OptimizeRx Corp Debt Disclosure

NOTE 12 – LONG-TERM DEBT

 

Long-term debt consisted of the following at December 31, 2024 and 2023:

 

		2024				2023
Term loan, due in 2027		$	34,290			$	38,290
Less: current portion of long-term debt			(2,000	)			(2,000	)
Less: unamortized issuance costs			(1,474	)			(2,059	)
Long-term debt, net		$	30,816			$	34,231

 

On October 11, 2023, the Company entered into a Financing Agreement (the “Financing Agreement”) which provided for a term loan (the “Term Loan”) of $40 million, the net proceeds of which were used to partially finance the Medicx Health transaction described in Note 3 “Acquisitions”. In connection with the Term Loan the Company incurred issuance costs of approximately $2,270, which were capitalized and are being amortized to interest expense over the life of the Term Loan. Amortization of debt issuance costs for the year ended December 31, 2024 and December 31, 2023 was $835 and $211, respectively.

 

The Company’s obligations under the Term Loan are secured by all of the Company’s and its subsidiaries’ assets (including a pledge of all of the capital stock and equity interests of its subsidiaries).

 

The Term Loan is repayable in quarterly installments on the last business day of each fiscal quarter, beginning December 31, 2023, in an amount equivalent to 1.25%, of the original principal amount. The outstanding unpaid principal amount and all accrued but unpaid interest thereon, shall be due and payable on the earlier of (i) the fourth anniversary of the closing date of the Term Loan or (ii) the date on which the Term Loan is declared due and payable pursuant to the terms of the Financing.

 

The Company may prepay, subject to an Applicable Premium, 3% if the prepayment is made on a date that is up to and including the first anniversary of closing, 2%, if the prepayment is made up to and including the second anniversary, 1% if the prepayment is made up to and including the third anniversary and zero thereafter, all or a portion of the Term Loan and, under certain circumstances, including certain asset disposals and the raising of indebtedness not permitted under the Term Loan is required to make mandatory prepayments of the principal balance. If the prepayment occurs within 12 months of the date of the loan, the Company is also required to pay lost interest from the prepayment date to one year from the loan funding date.

 

In addition, the Company is required to make a mandatory prepayment on March 31, of each year, commencing with 2025, equivalent to Excess Cash Flow multiplied by a percentage factor of 25%, if the leverage ratio is 3.60 to 1.00 or less, 50% if the leverage ratio is greater than 3.60 to 1 or less than or equal; to 4.10 to 1.00 and 75%, if the leverage ratio is greater than 4.10 to 1.00. Excess Cash Flow is defined in the Financing Agreement as Consolidated EBITDA for the previous fiscal year less scheduled principal and interest payments, capital expenditure, cash taxes and any cash expenses/gains added back to net income in the calculation of Consolidated EBITDA, adjusted for any increase/decrease in working capital during the fiscal year.

 

During the year ended December 31, 2024, the Company made total principal repayments of $4.0 million, including a voluntary prepayment of $2.0 million. During the year ended December 31, 2023, the Company made total principal repayments of $1.7 million, including a mandatory prepayment of $1.2 million as a result of an asset sale completed during the year.

 

At the Company’s option the Term Loan, or any portion thereof bears interest at either:

 

a.

The greater of (a) 4.00% per annum, (b) the Federal Funds Rate plus 0.50% per annum, (c) the one month Secured Overnight Financing Rate (“SOFR”), plus an adjustment of 26.161 basis point and 1.00% per annum, and (d) the rate last quoted by The Wall Street Journal as the “Prime Rate”, plus an Applicable Margin of 7.5%; or

 

b.

Three-month SOFR plus an adjustment of 26.161 basis points and an Applicable Margin of 8.5%

 

As of December 31, 2024, the Loan bears interest at 13.3% per annum, with the effective interest rate for the year ended December 31, 2024, including the amortization of debt issuance costs and Applicable Premium and interest penalties of $66,804 associated with the prepayment during the year ended December 31, 2024 was 16.5%.

The Term Loan requires the Company to maintain certain maximum leverage ratios and Liquidity (as defined in the Financing Agreement), of at least $5.0 million.

 

The Company was in compliance with its financial covenants as of December 31, 2024.

 

The Term Loan contains customary events of default, which include, (subject to, in certain circumstances to grace and cure periods), non-payment of principal and interest, non-compliance with certain covenants, commencement of bankruptcy proceedings and a change in control.

 

Payments due on the Term Loan in each of the next three years subsequent to December 31, 2024, are as follows:

 

For the year ending December 31,
2025			2,000
2026			2,000
2027			30,290
		$	34,290