Related Party Transactions
Other than compensation arrangements for our directors and named executive officers, which are described in Item 11 of this Amendment No. 1 above, we describe transactions during the last fiscal year to which we were a participant or will be a participant, in which (1) the amounts involved exceeded or will exceed $120,000; and (2) any of our directors, executive officers, or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.
Significant Shareholder Relationship
On March 8, 2023, the Company issued an aggregate of 21,620,941 shares of Class A common stock to funds affiliated with Diameter Capital Partners LP (collectively, “Diameter”) upon the exercise of the warrants that were issued to Diameter pursuant to the Warrant Agreement, dated as of February 24, 2023, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent and transfer agent. The warrants were issued in connection with the consummation of a senior secured term loan to the Company from Diameter and Rubicon Credit Holdings LLC in the aggregate principal amount of $150.0 million. The term loan bears interest at a rate equal to (i) on or prior to February 24, 2025, 14% per annum, payable quarterly either (at the Company’s election) in cash or in kind by adding such amount to the principal balance of the term loan and (ii) thereafter, 13% per annum, payable quarterly in cash. The term loan will mature on November 23, 2027.
MedCloud Depot, LLC Relationship
On August 1, 2022, the Company appointed Bob Camerlinck as the Company’s Chief Operating Officer. Mr. Camerlinck owns 20% of MedCloud Depot, LLC (“MedCloud”), a Florida-based software development firm that specializes in health information technology and data warehousing. The Company has a license agreement with MedCloud pursuant to which MedCloud has granted the Company a non-exclusive, non-transferable license to use their software. The Company paid MedCloud $2.6 million for the year ended December 31, 2022. The Company owed MedCloud $0.3 million as of December 31, 2022.
Dental Excellence and Onsite Dental Relationships
On April 14, 2022, CD Support, LLC (“Onsite Dental”) acquired Dental Excellence Partners, LLC (“DEP”), a company who at the time of the acquisition was owned by the spouse of Dr. Marlow Hernandez, the Company’s Chief Executive Officer, and entered into a dental services agreement with the Company. Dr. Hernandez’s spouse became a minority shareholder of Onsite Dental upon closing of the acquisition and remains a member of their Board of Directors and Dr. Hernandez’s brother and mother are employed as dentists at DEP.
The Company has various sublease agreements with Onsite Dental. The Company recognized sublease income of approximately $0.7 million during the year ended December 31, 2022. As of December 31, 2022, an immaterial amount was due to the Company pursuant to these agreements.
On October 9, 2020, the Company entered into a dental services agreement with DEP pursuant to which DEP agreed to provide dental services for the Company’s managed care members. The Company paid DEP approximately $1.5 million during the year ended December 31, 2022. As of December 31, 2022, no balance was due to DEP. Subsequent to Onsite Dental acquiring DEP, the Company entered into a new dental services administration agreement with Onsite Dental to provide dental services for the Company’s managed care members. The Company paid Onsite Dental approximately $8.2 million for the year ended December 31, 2022. As of December 31, 2022, $1.4 million was owed to Onsite Dental.
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