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to resource needs to support organic growth.

Previous wording

Three Months Ended June 30, 2024 and 2023. Operating expenses increased $17.8 million, or 5.0%, due to an increase of $18.5 million in organic operating expenses and the 2023 acquisition, which added $0.6 million in expenses, partially offset by the favorable impact from foreign currency translation of $1.3 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to shifting resources to support organic growth and an adjustment recorded in the three months ended June 30, 2023 to stock-based compensation expense related to performance awards.

Current wording

Nine Months Ended September 30, 2024 and 2023. Operating expenses increased $66.3 million, or 6.3%, due to an increase of $60.0 million in organic operating expenses, acquisitions, which added $3.4 million in expenses, and the unfavorable impact from foreign currency translation of $2.9 million. Total operating expenses, excluding the impact of acquisitions and foreign currency translation, primarily increased due to resource needs to support organic growth.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023 for Interest, Taxes and Other

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023 for Interest, Taxes and Other

Previous wording

Interest expense, net. Net interest expense totaled $113.3 million and $229.3 million for the three and six months ended June 30, 2024, respectively, compared to $118.0 million and $229.9 million for the three and six months ended June 30, 2023, respectively. The decrease in interest expense, net for 2024 as compared to 2023, is primarily due to lower average debt balances partially offset by slightly higher interest rates. We had an average interest rate of 6.80% and 6.83% for the three and six months ended June 30, 2024, respectively, compared to 6.59% and 6.40% for the three and six months ended June 30, 2023, respectively.

Current wording

Interest expense, net. Net interest expense totaled $109.6 million and $338.9 million for the three and nine months ended September 30, 2024, respectively, compared to $120.6 million and $350.5 million for the three and nine months ended September 30, 2023, respectively. The decrease in interest expense, net for 2024 as compared to 2023, for the three months ended is primarily due to lower average debt balances. The decrease in interest expense, net for the nine months ended September 30, 2024 is due to lower average debt balances, partially offset by slightly higher average interest rates. We had an average interest rate of 6.78% and 6.81% for the three and nine months ended September 30, 2024, respectively, compared to 6.87% and 6.56% for the three and nine months ended September 30, 2023, respectively.

Previous wording

Other income, net. Other income, net was $0.6 million and $7.2 million for the three and six months ended June 30, 2024, respectively, compared to $14.9 million and $20.3 million for the three and six months ended June 30, 2023, respectively. For the three and six months ended June 30, 2024, other income, net consisted primarily of dividend income of $2.1 million and $12.6 million, respectively, partially offset by foreign currency translation losses of $1.1 million and $5.8 million, respectively. For the three and six months ended June 30, 2023, other income, net included income of $13.4 million from the settlement of a dispute related to pre-acquisition matters. During the three and six months ended June 30, 2023, other income, net also included dividend income of $2.2 million and $12.4 million, respectively, partially offset by losses of $0.5 million and $6.7 million, respectively, related to the fair value adjustments on assets held for sale.

Current wording

Other income (expense), net. Other income (expense), net was $9.3 million and $16.5 million for the three and nine months ended September 30, 2024, respectively, compared to $(5.0) million and $15.3 million for the three and nine months ended September 30, 2023, respectively. For the three months ended September 30, 2024, other income (expense), net consisted primarily of foreign currency translation gains of $4.2 million, investment gains due to mark-to market adjustments of $3.1 million and dividend income of $2.2 million. For the nine months ended September 30, 2024, other income (expense), net consisted primarily of dividend income of $14.8 million and investment gains due to mark-to-market adjustments of $2.5 million, partially offset by foreign currency translation losses of $1.6 million. For the three and nine months ended September 30, 2023, other (expense) income, net included investment losses due to mark-to-market adjustments of $2.7 million and $0.9 million, respectively, and foreign currency translation losses of $2.5 million and $3.7 million, respectively, as well as dividend income of $2.3 million and $14.6 million, respectively. During the nine months ended September 30, 2023, other income also included income of $13.4 million from the settlement of a dispute related to pre-acquisition matters and losses of $7.3 million related to the fair value adjustments on assets held for sale.

Previous wording

Equity in earnings of unconsolidated affiliates, net. Equity in earnings of unconsolidated affiliates, net totaled $17.3 million and $19.6 million for the three and six months ended June 30, 2024, respectively, compared to $9.4 million and $15.1 million for the three and six months ended June 30, 2023, respectively. The increase in equity in earnings of unconsolidated affiliates, net in 2024 is primarily related to a $16.2 million and $17.4 million adjustment for the three and six months ended June 30, 2024, respectively, to increase the carrying value of one of our investments. Our equity in earnings of unconsolidated affiliates, net in 2023 included a $7.6 million and $12.4 million adjustment for the three and six months ended June 30, 2023, respectively, to increase the carrying value of one of our investments.

Current wording

Equity in earnings of unconsolidated affiliates, net. Equity in earnings of unconsolidated affiliates, net totaled $1.1 million and $20.7 million for the three and nine months ended September 30, 2024, respectively, compared to $27.5 million and $42.6 million for the three and nine months ended September 30, 2023, respectively. Our equity in earnings of unconsolidated affiliates, net in 2024 included a $17.1 million adjustment for the nine months ended September 30, 2024 to increase the carrying value of one of our investments. Our equity in earnings of unconsolidated affiliates, net in 2023 included a $26.4 million and $38.8 million adjustment for the three and nine months ended September 30, 2023, respectively, to increase the carrying value of one of our investments.

Previous wording

Our effective tax rates for the three and six months ended June 30, 2024 and 2023 differ from the statutory rate of 21.0% primarily due to the composition of income before income taxes from foreign and domestic tax jurisdictions, foreign income that is being taxed in the U.S. offset by foreign tax credits that are being limited and the recognition of windfall tax benefits from stock awards. Our effective tax rates for the three and six months ended June 30, 2024 include benefits of $40.8 million related to releases of uncertain tax positions and $5.7 million of tax refunds, both due to closed audits. The change in the effective tax rate for the three and six months ended June 30, 2024 compared to the prior year was primarily related to releases of uncertain tax positions due to closed audits and a proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions. While we have income from multiple foreign sources, the majority of our non-U.S. operations are in the United Kingdom and India. We anticipate the statutory tax rates in 2024 to be 25.0% in the United Kingdom and approximately 25.5% in India. A future change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate.

Current wording

Our effective tax rates for the three and nine months ended September 30, 2024 and 2023 differ from the statutory rate of 21.0% primarily due to the composition of income before income taxes from foreign and domestic tax jurisdictions, foreign income that is being taxed in the U.S. offset by foreign tax credits that are being limited and the recognition of windfall tax benefits from stock awards. Our effective tax rates for the three and nine months ended September 30, 2024 include benefits of $1.1 million and $41.9 million, respectively, related to releases of uncertain tax positions and $1.5 million and $7.2 million, respectively, of tax refunds, due to closed audits and statute of limitations expirations. The change in the effective tax rate for the three months ended September 30, 2024 compared to the prior year was primarily related to a proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions, partially offset by an increased recognition of windfall tax benefits from stock awards in the current year. The change in the effective tax rate for the nine months ended September 30, 2024 compared to the prior year was primarily related to releases of uncertain tax positions in the current year due to closed audits, an increased recognition of windfall tax benefits from stock awards in the current year and a proportionate change in the composition of income before income taxes from foreign and domestic tax jurisdictions. While we have income from multiple foreign sources, the majority of our non-U.S. operations are in the United Kingdom and India. We anticipate the statutory tax rates in 2024 to be 25.0% in the United Kingdom and approximately 25.4% in India. A future change in the composition of income before income taxes from foreign and domestic tax jurisdictions could impact our periodic effective tax rate.

Previous wording

On August 16, 2022, the Inflation Reduction Act was signed into law, which includes a 15% corporate alternative minimum tax and a 1% excise tax on stock repurchases. The provisions were effective January 1, 2023 and were immaterial to our financial results, financial position and cash flows. The 1% excise tax on share repurchases is included as a cost to acquire treasury stock.

Current wording

On August 16, 2022, the Inflation Reduction Act was signed into law, which includes a 15% corporate alternative minimum tax and a 1% excise tax on stock repurchases. The provisions were effective January 1, 2023 and were immaterial to our financial results, financial position and cash flows. The 1% excise tax on stock repurchases is included as a cost to acquire treasury stock.

Previous wording

We paid quarterly cash dividends of $0.24 per share of common stock in each of March and June 2024 totaling $119.8 million. We paid quarterly cash dividends of $0.20 per share of common stock in each of March and June 2023 totaling $101.2 million.

Current wording

We paid quarterly cash dividends of $0.24 per share of common stock in each of March 2024 and June 2024 and $0.25 per share of common stock in September 2024 totaling $182.6 million in the aggregate. We paid quarterly cash dividends of $0.20 per share of common stock in each of March 2023 and June 2023 and $0.24 per share of common stock in September 2023 totaling $160.9 million in the aggregate.

Previous wording

Client funds obligations include our transfer agency client balances invested overnight as well as our contractual obligations to remit funds to satisfy client pharmacy claim obligations and are recorded on the Condensed Consolidated Balance Sheet when incurred, generally after a claim has been processed by us. Our contractual obligations to remit funds to satisfy client obligations are primarily sourced by funds held on behalf of clients. We had $1,624.2 million of client funds obligations at June 30, 2024.

Current wording

Client funds obligations include our transfer agency client balances invested overnight as well as our contractual obligations to remit funds to satisfy client pharmacy claim obligations and are recorded on the Condensed Consolidated Balance Sheet when incurred, generally after a claim has been processed by us. Our contractual obligations to remit funds to satisfy client obligations are primarily sourced by funds held on behalf of clients. We had $2,081.5 million of client funds obligations at September 30, 2024.

Previous wording

Net cash provided by operating activities was $565.4 million for the six months ended June 30, 2024. Cash provided by operating activities primarily resulted from net income of $348.7 million adjusted for non-cash items of $406.4 million, partially offset by changes in our working capital accounts totaling $189.7 million. The changes in our working capital accounts were driven by decreases in accrued expenses, an increase in accounts receivable and a decrease in accounts payable, partially offset by an increase in deferred revenue.

Current wording

Net cash provided by operating activities was $902.0 million for the nine months ended September 30, 2024. Cash provided by operating activities primarily resulted from net income of $513.3 million adjusted for non-cash items of $640.0 million, partially offset by changes in our working capital accounts totaling $251.3 million. The changes in our working capital accounts were driven by an increase in accounts receivable, decreases in accrued expenses, a decrease in accounts payable and an increase in contract assets.

Previous wording

Investing activities used net cash of $84.0 million for the six months ended June 30, 2024, primarily related to $100.2 million in capitalized software development costs and $15.8 million in capital expenditures, partially offset by $24.5 million in distributions received from unconsolidated affiliates, the collection of other non-current receivables of $5.0 million and proceeds from the sale of property and equipment of $3.2 million.

Current wording

Investing activities used net cash of $802.6 million for the nine months ended September 30, 2024, primarily related to $646.9 million paid for business acquisitions, net of cash acquired and asset acquisitions, $149.7 million in capitalized software development costs and $41.7 million in capital expenditures, partially offset by $24.4 million in distributions received from unconsolidated affiliates, the collection of other non-current receivables of $7.7 million and proceeds from the sale of property and equipment of $3.3 million.

Previous wording

Financing activities used net cash of $1,597.6 million for the six months ended June 30, 2024, primarily representing a net decrease in client fund obligations of $1,151.6 million, $279.9 million of purchases of common stock for treasury, $119.8 million in quarterly dividends paid, $105.1 million of net debt repayments and $30.0 million in payments of deferred financing fees. These expenditures were partially offset by proceeds of $103.7 million from stock option exercises.

Current wording

Financing activities used net cash of $790.1 million for the nine months ended September 30, 2024, primarily representing a net decrease in client fund obligations of $952.2 million, $369.3 million of purchases of common stock for treasury, $182.6 million in quarterly dividends paid, $36.6 million in payments of deferred financing fees and $20.3 million in withholding taxes paid related to equity award net share settlements. These expenditures were partially offset by net borrowings of $484.9 million, proceeds of $271.1 million from stock option exercises and proceeds from noncontrolling interests of $14.9 million.

Previous wording

We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive operating cash flows. At June 30, 2024, we held approximately $242.3 million in cash and cash equivalents at non-U.S. subsidiaries where we had made such a determination and in turn no provision for income taxes had been made.

Current wording

We have made a permanent reinvestment determination in certain non-U.S. operations that have historically generated positive operating cash flows. At September 30, 2024, we held approximately $251.9 million in cash and cash equivalents at non-U.S. subsidiaries where we had made such a determination and in turn no provision for income taxes had been made.

Previous wording

On May 9, 2024, we entered into the Incremental Joinder & First Amendment to Credit Agreement (the “Amendment”), which amends our existing amended and restated credit agreement, dated as of April 16, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Pursuant to the Amendment, we borrowed $3,935.0 million in aggregate principal amount of incremental term B-8 loans (the “Term B-8 Loans”). The Term B-8 Loans bear interest at, at our option, the Base Rate (as defined in the Amendment), plus 1.00% per annum, or the Term SOFR Rate (as defined in the Amendment), plus 2.00% per annum.

Current wording

On May 9, 2024, we entered into the Incremental Joinder & First Amendment to Credit Agreement (the “Amendment”), which amended our existing amended and restated credit agreement, dated as of April 16, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”). Pursuant to the Amendment, we borrowed $3,935.0 million in aggregate principal amount of incremental term B-8 loans (the “Term B-8 Loans”). The Term B-8 Loans bear interest at, at our option, the Base Rate (as defined in the Amendment), plus 1.00% per annum, or the Term SOFR Rate (as defined in the Amendment), plus 2.00% per annum.

Previous wording

We evaluated the borrowing of our Term B-8 Loans and issuance of 6.5% Senior Notes and the repayment of our Existing Term Loans in accordance with FASB Accounting Standards Codification 470-50, Debt Modifications and Extinguishments. We determined that the new debt borrowing and issuance and existing debt repayment were two independent transactions due to the fact that (i) no single investor held a significant concentration of both the old and the new debt, (ii) none of the old investors were included in negotiations with creditors about modifying the old debt, and (iii) all lenders were provided the same opportunity to participate in the new debt regardless of whether they were an existing lender. Consequently, the refinancing was accounted for as a debt extinguishment. As a result, we capitalized an aggregate of $34.5 million in financing costs during the three months ended June 30, 2024, which represent new third-party costs. The Existing Term Loans borrowing costs of $27.7 million were expensed and are included in Loss on extinguishment of debt in the Condensed Consolidated Statement of Comprehensive Income during the three months ended June 30, 2024.

Current wording

We evaluated the borrowing of our Term B-8 Loans and issuance of 6.5% Senior Notes and the repayment of our Existing Term Loans in accordance with FASB Accounting Standards Codification 470-50, Debt Modifications and Extinguishments. We determined that the new debt borrowing and issuance and existing debt repayment were two independent transactions due to the fact that (i) no single investor held a significant concentration of both the old and the new debt, (ii) none of the old investors were included in negotiations with creditors about modifying the old debt, and (iii) all lenders were provided the same opportunity to participate in the new debt regardless of whether they were an existing lender. Consequently, the refinancing was accounted for as a debt extinguishment. As a result, the Existing Term Loans borrowing costs of $27.7 million were expensed and are included in Loss on extinguishment of debt in the Condensed Consolidated Statement of Comprehensive Income during the nine months ended September 30, 2024.

Previous wording

Our obligations under the Term B-8 Loans are guaranteed by our existing and future wholly-owned domestic restricted subsidiaries (subject to customary exceptions and limitations). The obligations of the loan parties under the amended senior secured credit facility are secured by substantially all of the assets of such persons (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S. wholly-owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain foreign restricted subsidiaries of such persons (with customary exceptions and limitations).

Current wording

Our obligations under the Term B-8 Loans and Term A-9 Loans are guaranteed by our existing and future wholly-owned domestic restricted subsidiaries (subject to customary exceptions and limitations). The obligations of the loan parties under the amended senior secured credit facility are secured by substantially all of the assets of such persons (subject to customary exceptions and limitations), including a pledge of all of the capital stock of substantially all of the U.S. wholly-owned restricted subsidiaries of such persons (with customary exceptions and limitations) and 65% of the capital stock of certain foreign restricted subsidiaries of such persons (with customary exceptions and limitations).

Previous wording

The amended senior secured credit facility includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit our ability and the ability of our restricted subsidiaries to incur debt or liens, make investments (including in the form of loans and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of our subsidiaries, pay dividends on our capital stock or redeem, repurchase or retire our capital stock, alter the business we conduct, amend, prepay, redeem or purchase subordinated debt, or engage in transactions with our affiliates. The amended senior secured credit facility also contains customary representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions. In addition, the amended senior secured credit facility contains a financial covenant for the benefit of the Revolving Credit Facility requiring us to maintain a minimum consolidated net secured leverage ratio. In addition, under the amended senior secured credit facility, certain defaults under agreements governing other material indebtedness could result in an event of default under the amended senior secured credit facility, in which case the lenders could elect to accelerate payments under the amended senior secured credit facility and terminate any commitments they have to provide future borrowings. As of June 30, 2024, we were in compliance with all financial and non-financial covenants.

Current wording

The amended senior secured credit facility includes negative covenants that, among other things and subject to certain thresholds and exceptions, limit our ability and the ability of our restricted subsidiaries to incur debt or liens, make investments (including in the form of loans and acquisitions), merge, liquidate or dissolve, sell property and assets, including capital stock of our subsidiaries, pay dividends on our capital stock or redeem, repurchase or retire our capital stock, alter the business we conduct, amend, prepay, redeem or purchase subordinated debt, or engage in transactions with our affiliates. The amended senior secured credit facility also contains customary representations and warranties, affirmative covenants and events of default, subject to customary thresholds and exceptions. In addition, the amended senior secured credit facility contains a financial covenant for the benefit of the Revolving Credit Facility requiring us to maintain a maximum consolidated net secured leverage ratio. The amended senior secured credit facility also contains a financial maintenance covenant for the benefit of the Term A-9 Loans that will require us to maintain a separate maximum consolidated net secured leverage ratio. In addition, under the amended senior secured credit facility, certain defaults under agreements governing other material indebtedness could result in an event of default under the amended senior secured credit facility, in which case the lenders could elect to accelerate payments under the amended senior secured credit facility and terminate any commitments they have to provide future borrowings. As of September 30, 2024, we were in compliance with all financial and non-financial covenants.

Previous wording

Under the Revolving Credit Facility portion of the amended senior secured credit facility, we are required to satisfy and maintain a specified financial ratio at the end of each fiscal quarter if the sum of (i) outstanding amount of all loans under the Revolving Credit Facility and (ii) all non-cash collateralized letters of credit issued under the Revolving Credit Facility in excess of $20 million is equal to or greater than 30% of the total commitments under the Revolving Credit Facility. Our ability to meet this financial ratio can be affected by events beyond our control, and we cannot assure you that we will meet this ratio. Any breach of this covenant could result in an event of default under the amended senior secured credit facility. Upon the occurrence of any event of default under the amended senior secured credit facility, the lenders could elect to declare all amounts outstanding under the amended senior secured credit facility to be immediately due and payable and terminate all commitments to extend further credit. Any default and subsequent acceleration of payments under the amended senior secured credit facility would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under the amended senior secured credit facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to baskets and ratios based on Consolidated EBITDA.

Current wording

Under the Revolving Credit Facility portion of the amended senior secured credit facility, we are required to satisfy and maintain a specified financial ratio at the end of each fiscal quarter if the sum of (i) outstanding amount of all loans under the Revolving Credit Facility and (ii) all non-cash collateralized letters of credit issued under the Revolving Credit Facility in excess of $20 million is equal to or greater than 30% of the total commitments under the Revolving Credit Facility. In addition, the Term A-9 Loans will be subject to a 5.25x consolidated net secured leverage ratio commencing at the fiscal quarter ending December 31, 2024, which will, at our option, increase to 5.75x for four consecutive fiscal quarters following a material permitted acquisition. Our ability to meet either financial ratio can be affected by events beyond our control, and we cannot assure you that we will meet either ratio. Any breach of either financial covenant could result in an event of default under the amended senior secured credit facility. Upon the occurrence of any event of default under the amended senior secured credit facility, the lenders could elect to declare all amounts outstanding under the amended senior secured credit facility to be immediately due and payable and terminate all commitments to extend further credit. Any default and subsequent acceleration of payments under the amended senior secured credit facility would have a material adverse effect on our results of operations, financial position and cash flows. Additionally, under the amended senior secured credit facility, our ability to engage in activities such as incurring additional indebtedness, making investments and paying dividends is also tied to baskets and ratios based on Consolidated EBITDA.

Previous wording

Our covenant requirement for consolidated net secured leverage ratio and the actual ratio as of June 30, 2024 are as follows:

Current wording

Our covenant requirement for consolidated net secured leverage ratio for the benefit of the Revolving Credit Facility and the actual ratio as of September 30, 2024 are as follows:

Previous wording

Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, excluding $88.5 million of cash and cash equivalents held at DomaniRx, to Consolidated EBITDA, as defined by the amended senior secured credit facility, for the period of four consecutive fiscal quarters ended on the measurement date. Consolidated net secured funded indebtedness is comprised of indebtedness for borrowed money, letters of credit, deferred purchase price obligations and capital lease obligations, all of which is secured by liens on our property.

Current wording

Calculated as the ratio of consolidated net secured funded indebtedness, net of cash and cash equivalents, excluding $159.0 million of cash and cash equivalents held at DomaniRx, to Consolidated EBITDA, as defined by the amended senior secured credit facility, for the period of four consecutive fiscal quarters ended on the measurement date. Consolidated net secured funded indebtedness is comprised of indebtedness for borrowed money, letters of credit, deferred purchase price obligations and capital lease obligations, all of which is secured by liens on our property.