Exhibit 99.2
Unaudited Pro Forma Condensed Consolidated Financial Information
The unaudited pro forma condensed consolidated financial statements were prepared to assist readers in understanding the nature and effects of the sale (the “Asset Sale”) by Interpace Biosciences, Inc., (the “Company”), on August 31, 2022 of substantially all of the assets and the ongoing business comprising the Company’s Pharma Services business (“Interpace Pharma Solutions”) pursuant to the Asset Purchase Agreement, dated as of August 31, 2022, by and among Flagship Biosciences, Inc. (the “Buyer”), Interpace Pharma Solutions, Inc. and the Company (the “Asset Purchase Agreement”). The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2022, and for the year ended December 31, 2021 have been prepared with the assumption that the Asset Sale was completed as of January 1, 2021. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2022 has been prepared with the assumption that the Asset Sale was completed as of the balance sheet date.
The unaudited pro forma condensed consolidated financial information is prepared in accordance with Article 11 of Regulation S-X. The historical consolidated financial information has been adjusted in the accompanying unaudited pro forma condensed consolidated financial information to give effect to pro forma events that are (i) directly attributable to the Asset Sale, (ii) factually supportable, and (iii) with respect to the Unaudited Pro Forma Condensed Consolidated Statements of Operations, expected to have a continuing impact on the consolidated results.
The unaudited pro forma condensed consolidated financial statements do not purport to be indicative of the results of operations or the financial position which would have actually resulted if the Asset Sale had been completed on the dates indicated, or which may result in the future.
The unaudited pro forma financial information has been prepared by the Company based upon assumptions deemed appropriate by the Company’s management. An explanation of certain assumptions is set forth under the notes to the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as amended, Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2022.
INTERPACE BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of June 30, 2022
(in thousands, except share and per share data)
| | | Interpace Biosciences, Inc | | | Sale of Interpace Pharma Solutions (d), (e) | | | Adjustments | | | Pro Forma | |
| | | | | | | | | | | | | |
| ASSETS | | | | | | | | | | | | | | | | |
| Current assets: | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 1,865 | | | $ | - | | | $ | 6,433 | (f) | | $ | 8,298 | |
| Restricted cash | | | 250 | | | | - | | | | - | | | | 250 | |
| Accounts receivable, net of allowance for doubtful accounts of $72 | | | 6,446 | | | | (2,244 | ) | | | - | | | | 4,202 | |
| Other current assets | | | 2,697 | | | | (1,177 | ) | | | 500 | (f) | | | 2,020 | |
| Total current assets | | | 11,258 | | | | (3,421 | ) | | | 6,933 | | | | 14,770 | |
| Property and equipment, net | | | 5,970 | | | | (5,621 | ) | | | - | | | | 349 | |
| Other intangible assets, net | | | 6,215 | | | | - | | | | (4,719 | )(b) | | | 1,496 | |
| Goodwill | | | 8,433 | | | | - | | | | (8,433 | )(b) | | | - | |
| Operating lease right of use assets | | | 3,483 | | | | (2,589 | ) | | | - | | | | 894 | |
| Other long-term assets | | | 129 | | | | (19 | ) | | | - | | | | 110 | |
| Total assets | | $ | 35,488 | | | $ | (11,650 | ) | | $ | (6,219 | ) | | $ | 2,849 | |
| | | | | | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | | | | | |
| Accounts payable | | $ | 3,522 | | | $ | (1,307 | ) | | $ | - | | | $ | 2,215 | |
| Accrued salary and bonus | | | 3,368 | | | | (509 | ) | | | - | | | | 2,859 | |
| Other accrued expenses | | | 8,793 | | | | (563 | ) | | | - | | | | 8,230 | |
| Convertible debt | | | 2,000 | | | | - | | | | - | | | | 2,000 | |
| Current liabilities from discontinued operations | | | 766 | | | | - | | | | - | | | | 766 | |
| Total current liabilities | | | 18,449 | | | | (2,379 | ) | | | - | | | | 16,070 | |
| Contingent consideration | | | 762 | | | | - | | | | - | | | | 762 | |
| Operating lease liabilities, net of current portion | | | 2,691 | | | | (2,496 | ) | | | - | | | | 195 | |
| Line of credit | | | 2,500 | | | | - | | | | - | | | | 2,500 | |
| Note payable at fair value | | | 7,782 | | | | - | | | | - | | | | 7,782 | |
| Other long-term liabilities | | | 4,720 | | | | (37 | ) | | | - | | | | 4,683 | |
| Total liabilities | | | 36,904 | | | | (4,912 | ) | | | - | | | | 15,922 | |
| | | | | | | | | | | | | | | | | |
| Commitments and contingencies | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Redeemable preferred stock, $.01 par value; 5,000,000 shares authorized, 47,000 shares Series B issued and outstanding | | | 46,536 | | | | - | | | | - | | | | 46,536 | |
| | | | | | | | | | | | | | | | | |
| Stockholders’ deficit: | | | | | | | | | | | | | | | | |
| Common stock, $.01 par value; 100,000,000 shares authorized; 4,277,317 shares issued, 4,229,948 shares outstanding | | | 404 | | | | - | | | | - | | | | 404 | |
| Additional paid-in capital | | | 186,823 | | | | - | | | | - | | | | 186,823 | |
| Accumulated deficit | | | (233,245 | ) | | | (6,738 | ) | | | (6,219 | )(g) | | | (246,202 | ) |
| Treasury stock, at cost (47,369 shares) | | | (1,934 | ) | | | - | | | | - | | | | (1,934 | ) |
| Total stockholders’ deficit | | | (47,952 | ) | | | (6,738 | ) | | | (6,219 | ) | | | (60,909 | ) |
| Total liabilities and stockholders’ deficit | | | (11,048 | ) | | | (11,650 | ) | | | (6,219 | ) | | | (44,987 | ) |
| | | | | | | | | | | | | | | | | |
| Total liabilities, preferred stock and stockholders’ deficit | | $ | 35,488 | | | $ | (11,650 | ) | | $ | (6,219 | ) | | $ | 1,549 | |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements
INTERPACE BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
| | | Pro Forma Six Months Ended June 30, 2022 | |
| | | Interpace Biosciences Inc. | | | Sale of Interpace Pharma Solutions (a) | | | Adjustments | | | Pro Forma | |
| | | | | | | | | | | | | |
| Revenue, net | | $ | 19,728 | | | $ | 4,410 | | | $ | - | | | $ | 15,318 | |
| Cost of revenue | | | 11,234 | | | | 4,404 | | | | - | | | | 6,830 | |
| Gross profit | | | 8,494 | | | | 6 | | | | - | | | | 8,488 | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Sales and marketing | | | 5,190 | | | | 439 | | | | - | | | | 4,751 | |
| Research and development | | | 566 | | | | 131 | | | | - | | | | 435 | |
| General and administrative | | | 7,597 | | | | 1,728 | | | | - | | | | 5,869 | |
| Transition expense | | | 146 | | | | 146 | | | | - | | | | - | |
| Acquisition related amortization expense | | | 1,071 | | | | 436 | | | | - | | | | 635 | |
| Change in fair value of contingent consideration | | | (311 | ) | | | - | | | | - | | | | (311 | ) |
| Total operating expenses | | | 14,259 | | | | 2,880 | | | | - | | | | 11,379 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (5,765 | ) | | | (2,874 | ) | | | - | | | | (2,891 | ) |
| Interest accretion expense | | | (85 | ) | | | - | | | | - | | | | (85 | ) |
| Related party interest | | | - | | | | - | | | | - | | | | - | |
| Note payable interest | | | (390 | ) | | | - | | | | - | | | | (390 | ) |
| Other income (expense), net | | | 194 | | | | (4 | ) | | | - | | | | 198 | |
| Loss from continuing operations before tax | | | (6,046 | ) | | | (2,878 | ) | | | - | | | | (3,168 | ) |
| Provision for income taxes | | | 34 | | | | - | | | | - | (c) | | | 34 | |
| Loss from continuing operations | | | (6,080 | ) | | | (2,878 | ) | | | - | | | | (3,202 | ) |
| | | | | | | | | | | | | | | | | |
| Loss from discontinued operations, net of tax | | | (106 | ) | | | - | | | | - | | | | (106 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss | | $ | (6,186 | ) | | $ | (2,878 | ) | | $ | - | | | $ | (3,308 | ) |
| | | | | | | | | | | | | | | | | |
| Basic and diluted loss per share of common stock: | | | | | | | | | | | | | | | | |
| From continuing operations | | $ | (1.44 | ) | | | | | | | | | | $ | (0.76 | ) |
| From discontinued operations | | | (0.03 | ) | | | | | | | | | | | (0.03 | ) |
| Net loss per basic and diluted share of common stock | | $ | (1.47 | ) | | | | | | | | | | $ | (0.78 | ) |
| Weighted average number of common shares and common share equivalents outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 4,219 | | | | | | | | | | | | 4,219 | |
| Diluted | | | 4,219 | | | | | | | | | | | | 4,219 | |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements
INTERPACE BIOSCIENCES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except for per share data)
| | | Pro Forma Year Ended December 31, 2021 | |
| | | Interpace Biosciences Inc. | | | Sale of Interpace Pharma Solutions (a) | | | Adjustments | | | Pro Forma | |
| | | | | | | | | | | | | |
| Revenue, net | | $ | 41,314 | | | $ | 8,197 | | | $ | - | | | $ | 33,117 | |
| Cost of revenue | | | 23,369 | | | | 9,055 | | | | - | | | | 14,314 | |
| Gross profit | | | 17,945 | | | | (858 | ) | | | - | | | | 18,803 | |
| Operating expenses: | | | | | | | | | | | | | | | | |
| Sales and marketing | | | 10,067 | | | | 890 | | | | - | | | | 9,177 | |
| Research and development | | | 1,882 | | | | 389 | | | | - | | | | 1,493 | |
| General and administrative | | | 13,669 | | | | 2,964 | | | | - | | | | 10,705 | |
| Transition expense | | | 2,585 | | | | 1,688 | | | | - | | | | 897 | |
| Loss on DiaMir transaction | | | 13 | | | | - | | | | - | | | | 13 | |
| Acquisition related amortization expense | | | 4,064 | | | | 872 | | | | - | | | | 3,192 | |
| Change in fair value of contingent consideration | | | (338 | ) | | | - | | | | - | | | | (338 | ) |
| Total operating expenses | | | 31,942 | | | | 6,803 | | | | - | | | | 25,139 | |
| | | | | | | | | | | | | | | | | |
| Operating loss | | | (13,997 | ) | | | (7,661 | ) | | | - | | | | (6,336 | ) |
| Interest accretion expense | | | (496 | ) | | | - | | | | - | | | | (496 | ) |
| Related party interest | | | (424 | ) | | | - | | | | - | | | | (424 | ) |
| Other income (expense), net | | | (496 | ) | | | (10 | ) | | | - | | | | (486 | ) |
| Loss from continuing operations before tax | | | (15,413 | ) | | | (7,671 | ) | | | - | | | | (7,742 | ) |
| Benefit for income taxes | | | (667 | ) | | | - | | | | - | (c) | | | (667 | ) |
| Loss from continuing operations | | | (14,746 | ) | | | (7,671 | ) | | | - | | | | (7,075 | ) |
| | | | | | | | | | | | | | | | | |
| Loss from discontinued operations, net of tax | | | (197 | ) | | | - | | | | - | | | | (197 | ) |
| | | | | | | | | | | | | | | | | |
| Net loss | | $ | (14,943 | ) | | $ | (7,671 | ) | | $ | - | | | $ | (7,272 | ) |
| | | | | | | | | | | | | | | | | |
| Basic and diluted loss per share of common stock: | | | | | | | | | | | | | | | | |
| From continuing operations | | $ | (3.57 | ) | | | | | | | | | | $ | (1.71 | ) |
| From discontinued operations | | | (0.05 | ) | | | | | | | | | | | (0.05 | ) |
| Net loss per basic and diluted share of common stock | | $ | (3.61 | ) | | | | | | | | | | $ | (1.76 | ) |
| Weighted average number of common shares and common share equivalents outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 4,135 | | | | | | | | | | | | 4,135 | |
| Diluted | | | 4,135 | | | | | | | | | | | | 4,135 | |
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements
INTERPACE BIOSCIENCES, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
1. INTERPACE PHARMA SOLUTIONS SALE
On August 31, 2022, the Company completed a sale of its Interpace Pharma Solutions business unit to the Buyer for an aggregate cash purchase price at the closing of approximately $7,000,000 ($500,000 of which has been deposited into escrow), subject to a potential post-closing working capital adjustment, and the assumption by the Buyer of certain specified liabilities. Under the Purchase Agreement, the Company is also entitled to receive an earnout payment on or before September 23, 2022 of up to $2,000,000, subject to the gross revenue of Interpace Pharma Solutions being greater than $7,000,000 for the period beginning September 1, 2021 and ending August 31, 2022.
2. UNAUDITED PRO FORMA ADJUSTMENTS
The following notes describe the basis for and/or assumptions regarding certain of the pro forma adjustments included in the Company’s unaudited pro forma condensed consolidated financial statements:
(a) The amounts being eliminated represent the revenues, cost of revenues, and operating and other expenses that are attributable to the sale of Interpace Pharma Solutions.
(b) The net carrying amounts of goodwill and other intangible assets associated with Interpace Pharma Solutions. The balances became impaired and were immediately written off on the effective date of the Sale.
(c) Due to the existence of both current year operating losses and net operating loss carryforwards for the Company, any income tax expense resulting from the Sale would be offset. Therefore, no pro forma adjustment for income tax expense has been presented in connection with the Sale.
(d) Represents the disposition of the assets and liabilities that are being transferred as part of the Sale
(e) Net book value of Interpace Pharma Solutions:
| Interpace Pharma Solutions assets to be sold | | $ | 11,650 | |
| Interpace Pharma Solutions liabilities to be assumed | | | (4,912 | ) |
| Net book value of Interpace Pharma Solutions | | $ | 6,738 | |
(f) To record sales proceeds, net of estimated closing costs, for the sale of Interpace Pharma Solutions. The cash proceeds were calculated based on management’s estimate of the probability of certain scenarios as defined in the Purchase Agreement.
| Cash proceeds | | $ | 7,000 | |
| Escrow amount | | | (500 | ) |
| Working capital adjustment | | | 58 | |
| Transaction costs to be incurred at closing (bank fees, legal, accounting) | | | (125 | ) |
| Net cash from Sale of Interpace Pharma Solutions | | $ | 6,433 | |
(g) Adjustments to accumulated deficit:
| Cash proceeds | | $ | 7,000 | |
| Transaction costs | | | (125 | ) |
| Goodwill and other intangible asset impairments | | | (13,152 | ) |
| | | $ | (6,277 | ) |
