References to the "Company," "us," "our" or "we" refer to SCP & CO Healthcare
Acquisition Company. References to our "management" or our "management team" are
to our officers and directors, and references to the "sponsor" are to SCP & CO
Sponsor, LLC. The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with our audited
financial statements and related notes included herein. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Exchange Act that are not historical
facts, and involve risks and uncertainties that could cause actual results to
differ materially from those expected and projected. All statements, other than
statements of historical fact included in this Form 10-Q including, without
limitation, statements in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations" regarding the Company's financial
position, business strategy and the plans and objectives of management for
future operations, are forward-looking statements. Words such as "expect,"
"believe," "anticipate," "intend," "estimate," "seek" and variations and similar
words and expressions are intended to identify such forward-looking statements.
Such forward-looking statements relate to future events or future performance,
but reflect management's current beliefs, based on information currently
available. A number of factors could cause actual events, performance or results
to differ materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's final prospectus for its Initial Public Offering filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
July 29, 2020, for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business
combination with one or more businesses. We intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement Warrants, our capital stock, debt or a combination
of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities for the three-months and nine-months ended September 30,
2021 were organizational activities and those necessary to prepare for the
Initial Public Offering, described below. We do not expect to generate any
operating revenues until after the completion of our initial business
combination. We expect to generate non-operating income in the form of interest
income on marketable securities held after our initial public offering. We incur
expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses.
For the three months and nine months ended September 30, 2021, we had a net
income of $5,054,875 and $8,765,711, respectively which was as the result of as
gain on change in fair value of warrant liability offset by the formation and
operating costs.
Liquidity and Capital Resources
As of September 30, 2021, we had cash of $1,333,153. Until the consummation of
our Initial Public Offering, our only source of liquidity was an initial
purchase of common stock by our Sponsor and loans from our Sponsor.
On January 26, 2021, we consummated our Initial Public Offering of 23,000,000
Units, at a price of $10.00 per unit, which included the full exercise by the
underwriters of their over-allotment option in the amount of 3,000,000 units,
generating gross proceeds of $230,000,000. Simultaneously with the closing of
our initial public offering, we consummated the sale of 8,100,000 Private
Placement Warrants to our Sponsor at a price of $1.00 per Private Placement
Warrant generating gross proceeds of $8,100,000.
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Following our Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the private placement warrants, a total of $230,000,000
was placed in the trust account. We incurred $13,280,809 in transaction costs,
including $4,600,000 of underwriting fees, $8,050,000 of deferred underwriting
fees and $630,809 of other offering costs.
We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
deferred underwriting commissions and income taxes payable), to complete our
initial Business Combination. To the extent that our capital stock or debt is
used, in whole or in part, as consideration to complete our initial Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
We intend to use the funds held outside the Trust Account of $1,333,153 as of
September 30, 2021 primarily to identify and evaluate target businesses, perform
business due diligence on prospective target businesses, travel to and from the
offices, plants or similar locations of prospective target businesses or their
representatives or owners, review corporate documents and material agreements of
prospective target businesses, and structure, negotiate and complete our initial
Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with our initial Business Combination, our sponsor or an affiliate of
our sponsor or certain of our officers and directors may, but are not obligated
to, loan us funds as may be required. If we complete our initial Business
Combination, we may repay such loaned amounts out of the proceeds of the Trust
Account released to us. In the event that our initial business combination does
not close, we may use a portion of the working capital held outside the Trust
Account to repay such loaned amounts, but no proceeds from our trust account
would be used for such repayment. Up to $1,500,000 of such loans may be
convertible into warrants, at a price of $1.00 per warrant, at the option of the
lender. The warrants would be identical to the private placement warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating our initial Business Combination are less than the actual amount
necessary to do so, we may have insufficient funds available to operate our
business prior to our initial business combination. Moreover, we may need to
obtain additional financing either to complete our initial Business Combination
or because we become obligated to redeem a significant number of our public
shares upon consummation of our initial Business Combination, in which case we
may issue additional securities or incur debt in connection with such initial
Business Combination. Subject to compliance with applicable securities laws, we
would only complete such financing simultaneously with the completion of our
initial Business Combination. If we are unable to complete our initial Business
Combination because we do not have sufficient funds available to us, we will be
forced to cease operations and liquidate the trust account. In addition,
following our initial Business Combination, if cash on hand is insufficient, we
may need to obtain additional financing in order to meet our obligations.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be
considered off-balance sheet arrangements as of September 30, 2021. We do not
participate in transactions that create relationships with unconsolidated
entities or financial partnerships, often referred to as variable interest
entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements. We have not entered into
any off-balance sheet financing arrangements, established any special purpose
entities, guaranteed any debt or commitments of other entities, or purchased
any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than described below.
Commencing on January 21, 2021, we entered into an agreement pursuant to which
it will pay our Sponsor $10,000 per month for office space, secretarial and
administrative services. Upon completion of our initial Business Combination or
its liquidation, we will cease paying these monthly fees.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,050,000
in the aggregate. The deferred fee will become payable to the underwriters from
the amounts held in the Trust Account solely in the event that we complete a
Business Combination, subject to the terms of the underwriting agreement.
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Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standard Update ("ASU") No. 2020-06,
"Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for
Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU 2020-06 also removes
certain settlement conditions that are required for equity-linked contracts to
qualify for the derivative scope exception and it also simplifies the diluted
earnings per share calculation in certain areas. The Company is still assessing
the impact of ASU 2020-06 on its financial statements. The Company's management
does not believe that any recently issued, but not yet effective, accounting
standards updates, if currently adopted, would have a material effect on the
accompanying condensed consolidated financial statements.
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