Syneos Health Inc. filed SEC Form 8-K: Regulation FD Disclosure, Financial Statements and Exhibits

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 6, 2023

SYNEOS HEALTH, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: (919) 876-9300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 7.01 Regulation FD Disclosure.

As previously disclosed, on May 10, 2023, Syneos Health, Inc., a Delaware corporation (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Star Parent, Inc., a Delaware corporation (“Parent”), and Star Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that, upon the terms and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will merge with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent.

Parent intends to share certain supplemental information about the Company with potential investors as it seeks to raise its debt financing to fund the Merger as described in the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on June 27, 2023. The Company expects that its existing Senior Notes due January 2029 will be redeemed in connection with the Merger and related debt financing. The Company and Parent’s joint press release announcing the financing is attached hereto as Exhibit 99.1. Relevant excerpts of the supplemental information to be shared with investors are provided below:

Certain Supplemental Metrics

The below percentages of revenue and net revenue by business line are provided for the year ended December 31, 2022:

The below is the Company’s previously disclosed Consolidated Statements of Operations for the six months ended June 30, 2023 and 2022 and the year ended December 31, 2022 and 2021:

The Company’s Clinical Solutions book-to-bill ratio excluding reimbursable out-of-pocket expenses for the three months ended June 30, 2023 was 0.9x. Clinical Solutions book-to-bill ratio excluding reimbursable out-of-pocket expenses, represents Clinical Solutions net new business awards, excluding reimbursable out-of-pocket expenses, divided by Clinical Solutions revenue, excluding reimbursable out-of-pocket expenses, in each case for the respective period.

Information Regarding Non-GAAP Financial Metrics

This Current Report on Form 8-K (“Form 8-K”) includes certain supplemental financial measures of the Company’s performance that have not been calculated in accordance with GAAP, including, for example, net revenue, adjusted net income, Reported EBITDA, Management Adjusted EBITDA, and Adjusted EBITDA. Parent anticipates that each of the non-GAAP measures noted in this Form 8-K will be used by management and the Board, following closing of the Merger, to evaluate the Company’s core operating results because they exclude certain items whose fluctuations from period-to-period do not necessarily correspond to changes in the core operations of the business.

Such non-GAAP financial measures are not prepared with a view towards compliance with published guidelines of the SEC, and are not measures of net income, operating income or any other performance measure derived in accordance with GAAP, and are subject to important limitations. These non-GAAP financial measures exclude or include amounts from the most directly comparable measure calculated and presented in accordance with GAAP in the statements of operations, balance sheets, or statements of cash flows of the Company, and they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP. Also, other companies might calculate these measures differently. Reconciliation of such non-GAAP financial measures to the most closely comparable financial measure calculated in accordance with GAAP are provided below.

Clinical Solutions Business Unit Revenue to Net Revenue

Net revenue is defined as revenue less reimbursable out-of-pocket expenses. The table below shows each business unit’s revenue, reimbursable out-of-pocket expenses and net revenue for the year ended December 31, 2022.

Commercial Solutions Business Unit Revenue to Net Revenue

Net revenue is defined as revenue less reimbursable out-of-pocket expenses. The table below shows each business unit’s revenue, reimbursable out-of-pocket expenses and net revenue for the year ended December 31, 2022.

Adjusted Net Income

Adjusted net income is defined as net income excluding amortization; restructuring and other costs; transaction, integration-related, and other expenses; share-based compensation expense; other income (expense), net; loss on extinguishment of debt; and the income tax effect of the above adjustments. The below table presents a reconciliation from net income to adjusted net income.

Reported EBITDA, Management Adjusted EBITDA, Adjusted EBITDA

Reported EBITDA represents earnings before interest, taxes, depreciation and amortization. The Company defines Management Adjusted EBITDA as Reported EBITDA, further adjusted to exclude expenses and transactions that the Company believes are not representative of its core operations, namely: restructuring and other costs; transaction, integration-related, and other expenses; share-based compensation expense; and other income (expense), net. The Company defines Adjusted EBITDA as Management Adjusted EBITDA, further adjusted to add expenses or exclude gains that the Company believes are not representative of its normal operations, namely: adding certain bonus costs, excluding certain gains on sales of fleet vehicles, and accounting for other normalizing adjustments. The below table reconciles net income, the most directly comparable GAAP measure, to Reported EBITDA, Management Adjusted EBITDA, and Adjusted EBITDA.

The information in this Item 7.01 of this Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing. This Form 8-K and the information contained herein shall not constitute an offering to buy or sell securities of the Company.

Forward-Looking Statements

Certain statements contained in this Form 8-K may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including statements containing the words “predicts,” “plans,” “expects,” “anticipates,” “believes,” “goal,” “target,” “estimate,” “potential,” “may,” “might,” “could,” “see,” “seek,” “forecast,” and similar words. All statements, other than historical facts, including statements regarding the financing for the Merger and the expected retirement of the Company’s Senior Notes due January 2029, are forward-looking statements. The forward-looking statements are based on the Company’s current plans and expectations and involve risks and uncertainties which are, in many instances, beyond its control, and which could cause actual results to differ materially from those included in or contemplated or implied by the forward-looking statements. Such risks and uncertainties include, among others: (i) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including the failure to close the proposed transaction by November 10, 2023; (ii) the failure to obtain certain required regulatory approvals to the completion of the proposed transaction or the failure to satisfy any of the other conditions to the completion of the proposed transaction; (iii) any difficulties of Star Parent, Inc., an affiliated entity of Elliott Investment Management, Patient Square Capital and Veritas Capital, in financing the transaction as a result of uncertainty or adverse developments in the debt or equity capital markets or otherwise; (iv) the effect of the announcement of the proposed transaction on the ability of the Company to retain and hire key personnel and maintain relationships with its key business partners and customers, and others with whom it does business, or on its operating results and businesses generally; (v) the response of competitors to the proposed transaction; (vi) risks associated with the disruption of management’s attention from ongoing business operations due to the proposed transaction; (vii) the ability to meet expectations regarding the timing and completion of the proposed transaction; (viii) significant costs associated with the proposed transaction; (ix) litigation relating to the proposed transaction; (x) restrictions during the pendency of the proposed transaction that may impact the Company’s ability to pursue certain business opportunities; and (xi) the risk factors set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as updated by the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, and its other filings with the Securities and Exchange Commission, copies of which are available free of charge on the Company’s website at investor.syneoshealth.com. The Company assumes no obligation and does not intend to update these forward-looking statements, except as required by law.

(d) Exhibits

The following exhibits are included with this Form 8-K:

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.