v3.26.3
Stockholders’ Deficit
 9 Months Ended
Sep. 30, 2026
Equity [Abstract]  
Stockholders’ Deficit Stockholders’ Deficit
Series A Cumulative Convertible Participating Preferred Stock
On July 1, 2026 (the “Preferred Stock Closing Date”), we entered into an Investment Agreement (the “Investment Agreement”) with Chinotto Investments, LLC (the “Sixth Street Purchaser”) and HCRx Investments HoldCo, L.P. (the “HCR Purchaser”) (collectively, the “Purchasers”), providing for the issuance and sale by the Company to the Purchasers of shares of the Company’s Preferred Stock. Pursuant to the Investment Agreement, the Purchasers purchased an aggregate of 933,900 shares of Preferred Stock (collectively, the “Purchased Shares”) at a purchase price of $1,000 per share, for an aggregate purchase price of $933.9 million, consisting of 800,000 shares purchased by the Sixth Street Purchaser for an aggregate purchase price of $800.0 million and 133,900 shares purchased by the HCR Purchaser for an aggregate purchase price of $133.9 million. The terms of the Preferred Stock are set forth in the Certificate of Designations of Series A Cumulative Convertible Participating Preferred Stock filed with the Secretary of State of the State of Delaware on the Preferred Stock Closing Date (the “Certificate of Designations”). The Preferred Stock is convertible into shares of our common stock, par value $0.001 per share (the “Common Stock”), at an initial conversion price of $137.79 per share, subject to adjustment as set forth in the Certificate of Designations.
The Preferred Stock is redeemable solely at the option of the Company and, as such, is classified within permanent equity in our condensed consolidated balance sheet as of September 30, 2026. The holders of the Preferred Stock are entitled to the rights, preferences and privileges, and are subject to the restrictions, described below with respect to voting, dividends, redemption, liquidation, and conversion.
Voting Rights
Holders of the Preferred Stock generally are entitled to vote with the holders of the Common Stock on an as-converted basis on all matters submitted to a vote of the Company’s stockholders, voting together as a single class, subject to the beneficial ownership and other limitations set forth in the Certificate of Designations. In addition, the approval of the holders of a majority of the outstanding shares of Preferred Stock, voting as a separate class, is required for the Company to take certain actions, including amending its organizational documents or the Certificate of Designations in a manner that adversely affects the Preferred Stock, authorizing, creating or issuing any senior or parity equity securities, and increasing or decreasing the authorized number of shares of Preferred Stock or issuing additional shares of Preferred Stock.
Dividends
The Preferred Stock ranks senior to the Common Stock and each other class or series of our equity securities with respect to the payment of dividends and rights on liquidation, dissolution or winding up. Holders of the Preferred Stock are entitled to dividends that accrue and accumulate daily, whether or not declared, at an initial rate of 7.00% per annum on the Accumulated Amount (as defined in the Certificate of Designations) of such shares, payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year and, at our option, either in cash or by compounding and adding to the Accumulated Amount. The dividend rate is subject to increase, including (i) by 500 basis points on the seventh anniversary of July 1, 2026 (the “Original Issuance Date”), (ii) by an additional 125 basis points commencing on the eighth anniversary of the Original Issuance Date and at the end of each third month thereafter, up to a dividend rate cap of 17.00% per annum, (iii) by 300 basis points upon the occurrence and during the continuation of a Triggering Event (as defined in the Certificate of Designations) and (iv) by 200 basis points in connection with certain change of control transactions in which the Preferred Stock is not redeemed and remains outstanding.
Holders of the Preferred Stock are also entitled to participate in dividends declared or paid on the Common Stock on an as-converted basis, and no dividends may be paid on the Common Stock unless the full participating dividends are paid at the same time to the holders of the Preferred Stock.
Through September 30, 2026, the Company has elected to pay all dividends on the Preferred Stock in cash at the initial rate of 7.00% per annum. The Preferred Stock’s initial carrying value was recorded at a discount to its liquidation preference (i.e., the difference between the issuance price and estimated call price) due to being issued with an increasing rate dividend, in addition to its issuance costs. In accordance with the SEC’s Staff Accounting Bulletin Topic 5.Q, Increasing Rate Preferred Stock, the discount is considered an unstated dividend cost that must be amortized over the expected redemption period using the effective interest method, by charging the imputed dividend cost against additional paid-in capital in the absence of retained earnings and increasing the carrying amount of the Preferred Stock by a corresponding amount. The discount is therefore being amortized over the expected redemption period of six years using an 11.17% effective interest rate, assuming all dividends during the period are paid in cash. The six-year term represents the expected life of the Preferred Stock as the Company expects the Preferred Stock to be converted by such date and if not, the Company expects to exercise its redemption right with respect to such shares prior to the increase in the dividend rate on the seventh anniversary of the Original Issuance Date. The accretion includes approximately $1.3 million of issuance costs paid to third parties. The amortization in each period is the amount which, together with the stated dividend in the period, results in a constant rate of effective cost with regard to the carrying amount of the Preferred Stock. For the period from the Preferred Stock Closing Date to September 30, 2026, the Company recognized dividends of $26.3 million, which includes accretion of the implied discount of $9.9 million.
Following the requisite corporate approvals and in accordance with the Certificate of Designations, cash dividends of $2.7 million and $16.3 million were paid to the holders of the Preferred Stock on July 15, 2026 and October 15, 2026, respectively. As of September 30, 2026, accrued cash dividends of $13.7 million were presented within “Other current liabilities” on our condensed consolidated balance sheets.
Redemption
The Preferred Stock is redeemable solely at the option of the Company and is not redeemable at the option of the holders. At any time following the third anniversary of the Original Issuance Date, we may redeem all or any portion of the outstanding shares of Preferred Stock at a redemption price per share equal to the greatest of (i) the as-converted value of such share based on the Market Price (as defined in the Certificate of Designations) of the Common Stock, (ii) 120% of the Original Issue Price (as defined in the Certificate of Designations) plus the accrued balance of the Preferred Stock, which percentage increases to 125% following the fourth anniversary of the Original Issuance Date and by an additional 5% on each subsequent anniversary, up to a maximum of 140%, and (iii) if either (A) the Company has not paid cash dividends on the Preferred Stock for more than eight quarters prior to the redemption date or (B) the redemption occurs on or after the seventh anniversary of the Original Issuance Date, an amount sufficient to generate a 13% internal pre-tax rate of return on such share.
In the event of a Change of Control (as defined in the Certificate of Designations), we (or our successor or an affiliate thereof) have the option to purchase all, but not less than all, of the outstanding shares of Preferred Stock at a price per share, payable in cash, equal to the greatest of the following as of the date of such purchase: (i) 120% of the Original Issue Price plus the accrued balance of the Preferred Stock, which percentage increases to 125% following the fourth anniversary of the Original Issuance Date and by an additional 5% on each subsequent anniversary, up to a maximum of 140%, (ii) an amount sufficient to generate a 13% internal pre-tax rate of return on such share and (iii) the amount a holder would have received had such shares of Preferred Stock been converted into shares of Common Stock immediately prior to such Change of Control. As of September 30, 2026, no such Change of Control has occurred.
Upon any redemption by the Company, the holders of the Preferred Stock may elect to have such redemption settled by conversion into shares of our Common Stock.
Liquidation Preference
In the event of any Liquidation Event (as defined in the Certificate of Designations), each holder of Preferred Stock shall be entitled to receive liquidating distributions out of the assets of the Company, before any payment or distribution of any assets of the Company shall be made or set apart for holders of all other classes or series of equity securities of the Company, including any other preferred stock or the Common Stock, for such holder’s shares of Preferred Stock in an amount equal to the Liquidation Preference (as defined in the Certificate of Designations). A Change of Control shall not by itself be deemed a Liquidation Event.
Conversion Rights
The holders of the Preferred Stock have the right, at any time and from time to time, to convert their shares of Preferred Stock into shares of Common Stock at the then-effective conversion price, which is initially $137.79 per share and, on and after the fifth anniversary of the Original Issuance Date, $153.10 per share, in each case subject to customary anti-dilution adjustments.
On or after the third anniversary of the Original Issuance Date, we may, at our option, require conversion of all outstanding shares of Preferred Stock if the Market Price of the Common Stock exceeds 200% of the then-applicable conversion price for at least 20 trading days during any 30 consecutive trading day period, subject to the satisfaction of the Common Stock Liquidity Conditions (as defined in the Certificate of Designations). Prior to receipt of the Requisite Stockholder Approval (as defined in the Certificate of Designations), the number of shares of Common Stock issuable to any one holder upon conversion is subject to a beneficial ownership limitation of 19.9% of the total voting power of the Common Stock, calculated on an as-converted basis.
As of September 30, 2026, based on the initial conversion price of $137.79 per share and excluding the accrued cash dividends of $13.7 million, which the Company has elected to pay in cash, the 933,900 shares of Preferred Stock were convertible into an aggregate of 6,777,704 shares of our Common Stock.
2023 Shelf Registration Statement and ATM Agreement
In May 2023, we filed a shelf registration statement on Form S-3 (the “2023 Shelf”) with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants and units or any combination thereof. We also concurrently entered into an Equity Distribution Agreement (the “ATM Agreement”) with Goldman Sachs & Co. LLC and SVB Securities LLC (collectively, the “ATM Sales Agents”), with respect to an “at-the-market” offering program under which we may issue and sell, from time to time at our sole discretion and pursuant to a prospectus supplement, shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $450.0 million through the ATM Sales Agents. We paid the ATM Sales Agents a commission of up to 3.0% of the aggregate gross proceeds received from all sales of the common stock under the ATM Agreement. Since inception of the ATM Agreement through its termination on May 7, 2026, the Company had issued and sold 3,233,208 shares of common stock under the ATM Agreement for aggregate gross proceeds of $104.7 million.
2026 Shelf Registration Statement and ATM Agreement
In May 2026, we filed a shelf registration statement on Form S-3 (the “2026 Shelf”) with the SEC in relation to the registration of common stock, preferred stock, debt securities, warrants and units or any combination thereof. We also concurrently entered into an Equity Distribution Agreement (the “2026 ATM Agreement”) with Goldman Sachs & Co. LLC and Leerink Partners LLC (collectively, the “2026 ATM Sales Agents”), with respect to an “at-the-market” offering program under which we may issue and sell, from time to time at our sole discretion and pursuant to a prospectus supplement, shares of our common stock, par value $0.001 per share, having an aggregate offering price of up to $500.0 million through the 2026 ATM Sales Agents. Under the 2026 ATM Agreement, we have agreed to pay the 2026 ATM Sales Agents a customary commission of up to 3.0% of the aggregate gross proceeds from all sales of the common stock. As of September 30, 2026, $500.0 million remained available to be sold pursuant to the 2026 ATM Agreement under the 2026 Shelf.
2026 Share Repurchase Program
In May 2026, our Board of Directors approved a stock repurchase program pursuant to which we may purchase up to $500.0 million of our outstanding common stock. Stock repurchases under the program may be made from time to time, in the open market, in privately negotiated transactions and otherwise, at the discretion of our management and in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934, as amended, and other applicable legal requirements. The timing, pricing, and amounts of these repurchases will depend on a number of factors, including the market price of our common stock and general market and economic conditions. The stock repurchase program does not obligate us to repurchase any dollar amount or number of shares, and the program may be suspended or discontinued at any time. As of September 30, 2026, we had repurchased 2,616,166 shares under the share repurchase program in the open market at an average price of $66.88 per share for a total of approximately $175.0 million, of which $5.0 million remained unpaid as of that date. The repurchased shares were held as treasury stock as of September 30, 2026.