Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 01, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-39439 | |
Entity Registrant Name | ATI Physical Therapy, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 85-1408039 | |
Entity Address, Address Line One | 790 Remington Boulevard | |
Entity Address, City or Town | Bolingbrook | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60440 | |
City Area Code | 630 | |
Local Phone Number | 296-2223 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 4,209,265 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001815849 | |
Current Fiscal Year End Date | --12-31 | |
Common Class A | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Class A common stock, $0.0001 par value | |
Trading Symbol | ATIP | |
Security Exchange Name | NYSE | |
Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per share | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Redeemable Warrants, exercisable for Class A common stock at an exercise price of $575.00 per share | |
Trading Symbol | ATIP WS |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
Current assets: | |||
Cash and cash equivalents | $ 19,730 | $ 83,139 | |
Accounts receivable (net of allowance for doubtful accounts of $50,789 and $47,620 at September 30, 2023 and December 31, 2022, respectively) | 84,970 | 80,673 | |
Prepaid expenses | 12,458 | 13,526 | |
Other current assets | 6,367 | 10,040 | |
Assets held for sale | 0 | 6,755 | |
Total current assets | 123,525 | 194,133 | |
Property and equipment, net | 109,652 | 123,690 | |
Operating lease right-of-use assets | 207,802 | 226,092 | |
Goodwill, net | 289,650 | 286,458 | |
Trade name and other intangible assets, net | 246,028 | 246,582 | |
Other non-current assets | 1,866 | 2,030 | |
Total assets | 978,523 | 1,078,985 | |
Current liabilities: | |||
Accounts payable | 11,456 | 12,559 | |
Accrued expenses and other liabilities | 55,618 | 53,672 | |
Current portion of operating lease liabilities | 52,351 | 47,676 | |
Liabilities held for sale | 0 | 2,614 | |
Total current liabilities | 119,425 | 116,521 | |
Long-term debt, net | [1] | 417,379 | 531,600 |
2L Notes due to related parties, at fair value | 95,448 | 0 | |
Warrant liability | 10 | 98 | |
Contingent common shares liability | 1,028 | 2,835 | |
Deferred income tax liabilities | 19,168 | 18,886 | |
Operating lease liabilities | 197,084 | 218,424 | |
Other non-current liabilities | 1,654 | 1,834 | |
Total liabilities | 851,196 | 890,198 | |
Commitments and contingencies (Note 16) | |||
Mezzanine equity: | |||
Series A Senior Preferred Stock, $0.0001 par value; 1.0 million shares authorized; 0.2 million shares issued and outstanding; $1,211.90 stated value per share at September 30, 2023; $1,108.34 stated value per share at December 31, 2022 | 217,072 | 140,340 | |
Stockholders' equity: | |||
Class A common stock, $0.0001 par value; 470.0 million shares authorized; 4.2 million shares issued, 4.0 million shares outstanding at September 30, 2023; 4.1 million shares issued, 4.0 million shares outstanding at December 31, 2022 | 0 | 0 | |
Treasury stock, at cost, 0.006 million shares and 0.002 million shares at September 30, 2023 and December 31, 2022, respectively | (217) | (146) | |
Additional paid-in capital | 1,309,166 | 1,378,716 | |
Accumulated other comprehensive income | 550 | 4,899 | |
Accumulated deficit | (1,403,683) | (1,339,511) | |
Total ATI Physical Therapy, Inc. equity | (94,184) | 43,958 | |
Non-controlling interests | 4,439 | 4,489 | |
Total stockholders' equity | (89,745) | 48,447 | |
Total liabilities, mezzanine equity and stockholders' equity | $ 978,523 | $ 1,078,985 | |
[1]Includes $16.9 million of principal amount of debt due to related parties as of September 30, 2023. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | |
Statement of Financial Position [Abstract] | |||
Allowance for doubtful accounts | $ 50,789 | $ 47,620 | |
Temporary Equity, Preferred stock, par value (dollars per share) | $ 0.0001 | $ 0.0001 | |
Temporary Equity, Preferred stock, shares authorized (in shares) | 1,000,000 | 1,000,000 | |
Temporary Equity, Preferred stock, shares issued (in shares) | 200,000 | 200,000 | |
Temporary Equity, Preferred stock, shares outstanding (in shares) | 200,000 | 200,000 | |
Temporary Equity, Preferred stock, stated value (dollars per share) | $ 1,211.9 | $ 1,108.34 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | |
Common stock, shares authorized (in shares) | 470,000,000 | 470,000,000 | |
Common stock, shares Issued (in shares) | 4,200,000 | 4,100,000 | |
Common stock, shares outstanding (in shares) | 4,000,000 | 4,000,000 | |
Treasury stock (in shares) | 6,490 | 2,000 | |
Long-term debt, net | [1] | $ 417,379 | $ 531,600 |
Related Party | |||
Long-term debt, net | $ 16,900 | ||
[1]Includes $16.9 million of principal amount of debt due to related parties as of September 30, 2023. |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Net revenue | $ 177,455 | $ 156,792 | $ 516,724 | $ 473,907 |
Cost of services: | ||||
Salaries and related costs | 97,089 | 90,309 | 283,119 | 267,330 |
Rent, clinic supplies, contract labor and other | 52,699 | 51,417 | 156,014 | 153,437 |
Provision for doubtful accounts | 3,346 | 2,797 | 9,831 | 11,408 |
Total cost of services | 153,134 | 144,523 | 448,964 | 432,175 |
Selling, general and administrative expenses | 25,085 | 25,263 | 92,253 | 87,095 |
Goodwill, intangible and other asset impairment charges | 0 | 106,663 | 0 | 390,224 |
Operating loss | (764) | (119,657) | (24,493) | (435,587) |
Change in fair value of 2L Notes | (1,485) | 0 | (8,495) | 0 |
Change in fair value of warrant liability | (88) | (790) | (88) | (3,651) |
Change in fair value of contingent common shares liability | (306) | (6,930) | (1,807) | (32,760) |
Interest expense, net | 15,478 | 11,780 | 46,096 | 31,815 |
Other expense, net | 117 | 195 | 1,089 | 3,181 |
Loss before taxes | (14,480) | (123,912) | (61,288) | (434,172) |
Income tax expense (benefit) | 131 | (7,218) | 282 | (43,532) |
Net loss | (14,611) | (116,694) | (61,570) | (390,640) |
Net income (loss) attributable to non-controlling interests | 586 | (376) | 2,602 | (1,026) |
Net loss attributable to ATI Physical Therapy, Inc. | (15,197) | (116,318) | (64,172) | (389,614) |
Less: Series A Senior Preferred Stock redemption value adjustments | (2,927) | 0 | 41,769 | 0 |
Less: Series A Senior Preferred Stock cumulative dividend | 6,075 | 5,274 | 17,087 | 12,263 |
Loss available to common stockholders, diluted | (18,345) | (121,592) | (123,028) | (401,877) |
Loss available to common stockholders, basic | $ (18,345) | $ (121,592) | $ (123,028) | $ (401,877) |
Loss per share of Class A common stock: | ||||
Basic (in dollars per share) | $ (4.42) | $ (29.76) | $ (29.83) | $ (99.13) |
Diluted (in dollars per share) | $ (4.42) | $ (29.76) | $ (29.83) | $ (99.13) |
Weighted average shares outstanding: | ||||
Basic (in shares) | 4,154 | 4,086 | 4,125 | 4,054 |
Diluted (in shares) | 4,154 | 4,086 | 4,125 | 4,054 |
Net patient revenue | ||||
Net revenue | $ 162,258 | $ 142,313 | $ 469,950 | $ 429,744 |
Other revenue | ||||
Net revenue | $ 15,197 | $ 14,479 | $ 46,774 | $ 44,163 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (14,611) | $ (116,694) | $ (61,570) | $ (390,640) |
Other comprehensive (loss) income: | ||||
Cash flow hedges | (43) | 655 | (4,349) | 7,115 |
Comprehensive loss | (14,654) | (116,039) | (65,919) | (383,525) |
Net income (loss) attributable to non-controlling interests | 586 | (376) | 2,602 | (1,026) |
Comprehensive loss attributable to ATI Physical Therapy, Inc. | $ (15,240) | $ (115,663) | $ (68,521) | $ (382,499) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Non-Controlling Interests |
Beginning balance (in shares) at Dec. 31, 2021 | 3,948,199 | ||||||
Beginning balance at Dec. 31, 2021 | $ 511,507 | $ 0 | $ (95) | $ 1,351,617 | $ 28 | $ (847,132) | $ 7,089 |
Beginning balance (in shares) at Dec. 31, 2021 | 596 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of 2022 Warrants | 19,725 | 19,725 | |||||
Vesting of restricted shares distributed to holders of ICUs (in shares) | 1,510 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 812 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | (256) | 256 | |||||
Tax withholdings related to net share settlement of restricted stock units and awards | (22) | $ (22) | |||||
Non-cash share-based compensation | 1,960 | 1,960 | |||||
Other comprehensive income (loss) | 3,752 | 3,752 | |||||
Distribution to non-controlling interest holders | (473) | (473) | |||||
Net income (loss) attributable to non-controlling interests | (473) | (473) | |||||
Net loss attributable to ATI Physical Therapy, Inc. | (137,750) | (137,750) | |||||
Ending balance (in shares) at Mar. 31, 2022 | 3,950,265 | ||||||
Ending balance at Mar. 31, 2022 | 398,226 | $ 0 | $ (117) | 1,373,302 | 3,780 | (984,882) | 6,143 |
Ending balance (in shares) at Mar. 31, 2022 | 852 | ||||||
Beginning balance (in shares) at Dec. 31, 2021 | 3,948,199 | ||||||
Beginning balance at Dec. 31, 2021 | 511,507 | $ 0 | $ (95) | 1,351,617 | 28 | (847,132) | 7,089 |
Beginning balance (in shares) at Dec. 31, 2021 | 596 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Other comprehensive income (loss) | 7,115 | ||||||
Net income (loss) attributable to non-controlling interests | (1,026) | ||||||
Net loss attributable to ATI Physical Therapy, Inc. | (389,614) | ||||||
Ending balance (in shares) at Sep. 30, 2022 | 3,962,359 | ||||||
Ending balance at Sep. 30, 2022 | 152,367 | $ 0 | $ (136) | 1,377,172 | 7,143 | (1,236,746) | 4,934 |
Ending balance (in shares) at Sep. 30, 2022 | 1,109 | ||||||
Beginning balance (in shares) at Mar. 31, 2022 | 3,950,265 | ||||||
Beginning balance at Mar. 31, 2022 | 398,226 | $ 0 | $ (117) | 1,373,302 | 3,780 | (984,882) | 6,143 |
Beginning balance (in shares) at Mar. 31, 2022 | 852 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of restricted shares distributed to holders of ICUs (in shares) | 2,377 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 6,608 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | (132) | 132 | |||||
Tax withholdings related to net share settlement of restricted stock units and awards | (12) | $ (12) | |||||
Non-cash share-based compensation | 1,959 | 1,959 | |||||
Other comprehensive income (loss) | 2,708 | 2,708 | |||||
Distribution to non-controlling interest holders | (139) | (139) | |||||
Net income (loss) attributable to non-controlling interests | (177) | (177) | |||||
Net loss attributable to ATI Physical Therapy, Inc. | (135,546) | (135,546) | |||||
Ending balance (in shares) at Jun. 30, 2022 | 3,959,118 | ||||||
Ending balance at Jun. 30, 2022 | 267,019 | $ 0 | $ (129) | 1,375,261 | 6,488 | (1,120,428) | 5,827 |
Ending balance (in shares) at Jun. 30, 2022 | 984 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of restricted shares distributed to holders of ICUs (in shares) | 1,176 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 2,190 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | (125) | 125 | |||||
Tax withholdings related to net share settlement of restricted stock units and awards | (7) | $ (7) | |||||
Non-cash share-based compensation | 1,911 | 1,911 | |||||
Other comprehensive income (loss) | 655 | 655 | |||||
Distribution to non-controlling interest holders | (517) | (517) | |||||
Net income (loss) attributable to non-controlling interests | (376) | (376) | |||||
Net loss attributable to ATI Physical Therapy, Inc. | (116,318) | (116,318) | |||||
Ending balance (in shares) at Sep. 30, 2022 | 3,962,359 | ||||||
Ending balance at Sep. 30, 2022 | $ 152,367 | $ 0 | $ (136) | 1,377,172 | 7,143 | (1,236,746) | 4,934 |
Ending balance (in shares) at Sep. 30, 2022 | 1,109 | ||||||
Beginning balance (in shares) at Dec. 31, 2022 | 4,000,000 | 3,967,146 | |||||
Beginning balance at Dec. 31, 2022 | $ 48,447 | $ 0 | $ (146) | 1,378,716 | 4,899 | (1,339,511) | 4,489 |
Beginning balance (in shares) at Dec. 31, 2022 | 2,000 | 1,540 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Vesting of restricted shares distributed to holders of ICUs (in shares) | 751 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 25,387 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | (3,163) | 3,163 | |||||
Tax withholdings related to net share settlement of restricted stock units and awards | $ (51) | $ (51) | |||||
Non-cash share-based compensation | 1,454 | 1,454 | |||||
Other comprehensive income (loss) | (3,456) | (3,456) | |||||
Distribution to non-controlling interest holders | (710) | (710) | |||||
Net income (loss) attributable to non-controlling interests | 1,060 | 1,060 | |||||
Net loss attributable to ATI Physical Therapy, Inc. | (26,270) | (26,270) | |||||
Ending balance (in shares) at Mar. 31, 2023 | 3,990,121 | ||||||
Ending balance at Mar. 31, 2023 | $ 20,474 | $ 0 | $ (197) | 1,380,170 | 1,443 | (1,365,781) | 4,839 |
Ending balance (in shares) at Mar. 31, 2023 | 4,703 | ||||||
Beginning balance (in shares) at Dec. 31, 2022 | 4,000,000 | 3,967,146 | |||||
Beginning balance at Dec. 31, 2022 | $ 48,447 | $ 0 | $ (146) | 1,378,716 | 4,899 | (1,339,511) | 4,489 |
Beginning balance (in shares) at Dec. 31, 2022 | 2,000 | 1,540 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | 4,950 | ||||||
Other comprehensive income (loss) | $ (4,349) | ||||||
Net income (loss) attributable to non-controlling interests | 2,602 | ||||||
Net loss attributable to ATI Physical Therapy, Inc. | $ (64,172) | ||||||
Ending balance (in shares) at Sep. 30, 2023 | 4,000,000 | 4,030,916 | |||||
Ending balance at Sep. 30, 2023 | $ (89,745) | $ 0 | $ (217) | 1,309,166 | 550 | (1,403,683) | 4,439 |
Ending balance (in shares) at Sep. 30, 2023 | 6,490 | 6,490 | |||||
Beginning balance (in shares) at Mar. 31, 2023 | 3,990,121 | ||||||
Beginning balance at Mar. 31, 2023 | $ 20,474 | $ 0 | $ (197) | 1,380,170 | 1,443 | (1,365,781) | 4,839 |
Beginning balance (in shares) at Mar. 31, 2023 | 4,703 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Series A Senior Preferred Stock dividends and redemption value adjustments | (73,584) | (73,584) | |||||
Capital contribution from recognition of delayed draw right asset | 690 | 690 | |||||
Vesting of restricted shares distributed to holders of ICUs (in shares) | 737 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 10,824 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | (1,206) | 1,206 | |||||
Tax withholdings related to net share settlement of restricted stock units and awards | (15) | $ (15) | |||||
Issuance of common stock for fractional adjustments related to Reverse Stock Split (in shares) | 26,346 | ||||||
Non-cash share-based compensation | 2,754 | 2,754 | |||||
Other comprehensive income (loss) | (850) | (850) | |||||
Distribution to non-controlling interest holders | (965) | (965) | |||||
Net income (loss) attributable to non-controlling interests | 956 | 956 | |||||
Net loss attributable to ATI Physical Therapy, Inc. | (22,705) | (22,705) | |||||
Ending balance (in shares) at Jun. 30, 2023 | 4,026,822 | ||||||
Ending balance at Jun. 30, 2023 | (73,245) | $ 0 | $ (212) | 1,310,030 | 593 | (1,388,486) | 4,830 |
Ending balance (in shares) at Jun. 30, 2023 | 5,909 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Series A Senior Preferred Stock dividends and redemption value adjustments | (3,148) | (3,148) | |||||
Vesting of restricted shares distributed to holders of ICUs (in shares) | 701 | ||||||
Issuance of common stock upon vesting of restricted stock units and awards (in shares) | 3,974 | ||||||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | (581) | 581 | |||||
Tax withholdings related to net share settlement of restricted stock units and awards | (5) | $ (5) | |||||
Non-cash share-based compensation | 2,284 | 2,284 | |||||
Other comprehensive income (loss) | (43) | (43) | |||||
Distribution to non-controlling interest holders | (977) | (977) | |||||
Net income (loss) attributable to non-controlling interests | 586 | 586 | |||||
Net loss attributable to ATI Physical Therapy, Inc. | $ (15,197) | (15,197) | |||||
Ending balance (in shares) at Sep. 30, 2023 | 4,000,000 | 4,030,916 | |||||
Ending balance at Sep. 30, 2023 | $ (89,745) | $ 0 | $ (217) | $ 1,309,166 | $ 550 | $ (1,403,683) | $ 4,439 |
Ending balance (in shares) at Sep. 30, 2023 | 6,490 | 6,490 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | ||
Operating activities: | ||||||
Net loss | $ (14,611) | $ (116,694) | $ (61,570) | $ (390,640) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Goodwill, intangible and other asset impairment charges | 0 | 106,663 | 0 | 390,224 | ||
Depreciation and amortization | 28,341 | 30,477 | ||||
Provision for doubtful accounts | 3,346 | 2,797 | 9,831 | 11,408 | ||
Deferred income tax provision | 282 | (43,532) | ||||
Non-cash lease expense related to right-of-use assets | 35,844 | 36,155 | ||||
Non-cash share-based compensation | 2,300 | 6,492 | 5,830 | |||
Amortization of debt issuance costs and original issue discount | 2,200 | 1,934 | ||||
Non-cash interest expense | 6,020 | 889 | ||||
Loss on extinguishment of debt | 444 | 2,809 | ||||
Loss (gain) on disposal and sale of assets | 1,519 | (42) | ||||
Change in fair value of 2L Notes | (1,485) | 0 | (8,495) | 0 | ||
Change in fair value of warrant liability | (88) | (790) | (88) | (3,651) | ||
Change in fair value of contingent common shares liability | (306) | (6,930) | (1,807) | (32,760) | ||
Change in fair value of non-designated derivative instrument | (67) | 0 | ||||
Changes in: | ||||||
Accounts receivable, net | (13,642) | (11,276) | ||||
Prepaid expenses and other current assets | (549) | (5,507) | ||||
Other non-current assets | 94 | 52 | ||||
Accounts payable | (1,109) | (2,100) | ||||
Accrued expenses and other liabilities | 9,015 | (702) | ||||
Operating lease liabilities | (34,694) | (36,431) | ||||
Other non-current liabilities | 73 | 52 | ||||
Medicare Accelerated and Advance Payment Program Funds | 0 | (12,269) | ||||
Proceeds from legal cost insurance reimbursements | 4,091 | 0 | ||||
Net cash used in operating activities | (17,775) | (59,080) | ||||
Investing activities: | ||||||
Purchases of property and equipment | (14,592) | (22,091) | ||||
Proceeds from sale of property and equipment | 91 | 152 | ||||
Proceeds from sale of clinics | 355 | 77 | ||||
Payment of holdback liabilities related to acquisitions | (490) | 0 | ||||
Net cash used in investing activities | (14,636) | (21,862) | ||||
Financing activities: | ||||||
Proceeds from long-term debt | 0 | 500,000 | ||||
Proceeds from 2L Notes from related parties | 3,243 | 0 | ||||
Financing transaction costs | (6,287) | 0 | ||||
Deferred financing costs | (84) | (12,952) | ||||
Original issue discount | 0 | (10,000) | ||||
Principal payments on long-term debt | 0 | (555,048) | ||||
Proceeds from issuance of Series A Senior Preferred Stock | 0 | 144,667 | ||||
Proceeds from issuance of 2022 Warrants | 0 | 20,333 | ||||
Proceeds from revolving line of credit | 20,000 | 0 | ||||
Payments on revolving line of credit | (44,750) | 0 | ||||
Equity issuance costs and original issue discount | 0 | (4,935) | ||||
Payment of contingent consideration liabilities | (397) | 0 | ||||
Taxes paid on behalf of employees for shares withheld | (71) | (41) | ||||
Distribution to non-controlling interest holders | (2,652) | (1,129) | ||||
Net cash (used in) provided by financing activities | (30,998) | 80,895 | ||||
Changes in cash and cash equivalents: | ||||||
Net decrease in cash and cash equivalents | (63,409) | (47) | ||||
Cash and cash equivalents at beginning of period | 83,139 | 48,616 | $ 48,616 | |||
Cash and cash equivalents at end of period | $ 19,730 | $ 48,569 | 19,730 | 48,569 | $ 83,139 | |
Supplemental noncash disclosures: | ||||||
Derivative changes in fair value | [1] | 4,349 | (7,115) | |||
Purchases of property and equipment in accounts payable | 1,644 | 2,230 | ||||
Exchange of Senior Secured Term Loan for related party 2L Notes | 100,000 | 0 | ||||
Debt discount on Senior Secured Term Loan | (1,797) | 0 | ||||
Capital contribution from recognition of delayed draw right asset | 690 | 0 | ||||
Series A Senior Preferred Stock dividends and redemption value adjustments | 76,732 | 0 | ||||
Other supplemental disclosures: | ||||||
Cash paid for interest | 38,998 | 29,453 | ||||
Cash received from hedging activities | 5,247 | 1,080 | ||||
Cash paid for taxes | $ 1 | $ 82 | ||||
[1]Derivative changes in fair value related to unrealized loss (gain) on cash flow hedges, including the impact of reclassifications. |
Overview of the Company
Overview of the Company | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Overview of the Company | Overview of the Company ATI Physical Therapy, Inc., together with its subsidiaries (herein referred to as “we,” "our," “the Company,” “ATI Physical Therapy” and “ATI”), is a nationally recognized healthcare company, specializing in outpatient rehabilitation and adjacent healthcare services. The Company provides outpatient physical therapy services under the name ATI Physical Therapy and, as of September 30, 2023, had 900 clinics located in 24 states (as well as 18 clinics under management service agreements). The Company offers a variety of services within its clinics, including physical therapy to treat spine, shoulder, knee and neck injuries or pain; work injury rehabilitation services, including work conditioning and work hardening; hand therapy; and other specialized treatment services. The Company’s direct and indirect wholly-owned subsidiaries include, but are not limited to, Wilco Holdco, Inc., ATI Holdings Acquisition, Inc. and ATI Holdings, LLC. Impact of COVID-19 and CARES Act The coronavirus ("COVID-19") pandemic in the United States resulted in changes to our operating environment. Although the direct impact on our business has decreased since the peak impact in 2020, we continue to closely monitor the remaining impacts from the pandemic including its direct or indirect effects on macroeconomic factors, the labor markets in which we operate, and the physical therapy and broader healthcare landscape. Throughout the duration of the pandemic and declared public health emergency, and continuing hereafter, our priorities have been protecting the health and safety of employees and patients, maximizing the availability of services to satisfy patient needs and improving the operational and financial stability of our business. While we expect the disruption caused by COVID-19 and resulting impacts to diminish over time, we cannot predict the length of such impacts, and if such impacts continue for an extended period, it could have a continued effect on the Company’s results of operations, financial condition and cash flows, which could be material. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law providing reimbursement, grants, waivers and other funds to assist health care providers during the COVID-19 pandemic. The Company realized benefits under the CARES Act including, but not limited to, the receipt of Medicare Accelerated and Advance Payment Program ("MAAPP") funds and deferral of depositing the employer portion of Social Security taxes, interest-free and penalty-free. During the nine months ended September 30, 2022, the Company applied $12.3 million in MAAPP funds against the outstanding liability at that time. During the year ended December 31, 2022, the remaining obligations related to these benefits were applied and repaid. |
Basis of Presentation and Recen
Basis of Presentation and Recent Accounting Standards | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Recent Accounting Standards | Basis of Presentation and Recent Accounting Standards Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Management believes the unaudited condensed consolidated financial statements for interim periods presented contain all necessary adjustments to state fairly, in all material respects, the Company's financial position, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results the Company expects for the entire year. In addition, the influence of seasonality, changes in payor contracts, changes in rate per visit, changes in referral and visit volumes, strategic transactions and initiatives, labor market dynamics and wage inflation, changes in laws and general economic conditions in the markets in which the Company operates and other factors impacting the Company's operations may result in any period not being comparable to the same period in previous years. For further information regarding the Company's accounting policies and other information, the condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2023. Reverse Stock Split On June 14, 2023, the Company effected a one-for-fifty (1-for-50) reverse stock split of its Class A common stock (the “Reverse Stock Split”). The Reverse Stock Split was approved by the Company’s stockholders at the Company’s 2023 Annual Meeting of Stockholders held on June 13, 2023, and the final reverse split ratio was subsequently approved by the Company’s board of directors on June 14, 2023. The Company's common stock commenced trading on a reverse split-adjusted basis on June 15, 2023. As a result of the Reverse Stock Split, every fifty (50) shares of common stock either issued and outstanding or held as treasury stock were combined into one new share of common stock. Any fractional shares of common stock resulting from the Reverse Stock Split were rounded up to the nearest whole share. All outstanding securities entitling their holders to purchase or acquire shares of common stock, including stock options, warrants, Earnout Shares, Vesting Shares and shares of common stock subject to vesting were adjusted as a result of the Reverse Stock Split, as required by the terms of those securities. The Reverse Stock Split did not change the par value of the common stock or the number of shares authorized for issuance. All information included in these condensed consolidated financial statements and related notes has been adjusted, on a retrospective basis, to reflect the Reverse Stock Split, unless otherwise stated . Liquidity and going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within twelve months after the date that these condensed consolidated financial statements are issued. The Company has negative operating cash flows, operating losses and net losses. For the nine months ended September 30, 2023, the Company had cash flows used in operating activities of $17.8 million, operating loss of $24.5 million and net loss of $61.6 million. These results are, in part, due to trends experienced by the Company in recent years including a tight labor market for available physical therapy and other healthcare providers in the workforce, visit volume softness, decreases in rate per visit and increases in interest costs. As previously disclosed, these conditions and events raise substantial doubt about the Company's ability to continue as a going concern. In response to these conditions, management plans included refinancing the Company's debt under its 2022 Credit Agreement (as defined in Note 8) and improving operating results and cash flows. On June 15, 2023, the Company completed a debt restructuring transaction under its 2022 Credit Agreement including: (i) a delayed draw new money financing in an aggregate principal amount of $25.0 million, comprised of (A) second lien paid-in-kind ("PIK") convertible notes (the “2L Notes”) and (B) shares of Series B Preferred Stock (as defined in Note 8), which will provide the holder thereof with voting rights such that the holders thereof will have the right to vote on an as-converted basis, (ii) the exchange of $100.0 million of the aggregate principal amount of the term loans under the 2022 Credit Agreement held by certain of the holders of its Series A Senior Preferred Stock (the "Preferred Equityholders") for 2L Notes and Series B Preferred Stock and (iii) certain other changes to the terms of the 2022 Credit Agreement, including modifications of the financial covenants thereunder and relief from the requirements related to the delivery of independent audit reports without a going concern explanatory paragraph. Holders of the 2L Notes will also receive additional 2L Notes upon the in-kind payment of interest on any outstanding 2L Notes. The 2L Notes are convertible into shares of Class A common stock at a fixed conversion price. Additionally, the Company experienced improvements in operations that resulted in reduced levels of operating cash outflows during the nine months ended September 30, 2023 relative to the same period in the prior year. A continued improvement in business results is necessary as there remains a risk that the Company may fail to meet its minimum liquidity covenant or be unable to fund anticipated cash requirements and obligations as they become due in the future. The Company's plan is to continue its efforts to improve its operating results and cash flow through increases to clinical staffing levels, improvements in clinician productivity, controlling costs and capital expenditures and increases in patient visit volumes, referrals and rate per visit. There can be no assurance that the Company's plan will be successful in any of these respects. If the Company's plan does not result in improvement in these aspects in future periods that results in sufficient cash flow from operations, the Company will need to consider other alternatives, such as raising additional financing, obtaining funds from other sources, disposal of assets, or pursuing other strategic alternatives to improve its business, results of operations and financial condition. There can be no assurance that the Company will be successful in accessing such alternative options or financing if or when needed. Failure to do so could have a material adverse impact on our business, financial condition, results of operations and cash flows, and may lead to events including bankruptcy, reorganization or insolvency. Management plans have not been fully implemented and, as a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Use of estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The effect of any change in estimates will be recognized in the current period of the change. Segment reporting The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. All of the Company’s operations are conducted within the United States. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment. Cash, cash equivalents and restricted cash Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less when issued. Restricted cash consists of cash held as collateral in relation to the Company's corporate card agreement. Restricted cash included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, and our condensed consolidated statements of cash flows for the nine months ended September 30, 2023 was $0.8 million. There was no change in restricted cash for the nine months ended September 30, 2022. 2L Notes The guidance in Accounting Standards Codification ("ASC") Topic 825, Financial Instruments , provides a fair value option that allows companies to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the Company's condensed consolidated balance sheets from those instruments using another accounting method. The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments , in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in change in fair value of 2L Notes in the Company’s condensed consolidated statements of operations. Any changes in fair value related to changes in the Company's credit risk is recognized as a component of accumulated other comprehensive income (loss). Recently adopted accounting guidance In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers , which provides guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. This ASU is effective for the Company on January 1, 2023, with early adoption permitted, and shall be applied on a prospective basis to business combinations that occur on or after the adoption date. The Company adopted this new accounting standard effective January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. |
Divestitures
Divestitures | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Divestitures | Divestitures Clinics held for sale During the fourth quarter of 2022, the Company classified the assets and liabilities of certain clinics as held for sale as a result of the Company's decision to sell the clinics. The divestiture transactions were anticipated to be completed within twelve months. The clinics did not meet the criteria to be classified as discontinued operations. During the first quarter of 2023, the Company completed a portion of its anticipated divestiture transactions, which were immaterial. During the second quarter of 2023, the Company concluded the remaining anticipated divestiture transactions were no longer probable due to the Company's decision to retain the clinics. As a result, the assets and liabilities previously classified as held for sale were reclassified as held and used into the respective line items within the condensed consolidated balance sheet. There were no assets or liabilities classified as held for sale as of September 30, 2023. Major classes of assets and liabilities classified as held for sale as of December 31, 2022 were as follows (in thousands): December 31, 2022 Accounts receivable, net $ 486 Prepaid expenses 23 Property and equipment, net 1,113 Operating lease right-of-use assets 1,929 Goodwill, net 3,192 Other non-current assets 12 Total assets held for sale $ 6,755 Accounts payable $ 22 Accrued expenses and other liabilities 201 Current portion of operating lease liabilities 685 Operating lease liabilities 1,706 Total liabilities held for sale $ 2,614 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following table disaggregates net revenue by major service line for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net patient revenue $ 162,258 $ 142,313 $ 469,950 $ 429,744 ATI Worksite Solutions (1) 9,289 9,053 27,874 26,429 Management Service Agreements (1) 3,664 3,251 11,159 9,671 Sports Medicine and other revenue (1) 2,244 2,175 7,741 8,063 $ 177,455 $ 156,792 $ 516,724 $ 473,907 (1) ATI Worksite Solutions, Management Service Agreements and Sports Medicine and other revenue are included within other revenue on the face of the condensed consolidated statements of operations. The following table disaggregates net patient revenue for each associated payor class as a percentage of total net patient revenue for the periods indicated below: Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Commercial 58.5 % 57.7 % 58.4 % 57.2 % Government 23.3 % 24.7 % 23.5 % 24.3 % Workers’ compensation 11.6 % 12.0 % 11.7 % 12.7 % Other (1) 6.6 % 5.6 % 6.4 % 5.8 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Other is primarily comprised of net patient revenue related to auto personal injury reimbursement. |
Goodwill, Trade Name and Other
Goodwill, Trade Name and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Trade Name and Other Intangible Assets | Goodwill, Trade Name and Other Intangible Assets Changes in the carrying amount of goodwill during the current year consisted of the following (in thousands): Goodwill at December 31, 2022 (1) $ 286,458 Impairment charges (2) — Reclassifications to held and used 3,192 Goodwill at September 30, 2023 $ 289,650 (1) Net of accumulated impairment losses of $1,045.7 million. (2) The Company did not note any triggering events during the nine months ended September 30, 2023 that resulted in the recording of an impairment loss. The table below summarizes the Company’s carrying amount of trade name and other intangible assets at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Gross intangible assets: ATI trade name (1) $ 245,000 $ 245,000 Non-compete agreements 2,395 2,395 Other intangible assets 640 640 Accumulated amortization: Accumulated amortization – non-compete agreements (1,647) (1,126) Accumulated amortization – other intangible assets (360) (327) Total trade name and other intangible assets, net $ 246,028 $ 246,582 (1) Not subject to amortization. Amortization expense for the three and nine months ended September 30, 2023 and 2022 was immaterial. The Company estimates that amortization expense related to intangible assets will be immaterial over the next five fiscal years and thereafter. Interim impairment testing during 2022 During the quarters ended March 31, 2022, June 30, 2022 and September 30, 2022, the Company identified interim triggering events as a result of factors including potential changes in discount rates and decreases in share price. The Company determined that the combination of these factors constituted interim triggering events that required further analysis with respect to potential impairment to goodwill, trade name indefinite-lived intangible and other assets. As it was determined that it was more likely than not that the fair value of our trade name indefinite-lived intangible asset was below its carrying value, the Company performed an interim quantitative impairment test as of the March 31, 2022, June 30, 2022 and September 30, 2022 balance sheet dates. The Company utilized the relief from royalty method to estimate the fair value of the trade name indefinite-lived intangible asset. The key assumptions associated with determining the estimated fair value included projected revenue growth rates, the royalty rate, the discount rate and the terminal growth rate. As a result of the analyses, during the nine months ended September 30, 2022, the Company recognized $119.4 million in non-cash interim impairments in goodwill, intangible and other asset impairment charges in its condensed consolidated statements of operations, which represented the difference between the estimated fair value of the Company’s trade name indefinite-lived intangible asset and its carrying value. The Company assessed its long-lived asset groups, including operating lease right-of-use assets that were evaluated based on clinic-specific cash flows and clinic-specific market factors, noting no material impairment. As it was determined that it was more likely than not that the fair value of our single reporting unit was below its carrying value, the Company performed an interim quantitative impairment test with respect to goodwill. In order to determine the fair value of our single reporting unit, the Company utilized an average of a discounted cash flow analysis and comparable public company analysis. The key assumptions associated with determining the estimated fair value included projected revenue growth rates, earnings before interest, taxes, depreciation and amortization ("EBITDA") margins, the terminal growth rate, the discount rate and relevant market multiples. As a result of the analyses, during the nine months ended September 30, 2022, the Company recognized $270.6 million in non-cash interim impairments in goodwill, intangible and other asset impairment charges in its condensed consolidated statements of operations, which represented the difference between the estimated fair value of the Company’s single reporting unit and its carrying value. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating the fair value of the Company’s reporting unit and the indefinite-lived intangible asset requires us to make assumptions and estimates regarding our future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include projected revenue growth rates, EBITDA margins, terminal growth rates, discount rates, relevant market multiples, royalty rates and other market factors. If current expectations of future growth rates, margins and cash flows are not met, or if market factors outside of our control change significantly, including discount rates, relevant market multiples, company share price and other market factors, then our reporting unit or the indefinite-lived intangible asset might become impaired in the future, negatively impacting our operating results and financial position. As the carrying amounts of goodwill and the Company’s trade name indefinite-lived intangible asset were impaired as of December 31, 2022 and written down to fair value, those amounts are more susceptible to an impairment risk if there are unfavorable changes in assumptions and estimates. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Equipment $ 39,328 $ 38,102 Furniture and fixtures 17,948 17,215 Leasehold improvements 194,636 191,182 Automobiles 19 19 Computer equipment and software 106,642 102,651 Construction-in-progress 2,952 3,727 361,525 352,896 Accumulated depreciation and amortization (251,873) (229,206) Property and equipment, net (1) $ 109,652 $ 123,690 (1) Excludes $1.1 million reclassified as held for sale as of December 31, 2022. Refer to Note 3 - Divestitures for additional information. The following table presents the amount of depreciation and amortization expense related to property and equipment recorded in rent, clinic supplies, contract labor and other and selling, general and administrative expenses in the Company’s condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Rent, clinic supplies, contract labor and other $ 6,343 $ 6,876 $ 19,152 $ 20,785 Selling, general and administrative expenses 2,772 3,048 8,635 9,133 Total depreciation expense $ 9,115 $ 9,924 $ 27,787 $ 29,918 |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Liabilities | Accrued Expenses and Other Liabilities Accrued expenses and other liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Salaries and related costs $ 26,128 $ 28,949 Accrued professional fees 7,677 5,551 Credit balances due to patients and payors 7,425 6,117 Accrued interest 5,011 762 Accrued contract labor 3,271 4,483 Accrued occupancy costs 2,424 2,410 Other payables and accrued expenses 3,682 5,400 Total $ 55,618 $ 53,672 |
Borrowings
Borrowings | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Borrowings | Borrowings Long-term debt, net consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Senior Secured Term Loan (1, 2) (due February 24, 2028) $ 409,500 $ 503,481 Revolving Loans (3) (due February 24, 2027) 23,450 48,200 Less: unamortized debt issuance costs (7,718) (11,137) Less: unamortized original issue discount (7,853) (8,944) Total debt, net 417,379 531,600 Less: current portion of long-term debt — — Long-term debt, net $ 417,379 $ 531,600 (1) Interest rate of 13.7% and 12.1% at September 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate. The effective interest rate for the Senior Secured Term Loan was 13.9% and 13.1% at September 30, 2023 and December 31, 2022, respectively. (2) The Company has paid a portion of its interest in-kind on its Senior Secured Term Loan by capitalizing and adding such interest to the principal amount of the debt. As of September 30, 2023 and December 31, 2022, the Company has recognized total paid-in-kind interest in the amount of $9.5 million and $3.5 million, respectively. (3) Weighted average interest rate of 10.5% and 8.3% at September 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate. 2L Notes due to related parties, at fair value consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 2L Notes due to related parties, at fair value $ 95,448 $ — 2023 Debt Restructuring Transaction On June 15, 2023 (the "Closing Date"), the Company completed a debt restructuring transaction to improve the Company's liquidity (the "2023 Debt Restructuring"). On the Closing Date, certain previously executed agreements became effective, including (i) Amendment No. 2 to the Credit Agreement, (ii) a Second Lien Note Purchase Agreement and (iii) certain other definitive agreements relating to the 2023 Debt Restructuring (such documents referred to collectively as the "Signing Date Definitive Documents"). As part of the 2023 Debt Restructuring, the Company exchanged a principal amount of $100.0 million of the $507.8 million then outstanding Senior Secured Term Loan for an equal amount of 2L Notes, which are convertible into shares of the Company's common stock, stapled with a number of shares of Series B Preferred Stock (the "Series B Preferred Stock"), which represent voting interests only. The exchange was consummated through the Intercreditor and Subordination Agreement and Second Lien Note Purchase Agreement dated April 17, 2023 (the "Signing Date"). The Company accounted for the exchange as a debt extinguishment and recognized $0.4 million in loss on debt extinguishment during the nine months ended September 30, 2023. The loss on debt extinguishment consisted of various offsetting components, including the derecognition of $4.3 million of unamortized deferred financing costs and original issue discount on the Senior Secured Term Loan and the recognition of $0.7 million of fair value premium at issuance on the 2L Notes, offset by the recognition of $2.8 million in delayed draw right assets related to the commitment provided by certain lenders and the recognition of $1.8 million of incremental original issue discount on the Senior Secured Term Loan. The loss on debt extinguishment associated with the 2023 Debt Restructuring has been reflected in other expense, net in the condensed consolidated statements of operations. Amendment No. 2 to the Credit Agreement Pursuant to Amendment No. 2 to the Credit Agreement, the terms of the remaining unexchanged $407.8 million principal amount of the Senior Secured Term Loan as of the Signing Date were revised to: (i) increase the interest rate in the form of paid-in-kind interest by 1.0% per annum until the achievement of certain financial metrics, (ii) reset the prepayment premiums with respect to any repayment of the Senior Secured Term Loan, and (iii) amend certain covenants. At the completion of the 2023 Debt Restructuring, $391.0 million principal of amended Senior Secured Term Loan was outstanding with HPS Investment Partners, LLC (“HPS”), $16.3 million principal was outstanding with Onex Credit Partners, LLC (“Onex”), $0.3 million principal was outstanding with Knighthead Capital Management, LLC (“Knighthead”), and the remaining $0.2 million principal was outstanding with Marathon Asset Management LP (“Marathon”). Additionally, the terms of the Company's Revolving Loans were revised to increase the cash interest rate by 1.0% until the achievement of certain financial metrics. Amendment No. 2 to the Credit Agreement also provides, among other terms, (i) a reduction of the thresholds applicable to the minimum liquidity financial covenant under the 2022 Credit Agreement for certain periods, (ii) a waiver of the requirement to comply with the Secured Net Leverage Ratio financial covenant under the 2022 Credit Agreement for the fiscal quarters ending June 30, 2024, September 30, 2024 and December 31, 2024 and a modification of the levels and certain component definitions applicable thereto in the fiscal quarters ending after December 31, 2024, (iii) an extension of the minimum liquidity financial covenant for the fiscal quarters in which the Secured Net Leverage Ratio financial covenant was waived, (iv) a waiver of the requirement for the Company to deliver audited financial statements without a going concern explanatory paragraph for the years ended December 31, 2022, December 31, 2023, and December 31, 2024, and (v) board representation and observer rights and other changes to the governance of the Company. Based on the results of the cash flow tests and requirements pursuant to ASC Topic 470, Debt , the Company accounted for the impacts of Amendment No. 2 to the Credit Agreement related to the amount held by HPS as a modification, and the impacts related to the amounts held by Onex, Knighthead, and Marathon as an extinguishment. As part of the 2023 Debt Restructuring, the Company recognized $1.8 million of incremental original issue discount on the Senior Secured Term Loan related to lenders treated under extinguishment accounting. Second Lien Note Purchase Agreement and Designation of Series B Preferred Stock Knighthead, Marathon, and Onex collectively exchanged a principal amount of $100.0 million of Senior Secured Term Loan for $100.0 million of 2L Notes stapled with a number of shares of Series B Preferred Stock. Of the $100.0 million of 2L Notes issued, approximately $50.8 million were issued to Knighthead, $40.4 million were issued to Marathon, and $8.8 million were issued to Onex. The 2L Notes are subordinated in right of payment and lien priority to the 2022 Credit Facility and mature on August 24, 2028, unless earlier converted, accrue interest at an annual rate of 8.0% payable in-kind on a quarterly basis in the form of additional 2L Notes, and are convertible into shares of common stock, at the holder’s option, at a fixed conversion price of $12.50, subject to certain adjustments in the agreement (the "Conversion Price"). Upon conversion of the 2L Notes, the Company shall deliver to the holder a number of shares of common stock equal to (i) the principal amount of such 2L Notes plus any accrued and unpaid interest divided by (ii) the Conversion Price. The 2L Notes are effectively stapled with one share of the Company’s Series B Preferred Stock for every $1,000 principal amount of the 2L Notes. The Series B Preferred Stock represents voting rights only, with the number of votes being equal to the number of shares of common stock that each share of Series B Preferred Stock would convert into at a conversion price of $12.87 per share (the "Voting Rights Conversion Price"). Additional voting rights accrue to the lenders through the deemed issuance of the annual 8.0% paid-in-kind 2L Notes with stapled shares of Series B Preferred Stock. The Series B Preferred Stock does not have any dividend or redemption rights. Upon conversion of 2L Notes to common stock, the stapled shares of Series B Preferred Stock would be canceled in an amount commensurate with the portion of 2L Notes converted. Based on the voting rights associated with the Series B Preferred Stock attached to the 2L Notes as well as other terms to the 2023 Debt Restructuring, the Company determined that Knighthead, Marathon, and Onex became related parties on the Closing Date. On the Closing Date, an additional $3.2 million of 2L Notes with stapled Series B Preferred Stock were issued as part of the First Amendment to the Second Lien Note Purchase Agreement. The terms of the issued 2L Notes and Series B Preferred Stock are the same as those that were subject to the exchange. The following table presents approximate changes in outstanding shares of Series B Preferred Stock since the Closing Date and associated equivalent common stock voting rights at the end of the period (in thousands): September 30, 2023 Series B Preferred Stock, shares at Closing Date 103 Increase (decrease) in shares during period 3 Series B Preferred Stock, shares at end of period 106 Common stock voting rights, as converted basis (1) 8,211 (1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share. On or after the second anniversary of the Closing Date and subject to certain conditions, the Company may, at its option, elect to convert (a “Forced Conversion”) a portion of the outstanding 2L Notes into the number of shares of common stock based on the Conversion Price then in effect. The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments , in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's statements of operations. The interest cost associated with the 2L Notes is accounted for as part of the change in fair value of the 2L Notes. As a result of applying the fair value option, direct costs and fees related to the issuance of the 2L Notes were expensed as incurred. As of September 30, 2023, the principal amount and estimated fair value of the 2L Notes were approximately $105.7 million and $95.4 million, respectively. Refer to Note 13 - Fair Value Measurements for further details on the fair value of the 2L Notes. Additionally, as of September 30, 2023, the effective interest rate on the 2L Notes was 8.0%. The following table presents changes in the principal amount of the 2L Notes since the Closing Date (in thousands): September 30, 2023 2L Notes, principal amount at Closing Date $ 103,243 Paid-in-kind interest added during period 2,432 2L Notes, principal amount at end of period $ 105,675 As of September 30, 2023, of the 2L Notes principal outstanding and due to related parties, approximately $53.6 million, $42.7 million and $9.4 million were outstanding with Knighthead, Marathon, and Onex, respectively. Delayed Draw Right The Company also has the right to cause to be issued to Knighthead, Marathon and Caspian Capital L.P. ("Caspian") (collectively the "Delayed Draw Purchasers") an additional $25.0 million of aggregate principal in the form of 2L Notes under its delayed draw right ("Delayed Draw Right”), which is governed by the Second Lien Note Purchase Agreement. If drawn, the notes under the Delayed Draw Right will be subject to the same terms as the convertible 2L Notes with associated shares of Series B Preferred Stock allowing for voting rights on an as-converted basis prior to conversion. The right to draw will terminate approximately 18 months after the Closing Date. The Company may request two draws in an amount of $12.5 million each, separately or together, subject to, for each draw, (a) projected liquidity at any time during the 6-month period following the date of the relevant draw being below certain thresholds, and (b) the consent of the board of directors. Upon issuance, the Company accounted for the Delayed Draw Right as an asset at fair value, which represents the Company's option to draw funds subject to certain conditions. For Knighthead's and Marathon's portion of the Delayed Draw Right, the asset was recognized as part of the calculation of loss on debt extinguishment. For Caspian, the Delayed Draw Right was recognized as a capital contribution as there was no previous lender relationship with the Company with respect to the Senior Secured Term Loan. At the Closing Date, the Company recognized approximately $3.5 million in Delayed Draw Right assets, which is included in other current assets on the Company's condensed consolidated balance sheets. Subsequently, the asset will be monitored for impairment. As of September 30, 2023, no impairment indicators were identified. 2022 Credit Agreement On February 24, 2022 (the "Refinancing Date"), the Company entered into various financing arrangements to refinance its previous long-term debt (the "2022 Debt Refinancing"). As part of the 2022 Debt Refinancing, ATI Holdings Acquisition, Inc. (the "Borrower"), an indirect subsidiary of ATI Physical Therapy, Inc., entered into a credit agreement among the Borrower, Wilco Intermediate Holdings, Inc. ("Holdings"), as loan guarantor, Barclays Bank PLC, as administrative agent and issuing bank, and a syndicate of lenders (the "2022 Credit Agreement"). The 2022 Credit Agreement provides a $550.0 million credit facility (the "2022 Credit Facility") that is comprised of a $500.0 million senior secured term loan (the "Senior Secured Term Loan") which was fully funded at closing and a $50.0 million "super priority" senior secured revolver (the "Revolving Loans") with a $10.0 million letter of credit sublimit. The 2022 Credit Facility refinanced and replaced the Company's prior credit facility for which Barclays Bank PLC served as administrative agent for a syndicate of lenders. The Company paid $555.0 million to settle its previous term loan (the "2016 First Lien Term Loan"). The Company accounted for the transaction as a debt extinguishment and recognized $2.8 million in loss on debt extinguishment during the nine months ended September 30, 2022 related to the derecognition of the remaining unamortized deferred financing costs and unamortized original issue discount in conjunction with the debt repayment. The loss on debt extinguishment associated with the repayment of the 2016 First Lien Term Loan has been reflected in other expense, net in the condensed consolidated statements of operations. In connection with the 2022 Debt Refinancing, the Company also entered into a preferred stock purchase agreement, consisting of senior preferred stock with detachable warrants to purchase common stock for an aggregate stated value of $165.0 million (collectively, the “Preferred Stock Financing”). See Note 10 - Mezzanine and Stockholders' Equity for further information regarding the Preferred Stock Financing. The Company capitalized debt issuance costs totaling $12.5 million related to the 2022 Credit Facility as well as an original issue discount of $10.0 million, which are amortized over the terms of the respective financing arrangements. Senior Secured Term Loan The Senior Secured Term Loan matures on February 24, 2028 and bears interest, at the Company's election, at a base interest rate of the Alternate Base Rate ("ABR"), as defined in the agreement, plus an applicable credit spread, or the Adjusted Term Secured Overnight Financing Rate ("SOFR"), as defined in the agreement, plus an applicable credit spread. The credit spread is determined based on a pricing grid and the Company's Secured Net Leverage Ratio. The Company was able to elect to pay 2.0% interest in-kind at a 0.5% premium during the first year under the agreement. The Company elected to pay a portion of its interest in-kind beginning in the third quarter of 2022 through the completion of the first year under the agreement. As of September 30, 2023, borrowings on the Senior Secured Term Loan bear interest at 13.7%, consisting of 12-month SOFR, subject to a 1.0% floor, plus a credit spread of 7.25% plus an incremental 1.0% paid-in-kind interest added under the terms of the 2023 Debt Restructuring. As of September 30, 2023, the effective interest rate on the Senior Secured Term Loan was 13.9% and the outstanding principal amount was $409.5 million, of which $16.9 million was due to related parties and is primarily attributable to Onex. Beginning in October 2023, the Company is no longer incurring the incremental 1.0% paid-in-kind interest on its Senior Secured Term Loan based on its achievement of the required financial metrics under the terms of the 2023 Debt Restructuring. Revolving Loans The Revolving Loans are subject to a maximum borrowing capacity of $50.0 million and mature on February 24, 2027. Borrowings on the Revolving Loans bear interest, at the Company's election, at a base interest rate of the ABR, as defined in the agreement, plus an applicable credit spread, or the Adjusted Term SOFR Rate, as defined in the agreement, plus an applicable credit spread. The credit spread is determined based on a pricing grid and the Company's Secured Net Leverage Ratio. In December 2022, the Company drew $48.2 million in Revolving Loans. During the second quarter of 2023, the Company repaid approximately $24.8 million in Revolving Loans. During the third quarter of 2023, the Company repaid $20.0 million in Revolving Loans and drew an additional $20.0 million in Revolving Loans. As of September 30, 2023, $23.5 million in Revolving Loans were outstanding and bearing interest at a weighted average rate of 10.5%, consisting of 3-month SOFR plus a credit spread of approximately 5.1%, which includes the incremental 1.0% added under the terms of the 2023 Debt Restructuring. Beginning in October 2023, the Company is no longer incurring the incremental 1.0% interest on its Revolving Loans based on its achievement of the required financial metrics under the terms of the 2023 Debt Restructuring. Commitment fees on the Revolving Loans are payable quarterly at 0.5% per annum on the daily average undrawn portion for the quarter and are expensed as incurred. The balances of unamortized issuance costs related to the Revolving Loans were $0.5 million as of September 30, 2023, and $0.6 million as of December 31, 2022. The 2022 Credit Facility and 2L Notes are guaranteed by certain of the Company’s subsidiaries and are secured by substantially all of the assets of Holdings, the Borrower and the Borrower’s wholly-owned subsidiaries, including a pledge of the stock of the Borrower, in each case, subject to customary exceptions. Pursuant to the terms of the Intercreditor and Subordination Agreement, the 2L Notes (and the guarantees thereof) will rank junior in right of payment to the obligations under the 2022 Credit Agreement, and the liens on the collateral securing the 2L Notes will rank junior to the liens on such collateral securing the obligations under the 2022 Credit Agreement. The 2022 Credit Agreement contains customary covenants and restrictions, including financial and non-financial covenants. In accordance with Amendment No. 2 to the Credit Agreement, the financial covenants require the Company to maintain $30.0 million of minimum liquidity, as defined in the agreement, at each test date through the first quarter of 2023, $25.0 million of minimum liquidity for the second quarter of 2023, $15.0 million of minimum liquidity through the fourth quarter of 2023 and $10.0 million of minimum liquidity through the fourth quarter of 2024. Additionally, beginning in the first quarter of 2025, the Company must maintain a Secured Net Leverage Ratio, as defined in the agreement, not to exceed 11.00:1.00. The net leverage ratio covenant decreases each subsequent quarter through the second quarter of 2026 to 7.00:1.00, which remains applicable through maturity. The financial covenants are tested as of each fiscal quarter end for the respective periods. As of September 30, 2023, the Company is in compliance with its minimum liquidity financial covenant. The 2022 Credit Facility contains customary representations and warranties, events of default, reporting and other affirmative covenants and negative covenants, including requirements related to the delivery of independent audit reports without a going concern explanatory paragraph beginning with the report covering fiscal year 2025, limitations on indebtedness, liens, investments, negative pledges, dividends, junior debt payments, fundamental changes and asset sales and affiliate transactions. The Second Lien Note Purchase Agreement includes affirmative and negative covenants (other than financial covenants) that are substantially consistent with the 2022 Credit Agreement, as well as customary events of default. Failure to comply with the 2022 Credit Facility and Second Lien Note Purchase Agreement covenants and restrictions could result in an event of default under the respective borrowing agreements, subject to customary cure periods. In such an event, all amounts outstanding under the 2022 Credit Facility and Second Lien Note Purchase Agreement, together with any accrued interest, could then be declared immediately due and payable. Under the 2022 Credit Facility, the Company may be required to make certain mandatory prepayments upon the occurrence of certain events, including: an event of default, a prepayment asset sale or receipt of net insurance proceeds in excess of $10.0 million, or excess cash flows exceeding certain thresholds. A prepayment asset sale includes dispositions at fair market value, and net insurance proceeds is generally defined as insurance proceeds received on a covered loss or as a result of assets taken under the power of eminent domain, net of costs related to the matter. The Company had letters of credit totaling $6.5 million and $1.8 million under the letter of credit sub-facility on the Revolving Loans as of September 30, 2023 and December 31, 2022, respectively. The letters of credit auto-renew on an annual basis and are pledged to insurance carriers as collateral. Aggregate maturities of the Company's borrowings at September 30, 2023 are as follows (in thousands): 2023 (remainder of year) $ — 2024 — 2025 — 2026 — 2027 23,450 2028 515,175 Total future maturities (1) 538,625 Unamortized original issue discount and debt issuance costs (15,571) 2L Notes due to related parties, principal amount (1, 2) (105,675) Long-term debt, net (1) $ 417,379 (1) Excludes any contractual paid-in-kind interest that may be accrued and added to the principal amounts between now and the respective maturity dates. (2) The principal amount of the 2L Notes differs from the estimated fair value presented on the condensed consolidated balance sheet. Refer to Note 13 - Fair Value Measurements for further details on the fair value of the 2L Notes. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Compensation | Share-Based Compensation The Company recognizes compensation expense for all share-based compensation awarded to employees, net of forfeitures, using a fair value-based method. The grant-date fair value of each award is amortized to expense on a straight-line basis over the award’s vesting period. Compensation expense associated with share-based awards is included in salaries and related costs and selling, general and administrative expenses in the accompanying condensed consolidated statements of operations, depending on whether the award recipient is a clinic-level or corporate employee, respectively. Share-based compensation expense is adjusted for forfeitures as incurred. ATI 2021 Equity Incentive Plan The Company adopted the ATI Physical Therapy 2021 Equity Incentive Plan (the "2021 Plan") under which it may grant equity interests of ATI Physical Therapy, Inc., in the form of stock options, stock appreciation rights, restricted stock awards and restricted stock units, to members of management, key employees and independent directors of the Company and its subsidiaries. The Compensation Committee is authorized to make grants and to make various other decisions under the 2021 Plan. The maximum number of shares reserved for issuance under the 2021 Plan is approximately 1.2 million. As of September 30, 2023, approximately 0.2 million shares were available for future grant. 2023 grants During the nine months ended September 30, 2023, the Company granted restricted stock units ("RSUs") to certain employees and independent directors of the Company. For the nine months ended September 30, 2023, approximately 0.7 million RSUs were granted under the 2021 Plan. The weighted-average grant-date fair values related to the RSUs granted were $16.77. As of September 30, 2023, the unrecognized compensation expense related to outstanding RSUs was $12.7 million, to be recognized over a weighted-average period of 2.2 years. Total non-cash share-based compensation expense recognized in the three and nine months ended September 30, 2023 was approximately $2.3 million and $6.5 million, respectively. |
Mezzanine and Stockholders' Equ
Mezzanine and Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Mezzanine and Stockholders' Equity | Mezzanine and Stockholders' Equity ATI Physical Therapy, Inc. Series A Senior Preferred Stock In connection with the 2022 Debt Refinancing, the Company issued 165,000 shares of non-convertible preferred stock (the "Series A Senior Preferred Stock") plus warrants to purchase 0.1 million shares of the Company's common stock at an exercise price of $150.00 per share (the "Series I Warrants") and warrants to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $0.50 per share (the "Series II Warrants"). The shares of the Series A Senior Preferred Stock have a par value of $0.0001 per share and an initial stated value of $1,000 per share, for an aggregate initial stated value of $165.0 million. The Company is authorized to issue 1.0 million shares of preferred stock per the Certificate of Designation. As of September 30, 2023, there was 0.2 million shares of Series A Senior Preferred Stock issued and outstanding. The gross proceeds received from the issuance of the Series A Senior Preferred Stock and the Series I and Series II Warrants were $165.0 million, which was allocated among the instruments based on the relative fair values of each instrument. Of the gross proceeds, $144.7 million was allocated to the Series A Senior Preferred Stock, $5.1 million to the Series I Warrants and $15.2 million to the Series II Warrants. The resulting discount on the Series A Senior Preferred Stock will be recognized as a deemed dividend when those shares are subsequently remeasured upon becoming redeemable or probable of becoming redeemable. The Company recognized $2.9 million in issuance costs and $1.4 million of original issue discount related to the Series A Senior Preferred Stock. The following table reflects the components of the initial proceeds related to the Series A Senior Preferred Stock (in thousands): Gross proceeds allocated to Series A Senior Preferred Stock $ 144,667 Less: original issue discount (1,447) Less: issuance costs (2,880) Net proceeds received from issuance of Series A Senior Preferred Stock $ 140,340 The Series A Senior Preferred Stock has priority over the Company's Class A common stock and all other junior equity securities of the Company, and is junior to the Company's existing or future indebtedness and other liabilities (including trade payables), with respect to payment of dividends, distribution of assets, and all other liquidation, winding up, dissolution, dividend and redemption rights. The Series A Senior Preferred Stock carries an initial dividend rate of 12.0% per annum (the "Base Dividend Rate"), payable quarterly in arrears. Dividends will be paid-in-kind and added to the stated value of the Series A Senior Preferred Stock. The Company may elect to pay dividends on the Series A Senior Preferred Stock in cash beginning on the third anniversary of the Refinancing Date and, with respect to any such dividends paid in cash, the dividend rate then in effect will be decreased by 1.0%. The Base Dividend Rate is subject to certain adjustments, including an increase of 1.0% per annum on the first day following the fifth anniversary of the Refinancing Date and on each one-year anniversary thereafter, and 2.0% per annum upon the occurrence of either an Event of Noncompliance (as defined in the Certificate of Designation) or a failure by the Company to redeem in full all Series A Senior Preferred Stock upon a Mandatory Redemption Event, which includes a change of control, liquidation, bankruptcy or certain restructurings. The paid-in-kind dividends related to the Series A Senior Preferred Stock were $17.1 million and $12.3 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the accumulated paid-in-kind dividends related to the Series A Senior Preferred Stock were $35.0 million and the aggregate stated value was $200.0 million. Changes in the aggregate stated value and stated value per share of the Series A Senior Preferred Stock consisted of the following (in thousands, except per share data): September 30, 2023 December 31, 2022 Aggregate stated value, beginning of period $ 182,876 $ 165,000 Paid-in-kind dividends (1) 17,087 17,876 Aggregate stated value, end of period $ 199,963 $ 182,876 Preferred shares issued and outstanding, end of period 165 165 Stated value per share, end of period $ 1,211.90 $ 1,108.34 (1) Changes in the stated value for the year ended December 31, 2022 represent changes since the Refinancing Date, which is when the Series A Senior Preferred Stock was issued and established. The Company has the right to redeem the Series A Senior Preferred Stock, in whole or in part, at any time (subject to certain limitations on partial redemptions). The Redemption Price for each share of Series A Senior Preferred Stock is equal to the stated value subject to certain price adjustments depending on when such optional redemption takes place, if at all. The Series A Senior Preferred Stock is perpetual and is not mandatorily redeemable at the option of the holders, except upon the occurrence of a Mandatory Redemption Event. Upon the occurrence of a Mandatory Redemption Event, to the extent not prohibited by law, the Company is required to redeem all Series A Senior Preferred Stock, in cash, at a price per share equal to the then applicable Redemption Price. Because the Series A Senior Preferred Stock is mandatorily redeemable contingent on certain events outside the Company’s control, such as a change in control, and since such events are not currently deemed certain to occur, the Series A Senior Preferred Stock is classified as mezzanine equity in the Company's condensed consolidated balance sheets. If an Event of Noncompliance occurs, then the holders of a majority of the then outstanding shares of Series A Senior Preferred Stock (the “Majority Holders”) have the right to demand that the Company engage in a sale/refinancing process to consummate a Forced Transaction. A Forced Transaction includes a refinancing of the Series A Senior Preferred Stock or a sale of the Company. Upon consummation of any Forced Transaction, to the extent not prohibited by law, the Company is required to redeem all Series A Senior Preferred Stock, in cash, at a price per share equal to the then applicable Redemption Price. Holders of shares of Series A Senior Preferred Stock have no voting rights with respect to the Series A Senior Preferred Stock except as set forth in the Certificate of Designation, other documents entered into in connection with the Purchase Agreement and the transactions contemplated thereby, or as otherwise required by law. For so long as any Series A Senior Preferred Stock is outstanding, the Company is prohibited from taking certain actions without the prior consent of the Majority Holders as set forth in the Certificate of Designation which include: issuing equity securities ranking senior to or pari passu with the Series A Senior Preferred Stock, incurring indebtedness or liens, engaging in affiliate transactions, making restricted payments, consummating certain investments or asset dispositions, consummating a change of control transaction unless the Series A Senior Preferred Stock is redeemed in full, altering the Company’s organizational documents, and making material changes to the nature of the Company’s business. As part of the 2022 Debt Refinancing, the Preferred Equityholders, voting as a separate class, had the right to designate and elect one director to serve on the Company’s board of directors until such time after the Refinancing Date that (i) as of any applicable fiscal quarter end, the Company’s trailing 12-month Consolidated Adjusted EBITDA (as defined in the Certificate of Designation) exceeds $100.0 million, or (ii) the Lead Purchaser ceases to hold at least 50.1% of the Series A Senior Preferred Stock held by it as of the Refinancing Date. As part of the 2023 Debt Restructuring, (1) the Preferred Equityholders’ preexisting rights as holders of the Company’s Series A Senior Preferred Stock to designate and elect one director to the Company’s board of directors (the “Board”) was revised to provide that (a) the Preferred Equityholders have the right to appoint three additional directors to the Board (resulting in the right of the Preferred Equityholders to appoint a total of four directors to the Board) until such time after the Closing Date that the Lead Purchaser (as defined in certain of the transaction agreements entered into in connection with the original issuance of the Series A Senior Preferred Stock) ceases to hold at least 50.1% of the Series A Senior Preferred Stock held by it as of the Closing Date, one of whom must be unaffiliated with (and independent of) the Preferred Equityholders and who must meet the definition of “independent” under the listing standards of the New York Stock Exchange ("NYSE"), and by the SEC; and (b) all such designee directors of the Preferred Equityholders will be subject to consideration by the Board (acting in good faith and consistent with their review of other Board candidates) and (2) the provision in the Certificate of Designation of the Company’s Series A Senior Preferred Stock that eliminated the Preferred Equityholders’ director designation rights upon the Company’s achievement of certain amounts of EBITDA was deleted. Prior to the closing of the 2023 Debt Restructuring, because the Series A Senior Preferred Stock is classified as mezzanine equity and was not considered redeemable or probable of becoming redeemable, the paid-in-kind dividends that were added to the stated value did not impact the carrying value of the Series A Senior Preferred Stock in the Company’s condensed consolidated balance sheets. Based on the voting rights associated with the Series B Preferred Stock attached to the 2L Notes issued as part of the 2023 Debt Restructuring, the Company determined that redemption of the Series A Senior Preferred Stock is no longer solely within the control of the Company. As a result, the Company determined that the Series A Senior Preferred Stock is probable of becoming redeemable based on the accounting guidance in ASC Topic 480, Distinguishing Liabilities from Equity . Following the 2023 Debt Restructuring, since the Series A Senior Preferred Stock is probable of becoming redeemable, the Company will recognize changes in the redemption value of the Series A Senior Preferred Stock immediately as they occur and adjust the carrying amount as if redemption were to occur at the end of the reporting period. As of September 30, 2023, the redemption value of the Series A Senior Preferred Stock was $217.1 million, which includes the aggregate stated value at September 30, 2023, inclusive of paid-in-kind dividends, and an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period, based on the terms of the Certificate of Designation. Changes in the carrying value of the Series A Senior Preferred Stock consisted of the following for the nine months ended September 30, 2023 (in thousands). There were no changes in carrying value in 2022. September 30, 2023 Carrying value, beginning of period $ 140,340 Write off original issue discount 1,447 Write off issuance costs 2,880 Deemed dividend from discount on initial gross proceeds allocation 20,333 Paid-in-kind dividends recognized to carrying value 34,963 Redemption value adjustment 17,109 Carrying value, end of period $ 217,072 2022 Warrants In connection with the Preferred Stock Financing, the Company agreed to issue to the preferred stockholders the Series I Warrants entitling the holders thereof to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $150.00 per share, exercisable for 5 years from the Refinancing Date; and the Series II Warrants entitling holders thereof to purchase 0.1 million shares of the Company's common stock at an exercise price equal to $0.50 per share, exercisable for 5 years from the Refinancing Date (collectively, the "2022 Warrants"). Such number of shares of common stock purchasable pursuant to the 2022 Warrant Agreement and related exercise prices may be adjusted from time to time under certain scenarios as set forth in the 2022 Warrant Agreement, which relate to potential changes in the Company's capital structure. The 2022 Warrants are classified as equity instruments and were initially recorded at an amount equal to the proceeds received from the Preferred Stock Financing allocated among the Series A Senior Preferred Stock, the Series I Warrants, and the Series II Warrants based upon their relative fair values. Of the gross proceeds, $5.1 million was allocated to the Series I Warrants and $15.2 million was allocated to the Series II Warrants. The Company recognized total issuance costs and original issue discount of approximately $0.2 million and $0.5 million related to the Series I Warrants and Series II Warrants, respectively. The following table reflects the components of proceeds related to the 2022 Warrants (in thousands): Series I Warrants Series II Warrants Total Gross proceeds allocated to 2022 Warrants $ 5,101 $ 15,232 $ 20,333 Less: original issue discount (51) (152) (203) Less: issuance costs (102) (303) (405) Net proceeds received from issuance of 2022 Warrants $ 4,948 $ 14,777 $ 19,725 Class A common stock The Company is authorized to issue 470.0 million shares of Class A common stock with a par value of $0.0001 per share. Holders of the Company’s Class A common stock are entitled to one vote for each share on each matter on which they are entitled to vote. At September 30, 2023, there were 4.2 million shares of Class A common stock issued and 4.0 million shares outstanding. As of September 30, 2023, shares of Class A common stock reserved for potential future issuance, on an as-if converted basis, were as follows (in thousands): September 30, 2023 2L Notes (1) 8,454 Shares available for grant under the 2021 Plan 244 2021 Plan share-based awards outstanding 866 Earnout Shares reserved 300 2022 Warrant shares reserved 230 IPO Warrant shares reserved 197 Vesting Shares reserved (2) 173 Restricted shares (2) 6 Total shares of common stock reserved 10,470 (1) Calculated based on the principal amount of 2L Notes and Conversion Price of $12.50 per share. This figure differs from the contractual Voting Rights Conversion Price of $12.87 as outlined in Note 8 - Borrowings. (2) Represents shares of Class A common stock legally issued, but not outstanding, as of September 30, 2023. Treasury stock During the nine months ended September 30, 2023, the Company net settled 4,950 shares of its Class A common stock related to employee tax withholding obligations associated with the Company's share-based compensation program. These shares are reflected at cost as treasury stock in the condensed consolidated financial statements. As of September 30, 2023, there were 6,490 shares of treasury stock totaling $0.2 million recognized in the condensed consolidated balance sheets. |
IPO Warrant Liability
IPO Warrant Liability | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
IPO Warrant Liability | IPO Warrant Liability The Company has outstanding public warrants to purchase an aggregate of approximately 0.1 million shares of the Company’s Class A common stock at an exercise price of $575.00 per share ("Public Warrants") and outstanding private placement warrants to purchase an aggregate of approximately 0.1 million shares of the Company's Class A common stock at an exercise price of $575.00 per share ("Private Placement Warrants") (collectively, the "IPO Warrants"). As of September 30, 2023, the Public Warrants remain delisted from the NYSE and are traded in the over-the-counter market. There were no IPO Warrants exercised during the nine months ended September 30, 2023 . The Company accounts for its outstanding IPO Warrants in accordance with the guidance contained in ASC 815-40, Derivatives and Hedging - Contracts on an Entity’s Own Equity, and determined that the IPO Warrants do not meet the criteria for equity treatment thereunder. As such, each IPO Warrant must be recorded as a liability and is subject to re-measurement at each balance sheet date. Refer to Note 13 - Fair Value Measurements for further details. Changes in fair value are recognized in change in fair value of warrant liability in the Company’s condensed consolidated statements of operations. The following table presents the change in the fair value of Private Placement Warrants that is recognized in change in fair value of warrant liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 29 $ 445 $ 29 $ 1,305 Decrease in fair value (26) (238) (26) (1,098) Fair value, end of period $ 3 $ 207 $ 3 $ 207 The following table presents the changes in the fair value of the Public Warrants that is recognized in change in fair value of warrant liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 69 $ 1,035 $ 69 $ 3,036 Decrease in fair value (62) (552) (62) (2,553) Fair value, end of period $ 7 $ 483 $ 7 $ 483 |
Contingent Common Shares Liabil
Contingent Common Shares Liability | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Contingent Common Shares Liability | Contingent Common Shares Liability Earnout Shares Subject to the terms and conditions of the merger agreement between Wilco Holdco, Inc. and Fortress Value Acquisition Corp. II (herein referred to as "FAII" and "FVAC"), certain stockholders of Wilco Holdco, Inc. were provided the contingent right to receive, in the aggregate, up to 0.3 million shares of Class A common stock if, from the closing of the Company's business combination with FAII until the 10 th anniversary thereof, the dollar volume-weighted average price (“VWAP”) of Class A common stock exceeds certain thresholds (the "Earnout Shares"). The Earnout Shares vest in three equal tranches of 0.1 million shares each if the VWAP of Class A common stock exceeds $600.00, $700.00 and $800.00 per share, respectively, over the designated period of time. The Earnout Shares are subject to acceleration in the event of a sale or other change in control if the holders of Class A common stock would receive a per share price in excess of the applicable Earnout Shares price target. The Company accounts for the potential Earnout Shares as a liability in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging, and is subject to re-measurement at each balance sheet date. Changes in fair value are recognized in change in fair value of contingent common shares liability in the Company’s condensed consolidated statements of operations. As of September 30, 2023, no Earnout Shares have been issued as none of the corresponding share price thresholds have been met. The following table presents the changes in the fair value of the Earnout Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 847 $ 12,400 $ 1,800 $ 28,800 Decrease in fair value (194) (4,400) (1,147) (20,800) Fair value, end of period $ 653 $ 8,000 $ 653 $ 8,000 Refer to Note 13 - Fair Value Measurements for further details. Vesting Shares Subject to the terms and conditions of the sponsor letter agreement that was executed in connection with the merger agreement between Wilco Holdco, Inc. and FAII, approximately 0.2 million shares of Class F common stock of FAII outstanding immediately prior to the Company's business combination with FAII converted to potential Class A common shares and became subject to vesting and forfeiture provisions (the "Vesting Shares"). The Vesting Shares vest in three equal tranches of approximately 0.1 million shares each if the VWAP of Class A common stock exceeds $600.00, $700.00 and $800.00 p er share, respectively, over the designated period of time. The Vesting Shares are subject to acceleration in the event of a sale or other change in control if the holders of Class A common stock would receive a per share price in excess of the applicable Vesting Shares price target. The Company accounts for the Vesting Shares as a liability in accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity , and ASC 815, Derivatives and Hedging, and is subject to re-measurement at each balance sheet date. Changes in fair value are recognized in change in fair value of contingent common shares liability in the Company’s condensed consolidated statements of operations. As of September 30, 2023, no Vesting Shares are outstanding as none of the corresponding share price thresholds have been met. The following table presents the changes in the fair value of the Vesting Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 487 $ 7,130 $ 1,035 $ 16,560 Decrease in fair value (112) (2,530) (660) (11,960) Fair value, end of period $ 375 $ 4,600 $ 375 $ 4,600 Refer to Note 13 - Fair Value Measurements for further details. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company determines fair value measurements used in its condensed consolidated financial statements based upon the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels, with Level 1 having the highest priority and Level 3 having the lowest. • Level 1: Observable inputs, which include unadjusted quoted prices in active markets for identical instruments. • Level 2: Observable inputs other than Level 1 inputs, such as quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the instruments. • Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. As of September 30, 2023 and December 31, 2022 , respectively, the recorded values of cash, cash equivalents and restricted cash, accounts receivable, other current assets, accounts payable, accrued expenses and deferred revenue approximate their fair values due to the short-term nature of these items. Money market funds categorized in Level 1 of the fair value hierarchy are measured at fair value based on quoted market prices. As of September 30, 2023 and December 31, 2022, respectively, the fair value of money market fund investments i ncluded in cash and cash equivalents w as zero and $30.0 million . Fair value measurement of debt The Company's Revolving Loans are Level 2 fair value measures which have a variable interest rate structure that resets on a frequent short-term basis and, as of September 30, 2023, the recorded amounts approximate fair value. Prior to the 2023 Debt Restructuring, the Company's Senior Secured Term Loan was a Level 2 fair value measure. The Company utilized market approach valuation techniques based on interest rates and credit data that are currently available to the Company for issuance of debt with similar terms or maturities. In connection with the 2023 Debt Restructuring, the Company estimated the fair value of a portion of its Senior Secured Term Loan using a Black-Derman-Toy Lattice Bond Pricing Model, which utilized Level 3 inputs. During the third quarter of 2023, the Company prospectively changed its method to estimate the fair value of its Senior Secured Term Loan to a Discounted Cash Flow Model, noting no material changes to the presentation of fair values relative to the previous method. The Discount Cash Flow Model utilizes observable and unobservable Level 3 inputs, such as SOFR forward rates and an estimated yield. As of September 30, 2023, the carrying amount and estimated fair value of the Senior Secured Term Loan was approximately $393.9 million and $369.5 million, respectively. As discussed in Note 8 - Borrowings , the Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments . As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in the Company's statements of operations. The Company determines the fair value of the 2L Notes using Level 3 inputs. In connection with the 2023 Debt Restructuring, the fair value of the 2L Notes was estimated using a Goldman Sachs Convertible Bond Valuation Model to consider the impacts of the conversion feature. During the third quarter of 2023, the Company prospectively changed its method to estimate the fair value of its 2L Notes to a Bond Plus Call Model, which also considers the impacts of the conversion feature, noting no material changes to the presentation of fair values relative to the previous method. Changes in the assumptions of the unobservable inputs may materially affect the estimated fair value of the 2L Notes. The key inputs into the respective valuation models used to estimate the fair value of the 2L Notes were as follows as of September 30, 2023 and the Closing Date, which is when the 2L Notes were issued: 2L Notes September 30, 2023 June 15, 2023 Risk-free interest rate 4.55% 3.90% Volatility 45.00% 50.00% Selected yield 21.50% 20.00% Expected term (years) 5.0 5.3 Share price $8.86 $10.21 The following table presents the changes in the fair value of the 2L Notes that is recognized in change in fair value of 2L Note s in the condensed consolidated statements of operations for the periods indicated below (in thousands). None of the change in fair value is attributable to instrument-specific credit risk: Three Months Ended Nine Months Ended September 30, 2023 September 30, 2023 Fair value, beginning of period (1) $ 96,933 $ 103,943 Decrease in fair value (1) (1,485) (8,495) Fair value, end of period $ 95,448 $ 95,448 (1) Represents changes in fair value from the Closing Date, which is when the 2L Notes were issued. Fair value measurement of share-based financial liabilities Prior to June 30, 2023, the Company determined the fair value of the Public Warrant liability using Level 1 inputs, and determined the fair value of the Private Placement Warrant liability using the price of the Public Warrants as a Level 2 input. Beginning June 30, 2023, the Company determined the fair value of the IPO Warrant liability using Level 3 inputs as its Public Warrants were delisted from the NYSE. As of September 30, 2023, t he Company determined the fair value of the IPO Warrant liability, Earnout Shares liability and Vesting Shares liability using Level 3 inpu ts. The warrants would be deemed exercisable or redeemable if the Company's common stock price over a specified measurement period was trading at certain thresholds. The contingent common shares contain specific market conditions to determine whether the shares vest based on the Company’s common stock price over a specified measurement period. Given the path-dependent nature of the requirement in which the warrants are exercised or redeemed, and the shares are earned, a Monte-Carlo simulation was used to estimate the fair value of the liabilities. The Company’s common stock price was simulated to each measurement period based on the above methodology. In each iteration, the simulated stock price was compared to the conditions under which the warrants are exercised or redeemed, or the shares vest. In iterations where the stock price corresponded to warrants being exercised or redeemed, or shares vesting, the future value of the warrants or contingent common shares were discounted back to present value. The fair value of the liabilities were estimated based on the average of all iterations of the simulation. Inherent in a Monte-Carlo valuation model are assumptions related to expected stock-price volatility, expected term, risk-free interest rate and dividend yield. The Company estimates the volatility based on the historical volatility of certain guideline companies, as well as the Company's historical volatility over the available look-back period as of the valuation date. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the valuation date for a maturity similar to the expected term of the IPO Warrants, Earnout Shares and Vesting Shares. The dividend yield percentage is zero based on the Company's current expectations related to the payment of dividends during the expected term of the IPO Warrants, Earnout Shares or Vesting Shares. The key inputs into the Monte-Carlo option pricing model were as follows as of September 30, 2023 and December 31, 2022 for the respective Level 3 instruments: IPO Warrants Earnout Shares and Vesting Shares September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Risk-free interest rate 4.81% N/A 4.55% 3.88% Volatility 93.80% N/A 74.70% 74.60% Dividend yield —% N/A —% —% Expected term (years) 2.7 N/A 7.7 8.5 Share price $8.86 N/A $8.86 $15.50 Refer to Note 11 - IPO Warrant Liability and Note 12 - Contingent Common Shares Liability for further details on the change in fair value of the IPO Warrants and change in fair value of the Earnout Shares and Vesting Shares, respectively. Fair value measurement of interest rate derivative instruments The Company is exposed to interest rate variability with regard to its existing variable-rate debt instrument, which exposure primarily relates to movements in various interest rates, such as SOFR. The Company utilizes interest rate cap derivative instruments for purposes of hedging exposures related to such variable-rate cash payments. The Company's interest rate caps have historically been designated as cash flow hedging instruments. As of September 30, 2023, the Company's interest rate cap no longer qualifies as a designated cash flow hedging instrument due to a recent 12-month SOFR election on its Senior Secured Term Loan . The Company records derivatives on the balance sheet at fair value, which represents the estimated amounts it would receive or pay upon termination of the derivative prior to the scheduled expiration date. The fair value is derived from model-driven information based on observable Level 2 inputs, such as SOFR forward rates. For derivatives designated and that qualify as a cash flow hedge of interest rate risk, the gain or loss on the derivative is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. For derivatives that are considered to be ineffective, or are not designated in a hedging relationship, the gain or loss on the derivative is immediately recognized in other expense (income), net. The following table presents the activity of cash flow hedges included in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022, respectively (in thousands): Cash Flow Hedges Balance as of December 31, 2022 $ 4,899 Unrealized loss recognized in other comprehensive income before reclassifications (99) Reclassification to interest expense, net (3,357) Balance as of March 31, 2023 1,443 Unrealized gain recognized in other comprehensive income before reclassifications 798 Reclassification to interest expense, net (1,648) Balance as of June 30, 2023 593 Unrealized gain recognized in other comprehensive income before reclassifications 102 Reclassification to interest expense, net (145) Balance as of September 30, 2023 $ 550 Balance as of December 31, 2021 $ 28 Unrealized gain recognized in other comprehensive income before reclassifications 3,681 Reclassification to interest expense, net 71 Balance as of March 31, 2022 3,780 Unrealized gain recognized in other comprehensive income before reclassifications 2,642 Reclassification to interest expense, net 66 Balance as of June 30, 2022 6,488 Unrealized gain recognized in other comprehensive income before reclassifications 1,766 Reclassification to interest expense, net (1,111) Balance as of September 30, 2022 $ 7,143 For the three and nine months ended September 30, 2023, the change in fair value of the Company's non-designated cash flow hedge was immaterial. The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Assets Liabilities Assets Liabilities Derivatives not designated as cash flow hedging instruments: Other current assets $ 549 — — — Other non-current assets $ 99 — — — Accrued expenses and other liabilities — — — — Other non-current liabilities — — — — Derivatives designated as cash flow hedging instruments: Other current assets — — $ 5,028 — Other non-current assets — — — — Accrued expenses and other liabilities — — — — Other non-current liabilities — — — $ 73 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The effective tax rate and income tax expense for the three months ended September 30, 2023 were (0.9)% and $0.1 million, compared to an effective tax rate and income tax benefit of 5.8% and $7.2 million for the three months ended September 30, 2022. The effective tax rate and income tax expense for the nine months ended September 30, 2023 were (0.5)% and $0.3 million, compared to an effective tax rate and income tax benefit of 10.0% and $43.5 million for the nine months ended September 30, 2022. The effective tax rate for the three and nine months ended September 30, 2023 was estimated based on the full-year 2023 forecast. The estimated effective tax rate was different than the statutory rate primarily due to the recognition of valuation allowances against federal and state net operating losses and other tax attributes, such as interest disallowances, for which future realization is uncertain. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items including nontaxable fair value adjustments related to liability-classified share-based instruments, resulted in a tax expense of $0.1 million for the three months ended September 30, 2023, and a tax expense of $0.3 million for the nine months ended September 30, 2023. The effective tax rate for the three and nine months ended September 30, 2022 was estimated based on the full-year 2022 forecast. The estimated effective tax rate was different than the statutory rate primarily due to attributes in federal and state jurisdictions for which no benefit can be recognized and book impairment of goodwill. There was no tax basis established in a significant component of the goodwill impaired. As a result, the impairment had a substantial permanent impact on the effective tax rate. The estimated effective tax rate applicable to year-to-date losses as adjusted for discrete items including nontaxable fair value adjustments related to liability-classified share-based instruments, resulted in a tax benefit of $7.2 million for the three months ended September 30, 2022, and a tax benefit of $43.5 million for the nine months ended September 30, 2022. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Leases The Company leases various facilities and office equipment for its physical therapy operations and administrative support functions under operating leases. The Company’s initial operating lease terms are generally between 7 and 10 years, and typically contain options to renew for varying terms. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The amortization of operating lease ROU assets and the accretion of operating lease liabilities are reported together as fixed lease expense. The fixed lease expense is recognized on a straight-line basis over the life of the lease. If the ROU asset has been impaired, lease expense is no longer recognized on a straight-line basis. The lease liability continues to amortize using the effective interest method, while the ROU asset is subsequently amortized on a straight-line basis. Lease costs are included as components of rent, clinic supplies, contract labor and other and selling, general and administrative expenses on the condensed consolidated statements of operations. Lease charges related to ROU asset impairments are included in goodwill, intangible and other asset impairment charges on the condensed consolidated statements of operations. The components of the Company's lease costs incurred were as follows for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Lease cost Operating lease cost (1) $ 16,671 $ 16,826 $ 50,034 $ 50,313 Variable lease cost (2) 5,647 5,198 16,477 15,734 Total lease cost (3) $ 22,318 $ 22,024 $ 66,511 $ 66,047 (1) Includes ROU asset impairment charges for the three and nine months ended September 30, 2022, which were immaterial. (2) Includes short term lease costs, which are immaterial. (3) Sublease income primarily relates to subleases of certain clinic facilities to third parties, and is immaterial. During the nine months ended September 30, 2023 and 2022, the Company modified the lease terms for a significant number of its real estate leases, primarily related to lease term extensions and renewals in the normal course of business. Modifications during the nine months ended September 30, 2023 and 2022 contributed an increase to the Company’s operating lease ROU assets and operating lease liabilities of approximately $10.0 million and $11.0 million, respectively. Other supplemental quantitative disclosures were as follows for the periods indicated below (in thousands): Nine Months Ended September 30, 2023 September 30, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 48,466 $ 50,641 Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,831 $ 8,404 Average lease terms and discount rates as of September 30, 2023 and December 31, 2022 were as follows: September 30, 2023 December 31, 2022 Weighted-average remaining lease term: Operating leases 5.5 years 5.9 years Weighted-average discount rate: Operating leases 7.2% 6.9% Estimated undiscounted future lease payments under non-cancellable operating leases, along with a reconciliation of the undiscounted cash flows to operating lease liabilities, respectively, at September 30, 2023 were as follows (in thousands): Year Amount 2023 (remainder of year) $ 17,023 2024 66,674 2025 56,647 2026 49,767 2027 38,358 Thereafter 77,239 Total undiscounted future cash flows 305,708 Less: Imputed Interest (56,273) Present value of future cash flows $ 249,435 Presentation on Balance Sheet: Current $ 52,351 Non-current $ 197,084 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesThe Company has contractual commitments that are not required to be recognized in the condensed consolidated financial statements related to cloud computing and telecommunication services agreements. As of September 30, 2023, minimum amounts due under these agreements are approximately $12.2 million through January of 2026 subject to customary business terms and conditions. From time to time, the Company is a party to legal proceedings, governmental audits and investigations that arise in the ordinary course of business. Management is not aware of any legal proceedings, governmental audits and investigations of which the outcome is probable to have a material adverse effect on the Company’s results of operations, cash flows or financial condition. The outcome of any litigation and claims against the Company cannot be predicted with certainty, and the resolution of current or future claims could materially affect our future results of operations, cash flows or financial condition. During 2022, the Company engaged in discussions with a payor regarding a billing dispute related to certain historical claims. Management believed, based on discussions with its legal counsel, that the Company had meritorious defenses against such unasserted claim. However, based on the progress of settlement discussions to avoid the cost of potential litigation, the Company recorded a charge for a net settlement liability related to the billing dispute of $3.0 million, which is included in selling, general and administrative expenses in its condensed consolidated statements of operations for the nine months ended September 30, 2022. As of December 31, 2022, the liability was fully settled. Stockholder class action complaints Federal Securities Litigation. On August 16, 2021, two purported ATI stockholders, Kevin Burbige and Ziyang Nie, filed a putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, Labeed Diab, Joe Jordan, and Drew McKnight (collectively, the “ATI Individual Defendants”), and Joshua Pack, Marc Furstein, Leslee Cowen, Aaron Hood, Carmen Policy, Rakefet Russak-Aminoach, and Sunil Gulati (collectively, the “FVAC Defendants”). On October 7, 2021, another purported ATI stockholder, City of Melbourne Firefighters' Retirement System ("City of Melbourne"), filed a nearly identical putative class action complaint in the U.S. District Court for the Northern District of Illinois against ATI, the ATI Individual Defendants, and the FVAC Defendants. On November 18, 2021, the court consolidated the cases and appointed The Phoenix Insurance Company Ltd. and The Phoenix Pension & Provident Funds as lead plaintiffs (together, “Lead Plaintiffs”). On February 8, 2022, Lead Plaintiffs filed a consolidated amended complaint against ATI, the ATI Individual Defendants, and the FVAC Defendants, which asserts claims against (i) ATI and the ATI Individual Defendants under Section 10(b) of the Exchange Act; (ii) the ATI Individual Defendants under Section 20(a) of the Exchange Act (in connection with the Section 10(b) claim); (iii) all defendants under Section 14(a) of the Exchange Act; and (iv) the ATI Individual Defendants and the FVAC Defendants under Section 20(a) of the Exchange Act (in connection with the Section 14(a) claim). Lead Plaintiffs purport to assert these claims on behalf of those ATI stockholders who purchased or otherwise acquired their ATI shares between February 22, 2021 and October 19, 2021, inclusive, and/or held FVAC Class A common shares as of May 24, 2021 and were eligible to vote at FVAC’s June 15, 2021 special meeting. The consolidated amended complaint generally alleges that the proxy materials for the FVAC/ATI merger, as well as other ATI disclosures (including the press release announcing ATI’s financial results for the first quarter of 2021), were false and misleading (and, thus, in violation of Sections 10(b) and 14(a) of the Exchange Act) because they failed to disclose that: (i) ATI was experiencing attrition among its physical therapists; (ii) ATI faced increasing competition for clinicians in the labor market; (iii) as a result, ATI faced difficulty retaining therapists and incurred increased labor costs; (iv) also as a result, ATI would open fewer new clinics; and (v) also as a result, the defendants’ positive statements about ATI’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis. Lead Plaintiffs, on behalf of themselves and the putative class, seek money damages in an unspecified amount and costs and expenses, including attorneys’ and experts’ fees. On April 11, 2022, defendants filed motions to dismiss the consolidated amended complaint, which were fully briefed as of July 25, 2022. On September 6, 2023, the court granted in part and denied in part the motions to dismiss. On October 19, 2023, ATI, the ATI Individual Defendants, and the FVAC Defendants answered the consolidated amended complaint, and the parties are now engaged in discovery. The Company has determined that potential liabilities related to the consolidated amended complaint are not considered probable or reasonably estimable at this time. Delaware Litigation. On February 7, 2023, another purported ATI stockholder, Wendell Robinson, filed a putative class action complaint in the Court of Chancery of the State of Delaware against Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rakefet Russak-Aminoach, Sunil Gulati, Daniel N. Bass, Micah B. Kaplan and Labeed Diab (the "Robinson Action"). The complaint asserts claims against: (i) Fortress Acquisition Sponsor II, LLC, Andrew A. McKnight, Joshua A. Pack, Marc Furstein, Leslee Cowen, Aaron F. Hood, Carmen A. Policy, Rafeket Russak-Aminoach, Sunil Gulati, Daniel N. Bass and Micah B. Kaplan for breach of fiduciary duty; and (ii) Labeed Diab for aiding and abetting breach of fiduciary duty. Plaintiff's allegations generally mirror those asserted in the federal stockholder class action described above, and Plaintiff further alleges that the alleged misrepresentations and omissions in the proxy materials for the FVAC/ATI merger prevented stockholders from making a fully informed decision on whether to approve the merger or have their shares redeemed. Defendants filed motions to dismiss on April 28, 2023, which were fully briefed as of June 23, 2023 and remain pending. On June 1, 2023, another purported ATI stockholder, Phillip Goldstein, filed a putative class action and derivative complaint in the Court of Chancery of the State of Delaware against Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John L. Larsen, John Maldonado, Carmine Petrone, Joanne M. Burns, Christopher Krubert, James E. Parisi, Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach (the "Goldstein Action"). The complaint asserts direct and/or derivative claims against: (i) Labeed Diab, Joseph Jordan, Cedric Coco, Ray Wahl, John Larsen, John Maldonado, Carmine Petrone, Joanne Burns, Christopher Krubert, and James Parisi for tortious interference with redemption rights, aiding and abetting breach of fiduciary duty, and fraud; and (ii) Joshua A. Pack, Andrew A. McKnight, Marc Furstein, Aaron F. Hood, Carmen A. Policy, Sunil Gulati, Leslee Cowen, and Rakefet Russak-Aminoach for breach of fiduciary duty. Plaintiff’s allegations generally mirror those asserted in the Robinson Action referenced above. Defendants have not yet responded to the complaint. On August 16, 2023, Plaintiffs in the Robinson and Goldstein Actions filed a motion for consolidation of the Robinson and Goldstein Actions and for appointment of lead plaintiff and lead counsel. On August 31, 2023, defendants opposed the motion for consolidation and concurrently moved to stay the Goldstein Action pending a decision on the motions to dismiss in the Robinson Action. The motion for consolidation and the motion to stay were fully briefed as of September 20, 2023. A hearing was held on October 6, 2023, at which the court (i) denied the motion for consolidation (without prejudice to renewing the motion post-decision on the motions to dismiss in the Robinson Action) and (ii) granted the motion to stay the Goldstein Action (pending the same decision). A hearing on defendants’ pending motions to dismiss the Robinson Action is scheduled for December 1, 2023. The Company has determined that potential liabilities related to the Robinson and Goldstein Actions are not considered probable or reasonably estimable at this time. Stockholder derivative complaint Federal Derivative Litigation. Between December 1, 2021 and September 22, 2022, five purported ATI stockholders filed four derivative actions, purportedly on behalf of ATI, in the U.S. District Court for the Northern District of Illinois. On November 21, 2022, four of these stockholder plaintiffs, Vinay Kumar, Brendan Reginbald, Ziyang Nie and Julia Chang, filed a consolidated amended complaint against Labeed Diab, Joe Jordan, John Larsen, John Maldonado, Carmine Petrone, Christopher Krubert, Joanne Burns and James Parisi (collectively, the “Legacy ATI Defendants”), Drew McKnight, Joshua Pack, Aaron Hood, Carmen Policy, Marc Furstein, Leslee Cowen, Rafeket Russak-Aminoach, and Sunil Gulati (collectively, the “FVACII Individual Defendants”), and Fortress Acquisition Sponsor II, LLC and Fortress Investment Group LLC (together, the "Fortress Entity Defendants," and together with the FVACII Individual Defendants, the “FVACII Defendants”). The consolidated amended complaint asserts claims on behalf of ATI against: (i) the FVACII Defendants for breach of fiduciary duty; (ii) Fortress Acquisition Sponsor II, LLC and the Legacy ATI Defendants for aiding and abetting breach of fiduciary duty; (iii) Labeed Diab, Joe Jordan, and Drew McKnight for contribution under Section 21D of the Exchange Act; (iv) the FVACII Defendants under Section 14(a) of the Exchange Act; (v) the Legacy ATI Defendants for unjust enrichment; and (vi) all defendants for contribution and indemnification under Delaware law. Plaintiffs' allegations generally mirror those asserted in the stockholder class action described above. On January 20, 2023, defendants filed motions to dismiss the consolidated amended complaint, which remain pending. On March 3, 2023, in lieu of filing a response to defendants' motions to dismiss, Plaintiffs filed a motion for leave to file an amended complaint, which was fully briefed as of April 7, 2023 and remains pending. The Company has determined that potential liabilities related to the action are not considered probable or reasonably estimable at this time. Insurance coverage complaint On March 8, 2023, the Company filed a complaint against Federal Insurance Company, U.S. Specialty Insurance Company and other insurers titled ATI Physical Therapy, Inc. v. Federal Insurance Company et. al., Case No. N23C-03-074, in the Superior Court of the State of Delaware related to a coverage dispute and those certain insurers’ denial of coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests discussed in this section. The complaint asserts claims against Federal Insurance Company for breach of contract and bad faith, and claims for declaratory judgment as to Federal Insurance Company, U.S. Specialty Insurance Company, XL Specialty Insurance Company and the Company’s excess insurance carriers, seeking coverage for the stockholder class action complaints, the stockholder derivative complaint, and the SEC requests. On June 26, 2023, the Company filed an amended complaint asserting the same claims and seeking the same relief. On July 18, 2023, the defendants filed their answers to the amended complaint. On July 14, 2023, Federal Insurance Company issued a supplemental coverage position in which, subject to certain reservations and limitations, Federal Insurance Company accepted coverage for certain insureds with respect to the stockholder class action complaints and the stockholder derivative complaints. The insurance coverage litigation remains pending. During the third quarter of 2023, the Company began receiving insurance reimbursements for legal costs incurred related to the stockholder class action complaint and stockholder derivative complaint previously disclosed. The Company recognized $4.3 million of legal cost insurance reimbursements which is included as an offset to selling, general and administrative expenses in its condensed consolidated statements of operations for the three and nine months ended September 30, 2023. Regulatory matters On November 5, 2021, the Company received from the SEC a voluntary request for the production of documents relating to the earnings forecast and financial information referenced in the Company's July 26, 2021 Form 8-K and related matters. The Company has subsequently received from the SEC additional requests for documents and information related to the same matters, and is cooperating with the SEC's review and investigation of those matters. Indemnifications The Company has agreed to indemnify its current and former directors and executive officers for costs associated with any fees, expenses, judgments, fines and settlement amounts incurred by them in any action or proceeding to which any of them are, or are threatened to be, made a party by reason of their service as a director or officer. The Company maintains director and officer insurance coverage that would generally enable it to recover a portion of any amounts paid. The ultimate cost of current or potential future litigation may exceed the Company’s current insurance coverages and may have a material adverse impact on our results of operations, cash flows and financial condition. The Company also may be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. |
Loss per Share
Loss per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Loss per Share | Loss per Share Basic loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding during the period, adjusted for the impact of securities that would have a dilutive effect on basic loss per share, if any. For the three and nine months ended September 30, 2023 and 2022, shares of Series A Senior Preferred Stock are treated as participating securities and therefore are included in computing earnings per common share using the two-class method. The two-class method is an earnings allocation formula that calculates basic and diluted net earnings per common share for each class of common stock separately based on dividends declared and participation rights in undistributed earnings as if the earnings for the year had been distributed. For the three and nine months ended September 30, 2023 and 2022, the income (loss) available to common stockholders is reduced (increased) by the amount of the cumulative dividend and any redemption value adjustments for the Series A Senior Preferred Stock that was issued as part of the 2022 Debt Refinancing. As discussed in Note 8 - Borrowings , the Series B Preferred Stock are non-economic and represent voting rights only and, therefore, are not considered in the calculation of basic or diluted loss per share. The calculation of both basic and diluted loss per share for the periods indicated below was as follows (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Basic and diluted loss per share: Net loss $ (14,611) $ (116,694) $ (61,570) $ (390,640) Less: Net income (loss) attributable to non-controlling interests 586 (376) 2,602 (1,026) Less: Series A Senior Preferred redemption value adjustments (1) (2,927) — 41,769 — Less: Series A Senior Preferred cumulative dividend 6,075 5,274 17,087 12,263 Loss available to common stockholders $ (18,345) $ (121,592) $ (123,028) $ (401,877) Weighted average shares outstanding (2) 4,154 4,086 4,125 4,054 Basic and diluted loss per share $ (4.42) $ (29.76) $ (29.83) $ (99.13) (1) For the three and nine months ended September 30, 2023, the Series A Senior Preferred Stock was remeasured to its redemption value. For the nine months ended September 30, 2023, this adjustment included a one-time recognition of a deemed dividend primarily from the original issue discount. For the three and nine months ended September 30, 2023, this adjustment included an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period. Refer to Note 10 - Mezzanine and Stockholders' Equity for additional information. (2) Included within weighted average shares outstanding following the 2022 Debt Refinancing are common shares issuable upon the exercise of the Series II Warrants, as the Series II Warrants are exercisable at any time for nominal consideration. As such, the shares are considered to be outstanding for the purpose of calculating basic and diluted loss per share. For the periods presented, basic and diluted loss per share were equal. The following number of shares issuable related to outstanding securities could potentially dilute earnings per share in the future (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 2L Notes (1) 8,454 — 8,454 — Series I Warrants 105 105 105 105 IPO Warrants 197 197 197 197 Restricted shares (2) 6 10 6 10 Stock options 101 128 101 128 RSUs 764 98 764 98 RSAs 2 5 2 5 Total 9,629 543 9,629 543 (1) Potential dilution is reflected on an if-converted basis based on the principal amount of 2L Notes as of the end of the periods presented, and Conversion Price of $12.50 per share. (2) Represents certain shares of Class A common stock legally issued, but not outstanding, as of the respective periods. As the vesting thresholds have not yet been met as of the end of th e reporting period, 0.3 million Earnout Shares and approximately 0.2 million Vesting Shares were excluded from the basic and diluted shares outstanding calculations. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net loss attributable to ATI Physical Therapy, Inc. | $ (15,197) | $ (22,705) | $ (26,270) | $ (116,318) | $ (135,546) | $ (137,750) | $ (64,172) | $ (389,614) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of Presentation and Rec_2
Basis of Presentation and Recent Accounting Standards (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of presentation The accompanying unaudited condensed consolidated financial statements of the Company were prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Management believes the unaudited condensed consolidated financial statements for interim periods presented contain all necessary adjustments to state fairly, in all material respects, the Company's financial position, results of operations and cash flows for the interim periods presented. Such adjustments are of a normal recurring nature. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results the Company expects for the entire year. In addition, the influence of seasonality, changes in payor contracts, changes in rate per visit, changes in referral and visit volumes, strategic transactions and initiatives, labor market dynamics and wage inflation, changes in laws and general economic conditions in the markets in which the Company operates and other factors impacting the Company's operations may result in any period not being comparable to the same period in previous years. For further information regarding the Company's accounting policies and other information, the condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K filed with the SEC on March 16, 2023. |
Liquidity and going concern | Liquidity and going concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business within twelve months after the date that these condensed consolidated financial statements are issued. Additionally, the Company experienced improvements in operations that resulted in reduced levels of operating cash outflows during the nine months ended September 30, 2023 relative to the same period in the prior year. A continued improvement in business results is necessary as there remains a risk that the Company may fail to meet its minimum liquidity covenant or be unable to fund anticipated cash requirements and obligations as they become due in the future. The Company's plan is to continue its efforts to improve its operating results and cash flow through increases to clinical staffing levels, improvements in clinician productivity, controlling costs and capital expenditures and increases in patient visit volumes, referrals and rate per visit. There can be no assurance that the Company's plan will be successful in any of these respects. If the Company's plan does not result in improvement in these aspects in future periods that results in sufficient cash flow from operations, the Company will need to consider other alternatives, such as raising additional financing, obtaining funds from other sources, disposal of assets, or pursuing other strategic alternatives to improve its business, results of operations and financial condition. There can be no assurance that the Company will be successful in accessing such alternative options or financing if or when needed. Failure to do so could have a material adverse impact on our business, financial condition, results of operations and cash flows, and may lead to events including bankruptcy, reorganization or insolvency. Management plans have not been fully implemented and, as a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. |
Use of estimates | Use of estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The effect of any change in estimates will be recognized in the current period of the change. |
Segment reporting | Segment reporting The Company reports segment information based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments. All of the Company’s operations are conducted within the United States. Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making decisions, assessing financial performance and allocating resources. We operate our business as one operating segment and therefore we have one reportable segment. |
Cash, cash equivalents and restricted cash | Cash, cash equivalents and restricted cash Cash and cash equivalents include all cash balances and highly liquid investments with original maturities of three months or less when issued. Restricted cash consists of cash held as collateral in relation to the Company's corporate card agreement. Restricted cash included within cash and cash equivalents as presented within our condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022, and our condensed consolidated statements of cash flows for the nine months ended September 30, 2023 was $0.8 million. There was no change in restricted cash for the nine months ended September 30, 2022. |
2L Notes | 2L Notes The guidance in Accounting Standards Codification ("ASC") Topic 825, Financial Instruments , provides a fair value option that allows companies to make an irrevocable election of fair value as the initial and subsequent measurement attribute for certain eligible financial assets and liabilities. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. The decision to elect the fair value option is determined on an instrument-by-instrument basis, must be applied to an entire instrument and is irrevocable once elected. Assets and liabilities measured at fair value pursuant to this guidance are required to be reported separately in the Company's condensed consolidated balance sheets from those instruments using another accounting method. The 2L Notes are accounted for as a liability in the Company's condensed consolidated balance sheets. The Company has made an irrevocable election to account for the 2L Notes under the fair value option in accordance with ASC Topic 825, Financial Instruments , in lieu of bifurcating certain features in the Second Lien Note Purchase Agreement. As such, the 2L Notes are initially recorded as a liability at estimated fair value and are subject to re-measurement at each balance sheet date with changes in fair value recognized in change in fair value of 2L Notes in the Company’s condensed consolidated statements of operations. Any changes in fair value related to changes in the Company's credit risk is recognized as a component of accumulated other comprehensive income (loss). |
Recently adopted accounting guidance | Recently adopted accounting guidance In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Liabilities from Contracts with Customers , which provides guidance to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice. This ASU is effective for the Company on January 1, 2023, with early adoption permitted, and shall be applied on a prospective basis to business combinations that occur on or after the adoption date. The Company adopted this new accounting standard effective January 1, 2023. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements. |
Divestitures (Tables)
Divestitures (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Disposal Groups, Including Discontinued Operations | Major classes of assets and liabilities classified as held for sale as of December 31, 2022 were as follows (in thousands): December 31, 2022 Accounts receivable, net $ 486 Prepaid expenses 23 Property and equipment, net 1,113 Operating lease right-of-use assets 1,929 Goodwill, net 3,192 Other non-current assets 12 Total assets held for sale $ 6,755 Accounts payable $ 22 Accrued expenses and other liabilities 201 Current portion of operating lease liabilities 685 Operating lease liabilities 1,706 Total liabilities held for sale $ 2,614 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregation of Net Operating Revenue By Major Service Line and Associated Payor Class | The following table disaggregates net revenue by major service line for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net patient revenue $ 162,258 $ 142,313 $ 469,950 $ 429,744 ATI Worksite Solutions (1) 9,289 9,053 27,874 26,429 Management Service Agreements (1) 3,664 3,251 11,159 9,671 Sports Medicine and other revenue (1) 2,244 2,175 7,741 8,063 $ 177,455 $ 156,792 $ 516,724 $ 473,907 (1) ATI Worksite Solutions, Management Service Agreements and Sports Medicine and other revenue are included within other revenue on the face of the condensed consolidated statements of operations. The following table disaggregates net patient revenue for each associated payor class as a percentage of total net patient revenue for the periods indicated below: Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Commercial 58.5 % 57.7 % 58.4 % 57.2 % Government 23.3 % 24.7 % 23.5 % 24.3 % Workers’ compensation 11.6 % 12.0 % 11.7 % 12.7 % Other (1) 6.6 % 5.6 % 6.4 % 5.8 % 100.0 % 100.0 % 100.0 % 100.0 % (1) Other is primarily comprised of net patient revenue related to auto personal injury reimbursement. |
Goodwill, Trade Name and Othe_2
Goodwill, Trade Name and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in The Carrying Amount of Goodwill | Changes in the carrying amount of goodwill during the current year consisted of the following (in thousands): Goodwill at December 31, 2022 (1) $ 286,458 Impairment charges (2) — Reclassifications to held and used 3,192 Goodwill at September 30, 2023 $ 289,650 (1) Net of accumulated impairment losses of $1,045.7 million. (2) The Company did not note any triggering events during the nine months ended September 30, 2023 that resulted in the recording of an impairment loss. |
Schedule of Carrying Amounts of Indefinite-Lived Intangible Assets | The table below summarizes the Company’s carrying amount of trade name and other intangible assets at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Gross intangible assets: ATI trade name (1) $ 245,000 $ 245,000 Non-compete agreements 2,395 2,395 Other intangible assets 640 640 Accumulated amortization: Accumulated amortization – non-compete agreements (1,647) (1,126) Accumulated amortization – other intangible assets (360) (327) Total trade name and other intangible assets, net $ 246,028 $ 246,582 (1) Not subject to amortization. |
Schedule of Carrying Amounts of Finite-Lived Intangible Assets | The table below summarizes the Company’s carrying amount of trade name and other intangible assets at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Gross intangible assets: ATI trade name (1) $ 245,000 $ 245,000 Non-compete agreements 2,395 2,395 Other intangible assets 640 640 Accumulated amortization: Accumulated amortization – non-compete agreements (1,647) (1,126) Accumulated amortization – other intangible assets (360) (327) Total trade name and other intangible assets, net $ 246,028 $ 246,582 (1) Not subject to amortization. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment and Depreciation Expense | Property and equipment consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Equipment $ 39,328 $ 38,102 Furniture and fixtures 17,948 17,215 Leasehold improvements 194,636 191,182 Automobiles 19 19 Computer equipment and software 106,642 102,651 Construction-in-progress 2,952 3,727 361,525 352,896 Accumulated depreciation and amortization (251,873) (229,206) Property and equipment, net (1) $ 109,652 $ 123,690 (1) Excludes $1.1 million reclassified as held for sale as of December 31, 2022. Refer to Note 3 - Divestitures for additional information. The following table presents the amount of depreciation and amortization expense related to property and equipment recorded in rent, clinic supplies, contract labor and other and selling, general and administrative expenses in the Company’s condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Rent, clinic supplies, contract labor and other $ 6,343 $ 6,876 $ 19,152 $ 20,785 Selling, general and administrative expenses 2,772 3,048 8,635 9,133 Total depreciation expense $ 9,115 $ 9,924 $ 27,787 $ 29,918 |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Expenses and Other Liabilities | Accrued expenses and other liabilities consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Salaries and related costs $ 26,128 $ 28,949 Accrued professional fees 7,677 5,551 Credit balances due to patients and payors 7,425 6,117 Accrued interest 5,011 762 Accrued contract labor 3,271 4,483 Accrued occupancy costs 2,424 2,410 Other payables and accrued expenses 3,682 5,400 Total $ 55,618 $ 53,672 |
Borrowings (Tables)
Borrowings (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Long-Term Debt | Long-term debt, net consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Senior Secured Term Loan (1, 2) (due February 24, 2028) $ 409,500 $ 503,481 Revolving Loans (3) (due February 24, 2027) 23,450 48,200 Less: unamortized debt issuance costs (7,718) (11,137) Less: unamortized original issue discount (7,853) (8,944) Total debt, net 417,379 531,600 Less: current portion of long-term debt — — Long-term debt, net $ 417,379 $ 531,600 (1) Interest rate of 13.7% and 12.1% at September 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate. The effective interest rate for the Senior Secured Term Loan was 13.9% and 13.1% at September 30, 2023 and December 31, 2022, respectively. (2) The Company has paid a portion of its interest in-kind on its Senior Secured Term Loan by capitalizing and adding such interest to the principal amount of the debt. As of September 30, 2023 and December 31, 2022, the Company has recognized total paid-in-kind interest in the amount of $9.5 million and $3.5 million, respectively. (3) Weighted average interest rate of 10.5% and 8.3% at September 30, 2023 and December 31, 2022, respectively, with interest payable in designated installments at a variable interest rate. 2L Notes due to related parties, at fair value consisted of the following at September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 2L Notes due to related parties, at fair value $ 95,448 $ — The following table presents changes in the principal amount of the 2L Notes since the Closing Date (in thousands): September 30, 2023 2L Notes, principal amount at Closing Date $ 103,243 Paid-in-kind interest added during period 2,432 2L Notes, principal amount at end of period $ 105,675 |
Schedule of Debt Conversions For Voting Rights | The following table presents approximate changes in outstanding shares of Series B Preferred Stock since the Closing Date and associated equivalent common stock voting rights at the end of the period (in thousands): September 30, 2023 Series B Preferred Stock, shares at Closing Date 103 Increase (decrease) in shares during period 3 Series B Preferred Stock, shares at end of period 106 Common stock voting rights, as converted basis (1) 8,211 (1) Represents approximate shares of Series B Preferred Stock outstanding at end of period, times $1,000, divided by the contractual Voting Rights Conversion Price of $12.87 per share. |
Schedule of Aggregate Maturities of Long-Term Debt | Aggregate maturities of the Company's borrowings at September 30, 2023 are as follows (in thousands): 2023 (remainder of year) $ — 2024 — 2025 — 2026 — 2027 23,450 2028 515,175 Total future maturities (1) 538,625 Unamortized original issue discount and debt issuance costs (15,571) 2L Notes due to related parties, principal amount (1, 2) (105,675) Long-term debt, net (1) $ 417,379 (1) Excludes any contractual paid-in-kind interest that may be accrued and added to the principal amounts between now and the respective maturity dates. (2) The principal amount of the 2L Notes differs from the estimated fair value presented on the condensed consolidated balance sheet. Refer to Note 13 - Fair Value Measurements for further details on the fair value of the 2L Notes. |
Mezzanine and Stockholders' E_2
Mezzanine and Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Schedule of Temporary Equity | The following table reflects the components of the initial proceeds related to the Series A Senior Preferred Stock (in thousands): Gross proceeds allocated to Series A Senior Preferred Stock $ 144,667 Less: original issue discount (1,447) Less: issuance costs (2,880) Net proceeds received from issuance of Series A Senior Preferred Stock $ 140,340 Changes in the aggregate stated value and stated value per share of the Series A Senior Preferred Stock consisted of the following (in thousands, except per share data): September 30, 2023 December 31, 2022 Aggregate stated value, beginning of period $ 182,876 $ 165,000 Paid-in-kind dividends (1) 17,087 17,876 Aggregate stated value, end of period $ 199,963 $ 182,876 Preferred shares issued and outstanding, end of period 165 165 Stated value per share, end of period $ 1,211.90 $ 1,108.34 (1) Changes in the stated value for the year ended December 31, 2022 represent changes since the Refinancing Date, which is when the Series A Senior Preferred Stock was issued and established. Changes in the carrying value of the Series A Senior Preferred Stock consisted of the following for the nine months ended September 30, 2023 (in thousands). There were no changes in carrying value in 2022. September 30, 2023 Carrying value, beginning of period $ 140,340 Write off original issue discount 1,447 Write off issuance costs 2,880 Deemed dividend from discount on initial gross proceeds allocation 20,333 Paid-in-kind dividends recognized to carrying value 34,963 Redemption value adjustment 17,109 Carrying value, end of period $ 217,072 |
Schedule of Components Of Proceeds Related to Warrants | The following table reflects the components of proceeds related to the 2022 Warrants (in thousands): Series I Warrants Series II Warrants Total Gross proceeds allocated to 2022 Warrants $ 5,101 $ 15,232 $ 20,333 Less: original issue discount (51) (152) (203) Less: issuance costs (102) (303) (405) Net proceeds received from issuance of 2022 Warrants $ 4,948 $ 14,777 $ 19,725 |
Schedule of Shares of Class A Common Stock Reserved for Potential Future Issuance | As of September 30, 2023, shares of Class A common stock reserved for potential future issuance, on an as-if converted basis, were as follows (in thousands): September 30, 2023 2L Notes (1) 8,454 Shares available for grant under the 2021 Plan 244 2021 Plan share-based awards outstanding 866 Earnout Shares reserved 300 2022 Warrant shares reserved 230 IPO Warrant shares reserved 197 Vesting Shares reserved (2) 173 Restricted shares (2) 6 Total shares of common stock reserved 10,470 (1) Calculated based on the principal amount of 2L Notes and Conversion Price of $12.50 per share. This figure differs from the contractual Voting Rights Conversion Price of $12.87 as outlined in Note 8 - Borrowings. (2) Represents shares of Class A common stock legally issued, but not outstanding, as of September 30, 2023. |
IPO Warrant Liability (Tables)
IPO Warrant Liability (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Liabilities Disclosure [Abstract] | |
Summary of Warrant Liability | The following table presents the change in the fair value of Private Placement Warrants that is recognized in change in fair value of warrant liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 29 $ 445 $ 29 $ 1,305 Decrease in fair value (26) (238) (26) (1,098) Fair value, end of period $ 3 $ 207 $ 3 $ 207 The following table presents the changes in the fair value of the Public Warrants that is recognized in change in fair value of warrant liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 69 $ 1,035 $ 69 $ 3,036 Decrease in fair value (62) (552) (62) (2,553) Fair value, end of period $ 7 $ 483 $ 7 $ 483 |
Contingent Common Shares Liab_2
Contingent Common Shares Liability (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Change in Fair Value of Earn Out Shares | The following table presents the changes in the fair value of the Earnout Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 847 $ 12,400 $ 1,800 $ 28,800 Decrease in fair value (194) (4,400) (1,147) (20,800) Fair value, end of period $ 653 $ 8,000 $ 653 $ 8,000 The following table presents the changes in the fair value of the Vesting Shares that is recognized in change in fair value of contingent common shares liability in the condensed consolidated statements of operations for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Fair value, beginning of period $ 487 $ 7,130 $ 1,035 $ 16,560 Decrease in fair value (112) (2,530) (660) (11,960) Fair value, end of period $ 375 $ 4,600 $ 375 $ 4,600 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Key Fair Value Measurement Inputs | The key inputs into the respective valuation models used to estimate the fair value of the 2L Notes were as follows as of September 30, 2023 and the Closing Date, which is when the 2L Notes were issued: 2L Notes September 30, 2023 June 15, 2023 Risk-free interest rate 4.55% 3.90% Volatility 45.00% 50.00% Selected yield 21.50% 20.00% Expected term (years) 5.0 5.3 Share price $8.86 $10.21 The key inputs into the Monte-Carlo option pricing model were as follows as of September 30, 2023 and December 31, 2022 for the respective Level 3 instruments: IPO Warrants Earnout Shares and Vesting Shares September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Risk-free interest rate 4.81% N/A 4.55% 3.88% Volatility 93.80% N/A 74.70% 74.60% Dividend yield —% N/A —% —% Expected term (years) 2.7 N/A 7.7 8.5 Share price $8.86 N/A $8.86 $15.50 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table presents the changes in the fair value of the 2L Notes that is recognized in change in fair value of 2L Note s in the condensed consolidated statements of operations for the periods indicated below (in thousands). None of the change in fair value is attributable to instrument-specific credit risk: Three Months Ended Nine Months Ended September 30, 2023 September 30, 2023 Fair value, beginning of period (1) $ 96,933 $ 103,943 Decrease in fair value (1) (1,485) (8,495) Fair value, end of period $ 95,448 $ 95,448 (1) Represents changes in fair value from the Closing Date, which is when the 2L Notes were issued. |
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following table presents the activity of cash flow hedges included in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022, respectively (in thousands): Cash Flow Hedges Balance as of December 31, 2022 $ 4,899 Unrealized loss recognized in other comprehensive income before reclassifications (99) Reclassification to interest expense, net (3,357) Balance as of March 31, 2023 1,443 Unrealized gain recognized in other comprehensive income before reclassifications 798 Reclassification to interest expense, net (1,648) Balance as of June 30, 2023 593 Unrealized gain recognized in other comprehensive income before reclassifications 102 Reclassification to interest expense, net (145) Balance as of September 30, 2023 $ 550 Balance as of December 31, 2021 $ 28 Unrealized gain recognized in other comprehensive income before reclassifications 3,681 Reclassification to interest expense, net 71 Balance as of March 31, 2022 3,780 Unrealized gain recognized in other comprehensive income before reclassifications 2,642 Reclassification to interest expense, net 66 Balance as of June 30, 2022 6,488 Unrealized gain recognized in other comprehensive income before reclassifications 1,766 Reclassification to interest expense, net (1,111) Balance as of September 30, 2022 $ 7,143 |
Schedule of Fair Value of Derivative Assets and Liabilities | The following table presents the fair value of derivative assets and liabilities within the condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 (in thousands): September 30, 2023 December 31, 2022 Assets Liabilities Assets Liabilities Derivatives not designated as cash flow hedging instruments: Other current assets $ 549 — — — Other non-current assets $ 99 — — — Accrued expenses and other liabilities — — — — Other non-current liabilities — — — — Derivatives designated as cash flow hedging instruments: Other current assets — — $ 5,028 — Other non-current assets — — — — Accrued expenses and other liabilities — — — — Other non-current liabilities — — — $ 73 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Lease Cost, Supplemental Cash Flow, and Other Information Related to Leases | The components of the Company's lease costs incurred were as follows for the periods indicated below (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Lease cost Operating lease cost (1) $ 16,671 $ 16,826 $ 50,034 $ 50,313 Variable lease cost (2) 5,647 5,198 16,477 15,734 Total lease cost (3) $ 22,318 $ 22,024 $ 66,511 $ 66,047 (1) Includes ROU asset impairment charges for the three and nine months ended September 30, 2022, which were immaterial. (2) Includes short term lease costs, which are immaterial. (3) Sublease income primarily relates to subleases of certain clinic facilities to third parties, and is immaterial. Other supplemental quantitative disclosures were as follows for the periods indicated below (in thousands): Nine Months Ended September 30, 2023 September 30, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 48,466 $ 50,641 Right-of-use assets obtained in exchange for new operating lease liabilities $ 6,831 $ 8,404 Average lease terms and discount rates as of September 30, 2023 and December 31, 2022 were as follows: September 30, 2023 December 31, 2022 Weighted-average remaining lease term: Operating leases 5.5 years 5.9 years Weighted-average discount rate: Operating leases 7.2% 6.9% |
Schedule of Estimated Undiscounted Future Lease Payments | Estimated undiscounted future lease payments under non-cancellable operating leases, along with a reconciliation of the undiscounted cash flows to operating lease liabilities, respectively, at September 30, 2023 were as follows (in thousands): Year Amount 2023 (remainder of year) $ 17,023 2024 66,674 2025 56,647 2026 49,767 2027 38,358 Thereafter 77,239 Total undiscounted future cash flows 305,708 Less: Imputed Interest (56,273) Present value of future cash flows $ 249,435 Presentation on Balance Sheet: Current $ 52,351 Non-current $ 197,084 |
Loss per Share (Tables)
Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Calculation of Both Basic and Diluted Loss Per Share | The calculation of both basic and diluted loss per share for the periods indicated below was as follows (in thousands, except per share data): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Basic and diluted loss per share: Net loss $ (14,611) $ (116,694) $ (61,570) $ (390,640) Less: Net income (loss) attributable to non-controlling interests 586 (376) 2,602 (1,026) Less: Series A Senior Preferred redemption value adjustments (1) (2,927) — 41,769 — Less: Series A Senior Preferred cumulative dividend 6,075 5,274 17,087 12,263 Loss available to common stockholders $ (18,345) $ (121,592) $ (123,028) $ (401,877) Weighted average shares outstanding (2) 4,154 4,086 4,125 4,054 Basic and diluted loss per share $ (4.42) $ (29.76) $ (29.83) $ (99.13) (1) For the three and nine months ended September 30, 2023, the Series A Senior Preferred Stock was remeasured to its redemption value. For the nine months ended September 30, 2023, this adjustment included a one-time recognition of a deemed dividend primarily from the original issue discount. For the three and nine months ended September 30, 2023, this adjustment included an incremental redemption value adjustment to reflect the carrying amount equal to what the redemption amount would be as if redemption were to occur at the end of the reporting period. Refer to Note 10 - Mezzanine and Stockholders' Equity for additional information. (2) Included within weighted average shares outstanding following the 2022 Debt Refinancing are common shares issuable upon the exercise of the Series II Warrants, as the Series II Warrants are exercisable at any time for nominal consideration. As such, the shares are considered to be outstanding for the purpose of calculating basic and diluted loss per share. |
Schedule of Antidilutive Securities Excluded From Computation of Diluted Shares Outstanding | For the periods presented, basic and diluted loss per share were equal. The following number of shares issuable related to outstanding securities could potentially dilute earnings per share in the future (in thousands): Three Months Ended Nine Months Ended September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 2L Notes (1) 8,454 — 8,454 — Series I Warrants 105 105 105 105 IPO Warrants 197 197 197 197 Restricted shares (2) 6 10 6 10 Stock options 101 128 101 128 RSUs 764 98 764 98 RSAs 2 5 2 5 Total 9,629 543 9,629 543 (1) Potential dilution is reflected on an if-converted basis based on the principal amount of 2L Notes as of the end of the periods presented, and Conversion Price of $12.50 per share. (2) Represents certain shares of Class A common stock legally issued, but not outstanding, as of the respective periods. |
Overview of the Company (Detail
Overview of the Company (Details) $ in Millions | 9 Months Ended | |
Sep. 30, 2022 USD ($) | Sep. 30, 2023 clinic state | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of stores | 900 | |
Number of states in which entity operates | state | 24 | |
Number of stores under management service agreements | 18 | |
CARES Act, MAAPP Funds | ||
Unusual or Infrequent Item, or Both [Line Items] | ||
Proceeds from sale of Home Health service line | $ | $ 12.3 |
Basis of Presentation and Rec_3
Basis of Presentation and Recent Accounting Standards - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||||
Jun. 15, 2023 USD ($) | Jun. 14, 2023 | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) segment | Sep. 30, 2022 USD ($) | |
Finite-Lived Intangible Assets [Line Items] | ||||||
Reverse stock split, conversion ratio | 0.02 | |||||
Net cash used in operating activities | $ (17,775,000) | $ (59,080,000) | ||||
Operating loss | $ (764,000) | $ (119,657,000) | (24,493,000) | (435,587,000) | ||
Net loss | (14,611,000) | $ (116,694,000) | (61,570,000) | (390,640,000) | ||
Principal payments on long-term debt | $ 0 | $ 555,048,000 | ||||
Number of operating segments | segment | 1 | |||||
Number of reportable segments | segment | 1 | |||||
Restricted cash included within cash and cash equivalents | $ 800,000 | $ 800,000 | ||||
Delayed Draw Right | Convertible Debt | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Debt amount | $ 25,000,000 | |||||
2L Notes | Convertible Debt | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Proceeds from long-term debt | 100,000,000 | |||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Principal payments on long-term debt | $ 100,000,000 |
Divestitures - Assets and Liabi
Divestitures - Assets and Liabilities Classified as Held For Sale (Details) - Disposal Group, Held-for-sale, Not Discontinued Operations - 2022 Clinics Held for Sale $ in Thousands | Dec. 31, 2022 USD ($) |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Accounts receivable, net | $ 486 |
Prepaid expenses | 23 |
Property and equipment, net | 1,113 |
Operating lease right-of-use assets | 1,929 |
Goodwill, net | 3,192 |
Other non-current assets | 12 |
Total assets held for sale | 6,755 |
Accounts payable | 22 |
Accrued expenses and other liabilities | 201 |
Current portion of operating lease liabilities | 685 |
Operating lease liabilities | 1,706 |
Total liabilities held for sale | $ 2,614 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 177,455 | $ 156,792 | $ 516,724 | $ 473,907 |
Net patient revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 162,258 | $ 142,313 | $ 469,950 | $ 429,744 |
Net operating revenue (as percent) | 100% | 100% | 100% | 100% |
Net patient revenue | Commercial | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenue (as percent) | 58.50% | 57.70% | 58.40% | 57.20% |
Net patient revenue | Government | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenue (as percent) | 23.30% | 24.70% | 23.50% | 24.30% |
Net patient revenue | Workers’ compensation | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenue (as percent) | 11.60% | 12% | 11.70% | 12.70% |
Net patient revenue | Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Net operating revenue (as percent) | 6.60% | 5.60% | 6.40% | 5.80% |
ATI Worksite Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 9,289 | $ 9,053 | $ 27,874 | $ 26,429 |
Management Service Agreements | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | 3,664 | 3,251 | 11,159 | 9,671 |
Sports Medicine and other revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Net revenue | $ 2,244 | $ 2,175 | $ 7,741 | $ 8,063 |
Goodwill, Trade Name and Othe_3
Goodwill, Trade Name and Other Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Goodwill [Roll Forward] | |||
Goodwill, beginning balance | $ 286,458 | ||
Impairment charges | 0 | $ (270,600) | |
Reclassifications to held and used | 3,192 | ||
Goodwill, ending balance | $ 289,650 | ||
Accumulated goodwill impairment loss | $ 1,045,700 |
Goodwill, Trade Name and Othe_4
Goodwill, Trade Name and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Total trade name and other intangible assets, net | $ 246,028 | $ 246,582 |
ATI trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Gross intangible assets | 245,000 | 245,000 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets: | 2,395 | 2,395 |
Accumulated amortization: | (1,647) | (1,126) |
Other intangible assets | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross intangible assets: | 640 | 640 |
Accumulated amortization: | $ (360) | $ (327) |
Goodwill, Trade Name and Othe_5
Goodwill, Trade Name and Other Intangible Assets - Narrative (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Goodwill impairment loss | $ 0 | $ 270,600 |
ATI trade name | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Impairment of indefinite lived intangible assets | $ 119,400 |
Property and Equipment - Carryi
Property and Equipment - Carrying Amount (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 361,525 | $ 352,896 |
Accumulated depreciation and amortization | (251,873) | (229,206) |
Property and equipment, net | 109,652 | 123,690 |
Disposal Group, Held-for-sale, Not Discontinued Operations | 2022 Clinics Held for Sale | ||
Property, Plant and Equipment [Line Items] | ||
Disposal group, including discontinued operation, property, plant and equipment | 1,113 | |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 39,328 | 38,102 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 17,948 | 17,215 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 194,636 | 191,182 |
Automobiles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 19 | 19 |
Computer equipment and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 106,642 | 102,651 |
Construction-in-progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,952 | $ 3,727 |
Property and Equipment - Deprec
Property and Equipment - Depreciation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Property, Plant and Equipment [Line Items] | ||||
Total depreciation expense | $ 9,115 | $ 9,924 | $ 27,787 | $ 29,918 |
Rent, clinic supplies, contract labor and other | ||||
Property, Plant and Equipment [Line Items] | ||||
Total depreciation expense | 6,343 | 6,876 | 19,152 | 20,785 |
Selling, general and administrative expenses | ||||
Property, Plant and Equipment [Line Items] | ||||
Total depreciation expense | $ 2,772 | $ 3,048 | $ 8,635 | $ 9,133 |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Salaries and related costs | $ 26,128 | $ 28,949 |
Accrued professional fees | 7,677 | 5,551 |
Credit balances due to patients and payors | 7,425 | 6,117 |
Accrued interest | 5,011 | 762 |
Accrued contract labor | 3,271 | 4,483 |
Accrued occupancy costs | 2,424 | 2,410 |
Other payables and accrued expenses | 3,682 | 5,400 |
Accrued expenses and other liabilities | $ 55,618 | $ 53,672 |
Borrowings - Long-Term Debt (De
Borrowings - Long-Term Debt (Details) - USD ($) $ in Thousands | 9 Months Ended | |||||
Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 15, 2023 | Jun. 14, 2023 | |
Debt Instrument [Line Items] | ||||||
Debt, gross | $ 538,625 | $ 538,625 | ||||
Paid-in-kind interest added during period | 6,020 | $ 889 | ||||
Senior Secured Term Loan And 2022 Credit Agreement | Secured Debt And Line Of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Less: unamortized debt issuance costs | (7,718) | $ (11,137) | (7,718) | |||
Less: unamortized original issue discount | (7,853) | (8,944) | (7,853) | |||
Total debt, net | 417,379 | 531,600 | 417,379 | |||
Less: current portion of long-term debt | 0 | 0 | 0 | |||
Long-term debt, net | $ 417,379 | $ 531,600 | $ 417,379 | |||
Senior Secured Term Loan (due February 24, 2028) | ||||||
Debt Instrument [Line Items] | ||||||
State interest rate (in percent) | 13.70% | 12.10% | 13.70% | |||
Effective interest rate (in percent) | 13.90% | 13.10% | 13.90% | |||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt, gross | $ 409,500 | $ 503,481 | $ 409,500 | $ 407,800 | $ 507,800 | |
Paid-in-kind interest added during period | 9,500 | 3,500 | ||||
2022 Credit Agreement | Secured Debt And Line Of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Total debt, net | 417,379 | 417,379 | ||||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Debt, gross | 23,450 | 48,200 | 23,450 | |||
Less: unamortized debt issuance costs | $ (500) | $ (600) | $ (500) | |||
Weighted average interest rate | 10.50% | 8.30% | 10.50% |
Borrowings - Schedule of Fair V
Borrowings - Schedule of Fair Value (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Convertible Debt | 2L Notes | ||
Debt Instrument [Line Items] | ||
Fair value | $ 95,448 | $ 0 |
Borrowings - Narrative (Details
Borrowings - Narrative (Details) | 3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2023 USD ($) | Jun. 15, 2023 USD ($) draw $ / shares shares | Dec. 31, 2022 USD ($) | Feb. 24, 2022 USD ($) | Sep. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) | Jun. 14, 2023 USD ($) | ||
Debt Instrument [Line Items] | ||||||||||||
Principal payments on long-term debt | $ 0 | $ 555,048,000 | ||||||||||
Debt, gross | $ 538,625,000 | $ 538,625,000 | $ 538,625,000 | 538,625,000 | ||||||||
Loss on extinguishment of debt | 444,000 | 2,809,000 | ||||||||||
Delayed draw right assets | $ 3,500,000 | |||||||||||
Paid-in-kind interest added during period | 6,020,000 | 889,000 | ||||||||||
Warrants purchase common stock aggregate stated value | $ 165,000,000 | |||||||||||
Long-term debt, net | [1] | 417,379,000 | $ 531,600,000 | 417,379,000 | 417,379,000 | 417,379,000 | $ 531,600,000 | |||||
Proceeds from revolving line of credit | 20,000,000 | 0 | ||||||||||
Payments on revolving line of credit | 44,750,000 | 0 | ||||||||||
Related Party | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Long-term debt, net | 16,900,000 | 16,900,000 | 16,900,000 | 16,900,000 | ||||||||
Series B Preferred Stock, Voting Rights | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Preferred stock, convertible, conversion price (in dollars per share) | $ / shares | $ 12.87 | |||||||||||
2L Notes | Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from long-term debt | $ 100,000,000 | |||||||||||
Debt, gross | 105,675,000 | 103,243,000 | 105,675,000 | 105,675,000 | 105,675,000 | |||||||
Original issuance discount (premium) | (700,000) | |||||||||||
Delayed draw right assets | $ 2,800,000 | |||||||||||
State interest rate (in percent) | 8% | |||||||||||
Debt instrument, convertible, conversion price ( in usd per share) | $ / shares | $ 12.50 | |||||||||||
Number of shares issued with 1,000 of debt | shares | 0.001 | |||||||||||
Proceeds from issuance of additional long term debt | $ 3,200,000 | |||||||||||
Fair value | $ 95,448,000 | $ 0 | $ 95,448,000 | $ 95,448,000 | $ 95,448,000 | $ 0 | ||||||
Effective interest rate (in percent) | 8% | 8% | 8% | 8% | ||||||||
Paid-in-kind interest added during period | $ 2,432,000 | |||||||||||
2L Notes | Convertible Debt | Onex Credit Partners, LLC | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from long-term debt | 8,800,000 | |||||||||||
Debt, gross | $ 9,400,000 | $ 9,400,000 | 9,400,000 | $ 9,400,000 | ||||||||
2L Notes | Convertible Debt | Knighthead Capital Management, LLC | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from long-term debt | 50,800,000 | |||||||||||
Debt, gross | 53,600,000 | 53,600,000 | 53,600,000 | 53,600,000 | ||||||||
2L Notes | Convertible Debt | Marathon Asset Management LP | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Proceeds from long-term debt | 40,400,000 | |||||||||||
Debt, gross | $ 42,700,000 | $ 42,700,000 | $ 42,700,000 | $ 42,700,000 | ||||||||
Senior Secured Term Loan (due February 24, 2028) | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
State interest rate (in percent) | 13.70% | 12.10% | 13.70% | 13.70% | 13.70% | 12.10% | ||||||
Effective interest rate (in percent) | 13.90% | 13.10% | 13.90% | 13.90% | 13.90% | 13.10% | ||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Principal payments on long-term debt | 100,000,000 | |||||||||||
Debt, gross | $ 409,500,000 | 407,800,000 | $ 503,481,000 | $ 409,500,000 | $ 409,500,000 | $ 409,500,000 | $ 503,481,000 | $ 507,800,000 | ||||
Loss on extinguishment of debt | $ 400,000 | |||||||||||
Derecognition of the proportionate amount of remaining unamortized deferred financing costs and unamortized original issue discount | 4,300,000 | |||||||||||
Original issuance discount (premium) | $ 1,800,000 | |||||||||||
Interest rate period increase | 1% | |||||||||||
Paid-in-kind interest added during period | $ 9,500,000 | 3,500,000 | ||||||||||
Interest in-kind interest to pay | 2% | |||||||||||
Premium rate | 0.50% | 0.50% | 0.50% | 0.50% | 0.50% | |||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | HPS Investment Partners, LLC | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt, gross | $ 391,000,000 | |||||||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Onex Credit Partners, LLC | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt, gross | 16,300,000 | |||||||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Knighthead Capital Management, LLC | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt, gross | 300,000 | |||||||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Marathon Asset Management LP | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt, gross | 200,000 | |||||||||||
Senior Secured Term Loan (due February 24, 2028) | Secured Debt | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Floor rate (as a percent) | 1% | |||||||||||
Basis spread on variable rate (as a percent) | 7.25% | |||||||||||
Delayed Draw Right | Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt amount | $ 25,000,000 | |||||||||||
Debt instrument, time to draw | 18 months | |||||||||||
Number of draws | draw | 2 | |||||||||||
Liquidity period | 6 months | |||||||||||
Delayed Draw Right, Draw One | Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt amount | $ 12,500,000 | |||||||||||
Delayed Draw Right, Draw Two | Convertible Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt amount | 12,500,000 | |||||||||||
2022 Credit Agreement | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Original issuance discount (premium) | $ 10,000,000 | |||||||||||
Debt amount | 550,000,000 | |||||||||||
Debt issuance costs, gross | 12,500,000 | |||||||||||
Prepayment upon insurance proceeds in excess of | 10,000,000 | |||||||||||
2022 Credit Agreement | Through first quarter of 2023 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Minimum liquidity amount | 30,000,000 | |||||||||||
2022 Credit Agreement | Through second quarter 2023 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Minimum liquidity amount | 25,000,000 | |||||||||||
2022 Credit Agreement | Through fourth quarter of 2023 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Minimum liquidity amount | 15,000,000 | |||||||||||
2022 Credit Agreement | Through the fourth quarter of 2024 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Minimum liquidity amount | $ 10,000,000 | |||||||||||
2022 Credit Agreement | Beginning first quarter of 2025 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum debt to EBITDA ratio allowed | 11 | |||||||||||
2022 Credit Agreement | After first quarter of 2025 | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum debt to EBITDA ratio allowed | 7 | |||||||||||
2022 Credit Agreement | Secured Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt amount | $ 500,000,000 | |||||||||||
2022 Credit Agreement | Line of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Line of credit facility, commitment fee percentage | 0.50% | |||||||||||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Debt, gross | $ 23,450,000 | 48,200,000 | $ 23,450,000 | $ 23,450,000 | $ 23,450,000 | 48,200,000 | ||||||
Interest rate period increase | 1% | |||||||||||
Maximum borrowing capacity | $ 50,000,000 | |||||||||||
Proceeds from revolving line of credit | 20,000,000 | 48,200,000 | ||||||||||
Payments on revolving line of credit | 20,000,000 | $ 24,800,000 | ||||||||||
Borrowings outstanding | 23,500,000 | 23,500,000 | 23,500,000 | 23,500,000 | ||||||||
Balance of unamortized issuance costs | $ 500,000 | 600,000 | 500,000 | 500,000 | 500,000 | 600,000 | ||||||
2022 Credit Agreement | Line of Credit | Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Basis spread on variable rate (as a percent) | 5.10% | |||||||||||
2022 Credit Agreement | Line of Credit | Letter of Credit | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum borrowing capacity | 10,000,000 | |||||||||||
Letters of credit outstanding | $ 6,500,000 | $ 1,800,000 | $ 6,500,000 | $ 6,500,000 | $ 6,500,000 | $ 1,800,000 | ||||||
2016 first lien term loan | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Principal payments on long-term debt | $ 555,000,000 | |||||||||||
Loss on extinguishment of debt | $ 2,800,000 | |||||||||||
[1]Includes $16.9 million of principal amount of debt due to related parties as of September 30, 2023. |
Borrowings - Schedule of Stock
Borrowings - Schedule of Stock Conversion (Details) - Series B Preferred Stock, Voting Rights - $ / shares | 4 Months Ended | |
Sep. 30, 2023 | Jun. 15, 2023 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Series B Preferred Stock, shares at Closing Date (in shares) | 103,000 | |
Increase (decrease) in shares during period (in shares) | 3,000 | |
Series B Preferred Stock, shares at end of period (in shares) | 106,000 | |
Common Stock voting rights, as converted basis (in shares) | 8,211,000 | |
Preferred stock, convertible, conversion price (in dollars per share) | $ 12.87 |
Borrowings - Schedule of Princi
Borrowings - Schedule of Principal Amount (Details) - USD ($) $ in Thousands | 4 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Debt Instrument Principal [Roll Forward] | |||
Paid-in-kind interest added during period | $ 6,020 | $ 889 | |
2L Notes, principal amount at end of period | $ 538,625 | 538,625 | |
2L Notes | Convertible Debt | |||
Debt Instrument Principal [Roll Forward] | |||
2L Notes, principal amount at Closing Date | 103,243 | ||
Paid-in-kind interest added during period | 2,432 | ||
2L Notes, principal amount at end of period | $ 105,675 | $ 105,675 |
Borrowings - Maturities (Detail
Borrowings - Maturities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Jun. 15, 2023 |
Debt Instrument [Line Items] | ||
2023 (remainder of year) | $ 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | 23,450 | |
2028 | 515,175 | |
Total future maturities | 538,625 | |
Unamortized original issue discount and debt issuance costs | (15,571) | |
2L Notes | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Total future maturities | $ 105,675 | $ 103,243 |
Share-Based Compensation - Narr
Share-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Common stock, capital shares reserved for future issuance (in shares) | 10,470 | 10,470 | |
Non-cash share-based compensation | $ 2,300 | $ 6,492 | $ 5,830 |
2021 Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Shares authorized for issuance ( in shares) | 1,200 | 1,200 | |
Common stock, capital shares reserved for future issuance (in shares) | 200 | 200 | |
2021 Plan | RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Awards granted in period (in shares) | 700 | ||
Granted (in usd per share) | $ 16.77 | ||
Non-vested awards, cost not yet recognized | $ 12,700 | $ 12,700 | |
Period of recognition | 2 years 2 months 12 days |
Mezzanine and Stockholders' E_3
Mezzanine and Stockholders' Equity - Narrative (Details) | 9 Months Ended | 10 Months Ended | ||||
Sep. 30, 2023 USD ($) vote $ / shares shares | Feb. 24, 2022 USD ($) segment $ / shares shares | Sep. 30, 2023 USD ($) vote $ / shares shares | Sep. 30, 2022 USD ($) | Dec. 31, 2022 USD ($) $ / shares shares | Jun. 15, 2023 director | |
Class of Stock [Line Items] | ||||||
Preferred stock, shares issued (in shares) | shares | 200,000 | 200,000 | 200,000 | |||
Exercise price of warrant (in dollars per share) | $ / shares | $ 575 | $ 575 | ||||
Temporary Equity, Preferred stock, par value (dollars per share) | $ / shares | 0.0001 | 0.0001 | $ 0.0001 | |||
Temporary Equity, Preferred stock, stated value (dollars per share) | $ / shares | $ 1,211.9 | $ 1,211.9 | $ 1,108.34 | |||
Warrants purchase common stock aggregate stated value | $ 165,000,000 | |||||
Preferred stock, shares authorized (in shares) | shares | 1,000,000 | 1,000,000 | 1,000,000 | |||
Preferred stock, shares outstanding (in shares) | shares | 200,000 | 200,000 | 200,000 | |||
Proceeds from issuance of Series A Senior Preferred Stock | $ 0 | $ 144,667,000 | ||||
Proceeds from issuance of warrants | $ 20,333,000 | 0 | 20,333,000 | |||
Carrying value | $ 217,072,000 | $ 217,072,000 | $ 140,340,000 | |||
Common stock, shares authorized (in shares) | shares | 470,000,000 | 470,000,000 | 470,000,000 | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | $ 0.0001 | |||
Common stock, shares Issued (in shares) | shares | 4,200,000 | 4,200,000 | 4,100,000 | |||
Common stock, shares outstanding (in shares) | shares | 4,000,000 | 4,000,000 | 4,000,000 | |||
Tax withholdings related to net share settlement of restricted stock awards (in shares) | shares | 4,950 | |||||
Treasury stock (in shares) | shares | 6,490 | 6,490 | 2,000 | |||
Treasury stock, common, value | $ 217,000 | $ 217,000 | $ 146,000 | |||
Series I Warrants | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issuable by each warrant | shares | 100,000 | |||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 150 | |||||
Proceeds from issuance of warrants | $ 5,101,000 | |||||
Issuance discount | $ 200,000 | |||||
Series II Warrants | ||||||
Class of Stock [Line Items] | ||||||
Number of shares issuable by each warrant | shares | 100,000 | |||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 0.50 | |||||
Proceeds from issuance of warrants | $ 15,232,000 | |||||
Issuance discount | $ 500,000 | |||||
Series A Preferred | ||||||
Class of Stock [Line Items] | ||||||
Preferred stock, shares issued (in shares) | shares | 165,000 | 165,000 | 165,000 | 165,000 | ||
Temporary Equity, Preferred stock, par value (dollars per share) | $ / shares | $ 0.0001 | |||||
Temporary Equity, Preferred stock, stated value (dollars per share) | $ / shares | $ 1,000 | |||||
Preferred stock, shares authorized (in shares) | shares | 1,000,000 | |||||
Preferred stock, shares outstanding (in shares) | shares | 165,000 | 165,000 | 165,000 | |||
Proceeds from issuance of Series A Senior Preferred Stock | $ 144,667,000 | |||||
Issuance costs | 2,880,000 | |||||
Issuance discount | $ 1,447,000 | |||||
Annual dividend rate | 12% | |||||
Discount on dividends | 1% | |||||
In-kind increasing percentage | 1% | |||||
Dividend rate, occurrence, increase percent | 2% | |||||
Dividends, preferred stock, paid-in-kind | $ 17,087,000 | $ 12,300,000 | $ 17,876,000 | |||
Accumulated paid in-kind dividends | $ 35,000,000 | |||||
Aggregate stated value | 199,963,000 | $ 165,000,000 | 199,963,000 | $ 182,876,000 | ||
Number of directors equity holders can elect | segment | 1 | |||||
Change in voting rights, ADBITDA threshold | $ 100,000,000 | |||||
Change in voting rights, change in ownership percent | 50.10% | |||||
Carrying value | $ 217,100,000 | $ 217,100,000 | ||||
Series A Senior Preferred Stock | ||||||
Class of Stock [Line Items] | ||||||
Number of additional directors electable by holders | director | 3 | |||||
Number of total directors electable by holders | director | 4 | |||||
Number of unaffiliated directors | director | 1 | |||||
Class A Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Common stock, shares authorized (in shares) | shares | 470,000,000 | 470,000,000 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.0001 | $ 0.0001 | ||||
Common stock voting rights | vote | 1 | 1 | ||||
Common stock, shares Issued (in shares) | shares | 4,200,000 | 4,200,000 | ||||
Common stock, shares outstanding (in shares) | shares | 4,000,000 | 4,000,000 | ||||
Class A Common Stock | Series I Warrants | ||||||
Class of Stock [Line Items] | ||||||
Exercise period | 5 years | |||||
Class A Common Stock | Series II Warrants | ||||||
Class of Stock [Line Items] | ||||||
Exercise period | 5 years |
Mezzanine and Stockholders' E_4
Mezzanine and Stockholders' Equity - Components of Proceeds Related to the Series A Senior Preferred Stock (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Feb. 24, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Gross proceeds allocated to Series A Senior Preferred Stock | $ 0 | $ 144,667 | |
Series A Preferred | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Gross proceeds allocated to Series A Senior Preferred Stock | $ 144,667 | ||
Less: original issue discount | (1,447) | ||
Less: issuance costs | (2,880) | ||
Net proceeds received from issuance of Series A Senior Preferred Stock | $ 140,340 |
Mezzanine and Stockholders' E_5
Mezzanine and Stockholders' Equity - Aggregate Stated Value Of Series A Senior Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 10 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | Feb. 24, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Preferred stock, shares issued (in shares) | 200,000 | 200,000 | ||
Preferred stock, shares outstanding (in shares) | 200,000 | 200,000 | ||
Stated value (dollars per share) | $ 1,211.9 | $ 1,108.34 | ||
Series A Preferred | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Aggregate stated value, beginning | $ 182,876 | $ 165,000 | ||
Paid in-kind dividends | 17,087 | $ 12,300 | 17,876 | |
Aggregate stated value, ending | $ 199,963 | $ 182,876 | ||
Preferred stock, shares issued (in shares) | 165,000 | 165,000 | 165,000 | |
Preferred stock, shares outstanding (in shares) | 165,000 | 165,000 | ||
Stated value (dollars per share) | $ 1,000 |
Mezzanine and Stockholders' E_6
Mezzanine and Stockholders' Equity Schedule Of Temporary Equity (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Increase (Decrease) in Temporary Equity [Roll Forward] | |
Carrying value, beginning of period | $ 140,340 |
Write off original issue discount | 1,447 |
Write off issuance costs | 2,880 |
Deemed dividend from discount on initial gross proceeds allocation | 20,333 |
Paid-in-kind dividends recognized to carrying value | 34,963 |
Redemption value adjustment | 17,109 |
Carrying value, end of period | $ 217,072 |
Mezzanine and Stockholders' E_7
Mezzanine and Stockholders' Equity - Components of Proceeds Related to the Warrants (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Gross proceeds allocated to 2022 Warrants | $ 20,333 | $ 0 | $ 20,333 | |
Less: original issue discount | (203) | |||
Less: issuance costs | (405) | |||
Net proceeds received from issuance of 2022 Warrants | 19,725 | $ 19,725 | ||
Series I Warrants | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Gross proceeds allocated to 2022 Warrants | 5,101 | |||
Less: original issue discount | (51) | |||
Less: issuance costs | (102) | |||
Net proceeds received from issuance of 2022 Warrants | 4,948 | |||
Series II Warrants | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Gross proceeds allocated to 2022 Warrants | 15,232 | |||
Less: original issue discount | (152) | |||
Less: issuance costs | (303) | |||
Net proceeds received from issuance of 2022 Warrants | $ 14,777 |
Mezzanine and Stockholders' E_8
Mezzanine and Stockholders' Equity - Reserved Shares (Details) - $ / shares shares in Thousands | Sep. 30, 2023 | Jun. 15, 2023 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 10,470 | |
Series B Preferred Stock, Voting Rights | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Preferred stock, convertible, conversion price (in dollars per share) | $ 12.87 | |
2L Notes | Convertible Debt | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Debt instrument, convertible, conversion price ( in usd per share) | $ 12.50 | |
2L Notes | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 8,454 | |
Shares available for grant under the 2021 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 244 | |
Earnout Shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 300 | |
2022 Warrant shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 230 | |
IPO Warrant shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 197 | |
Vesting Shares reserved | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 173 | |
Restricted shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 6 | |
2021 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 200 | |
2021 Plan | Shares available for grant under the 2021 Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Common stock, capital shares reserved for future issuance (in shares) | 866 |
IPO Warrant Liability - Narrati
IPO Warrant Liability - Narrative (Details) shares in Millions | Sep. 30, 2023 $ / shares shares |
Class of Warrant or Right [Line Items] | |
Exercise price of warrant (in dollars per share) | $ / shares | $ 575 |
Public Warrant | |
Class of Warrant or Right [Line Items] | |
Number of shares called by each warrant | 0.1 |
Private Placement Warrant | |
Class of Warrant or Right [Line Items] | |
Number of shares called by each warrant | 0.1 |
IPO Warrant Liability - Warrant
IPO Warrant Liability - Warrant Liability (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning of period | $ 98 | |||
Decrease in fair value | $ (88) | $ (790) | (88) | $ (3,651) |
Fair value, end of period | 10 | 10 | ||
Private Placement Warrant | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning of period | 29 | 445 | 29 | 1,305 |
Decrease in fair value | (26) | (238) | (26) | (1,098) |
Fair value, end of period | 3 | 207 | 3 | 207 |
Public Warrant | ||||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Fair value, beginning of period | 69 | 1,035 | 69 | 3,036 |
Decrease in fair value | (62) | (552) | (62) | (2,553) |
Fair value, end of period | $ 7 | $ 483 | $ 7 | $ 483 |
Contingent Common Shares Liab_3
Contingent Common Shares Liability - Narrative (Details) | Jun. 16, 2021 tranche $ / shares shares |
Earnout Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 300,000 |
Number of tranches | tranche | 3 |
First Issuance, Earnout Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 100,000 |
First Issuance, Earnout Shares | Weighted Average | |
Derivative [Line Items] | |
Stock price trigger (in dollars per share) | $ / shares | $ 600 |
Second Issuance, Earnout Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 100,000 |
Second Issuance, Earnout Shares | Weighted Average | |
Derivative [Line Items] | |
Stock price trigger (in dollars per share) | $ / shares | $ 700 |
Third Issuance, Earnout Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 100,000 |
Third Issuance, Earnout Shares | Weighted Average | |
Derivative [Line Items] | |
Stock price trigger (in dollars per share) | $ / shares | $ 800 |
Vesting Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 200,000 |
Number of tranches | tranche | 3 |
First Issuance, Vesting Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 100,000 |
First Issuance, Vesting Shares | Weighted Average | |
Derivative [Line Items] | |
Stock price trigger (in dollars per share) | $ / shares | $ 600 |
Second Issuance, Vesting Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 100,000 |
Second Issuance, Vesting Shares | Weighted Average | |
Derivative [Line Items] | |
Stock price trigger (in dollars per share) | $ / shares | $ 700 |
Third Issuance, Vesting Shares | |
Derivative [Line Items] | |
Contingent consideration liability (in shares) | 100,000 |
Third Issuance, Vesting Shares | Weighted Average | |
Derivative [Line Items] | |
Stock price trigger (in dollars per share) | $ / shares | $ 800 |
Contingent Common Shares Liab_4
Contingent Common Shares Liability - Derivatives and Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Schedule of Changes in Fair Value | ||||
Fair value, beginning of period | $ 2,835 | |||
Fair value, end of period | $ 1,028 | 1,028 | ||
Earnout Shares | ||||
Schedule of Changes in Fair Value | ||||
Fair value, beginning of period | 847 | $ 12,400 | 1,800 | $ 28,800 |
Decrease in fair value | (194) | (4,400) | (1,147) | (20,800) |
Fair value, end of period | 653 | 8,000 | 653 | 8,000 |
Vesting Shares | ||||
Schedule of Changes in Fair Value | ||||
Fair value, beginning of period | 487 | 7,130 | 1,035 | 16,560 |
Decrease in fair value | (112) | (2,530) | (660) | (11,960) |
Fair value, end of period | $ 375 | $ 4,600 | $ 375 | $ 4,600 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) $ in Millions | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) |
Senior Secured Term Loan (due February 24, 2028) | Reported Value Measurement | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total debt, net | $ 393.9 | |
Senior Secured Term Loan (due February 24, 2028) | Estimate of Fair Value Measurement | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Total debt, net | $ 369.5 | |
Fair Value, Inputs, Level 3 | Dividend yield | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
IPO Warrants | 0 | |
Earnout shares and vesting shares | 0 | 0 |
Fair Value, Inputs, Level 3 | Dividend yield | IPO | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
IPO Warrants | 0 | |
Money Market Funds | Fair Value, Inputs, Level 1 | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Cash and cash equivalent, fair value disclosure | $ 0 | $ 30 |
Fair Value Measurements - Conve
Fair Value Measurements - Convertible Bond Valuation Model (Details) - 2L Notes - Convertible Debt | Sep. 30, 2023 yr $ / shares | Jun. 15, 2023 yr $ / shares |
Risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Debt Instrument, Measurement Input | 0.0455 | 0.0390 |
Volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Debt Instrument, Measurement Input | 0.4500 | 0.5000 |
Selected yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Debt Instrument, Measurement Input | 0.2150 | 0.2000 |
Expected term (years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Debt Instrument, Measurement Input | yr | 5 | 5.3 |
Share price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Debt Instrument, Measurement Input | $ / shares | 8.86 | 10.21 |
Fair Value Measurements - Recog
Fair Value Measurements - Recognized in Change in Fair Value (Details) - 2L Notes - Convertible Debt - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Schedule of Changes in Fair Value | ||
Fair value, beginning of period | $ 96,933 | $ 103,943 |
Decrease in fair value | (1,485) | (8,495) |
Fair value, end of period | $ 95,448 | $ 95,448 |
Fair Value Measurements - Measu
Fair Value Measurements - Measurement Inputs (Details) - Fair Value, Inputs, Level 3 | Sep. 30, 2023 $ / shares | Dec. 31, 2022 $ / shares |
Risk-free interest rate | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
IPO Warrants | 0.0481 | |
Earnout Shares and Vesting Shares | 0.0455 | 0.0388 |
Volatility | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
IPO Warrants | 0.9380 | |
Earnout Shares and Vesting Shares | 0.7470 | 0.7460 |
Dividend yield | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
IPO Warrants | 0 | |
Earnout Shares and Vesting Shares | 0 | 0 |
Dividend yield | IPO | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
IPO Warrants | 0 | |
Expected term (years) | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
IPO Warrants, Term | 2 years 8 months 12 days | |
Earnout Shares and Vesting Shares, Term | 7 years 8 months 12 days | 8 years 6 months |
Share price | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
IPO Warrants | 8.86 | |
Earnout Shares and Vesting Shares | 8.86 | 15.50 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
Cash Flow Hedges | ||||||
Beginning balance | $ (73,245) | $ 20,474 | $ 48,447 | $ 267,019 | $ 398,226 | $ 511,507 |
Unrealized (loss) gain recognized in other comprehensive income before reclassifications | 102 | 798 | (99) | 1,766 | 2,642 | 3,681 |
Reclassification to interest expense, net | (145) | (1,648) | (3,357) | (1,111) | 66 | 71 |
Ending balance | (89,745) | (73,245) | 20,474 | 152,367 | 267,019 | 398,226 |
Cash Flow Hedges | ||||||
Cash Flow Hedges | ||||||
Beginning balance | 593 | 1,443 | 4,899 | 6,488 | 3,780 | 28 |
Ending balance | $ 550 | $ 593 | $ 1,443 | $ 7,143 | $ 6,488 | $ 3,780 |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule of Fair Value Reconciliation (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Other current assets | Not Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | $ 549 | $ 0 |
Other current assets | Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | 0 | 5,028 |
Other non-current assets | Not Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | 99 | 0 |
Other non-current assets | Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Assets | 0 | 0 |
Accrued expenses and other liabilities | Not Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Liabilities | 0 | 0 |
Accrued expenses and other liabilities | Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Liabilities | 0 | 0 |
Other non-current liabilities | Not Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Liabilities | 0 | 0 |
Other non-current liabilities | Designated as Hedging Instrument | ||
Derivatives designated as cash flow hedging instruments: | ||
Liabilities | $ 0 | $ 73 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Effect income tax rate expense (benefit) | 0.90% | (5.80%) | 0.50% | (10.00%) |
Income tax expense (benefit) | $ 131 | $ (7,218) | $ 282 | $ (43,532) |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Lessee, Lease, Description [Line Items] | ||
Operating lease assets additions | $ 10 | $ 11 |
Operating lease liabilities, additions | $ 10 | $ 11 |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Initial operating lease term | 7 years | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Initial operating lease term | 10 years |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Operating lease cost | $ 16,671 | $ 16,826 | $ 50,034 | $ 50,313 |
Variable lease cost | 5,647 | 5,198 | 16,477 | 15,734 |
Total lease cost | $ 22,318 | $ 22,024 | $ 66,511 | $ 66,047 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 48,466 | $ 50,641 |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 6,831 | $ 8,404 |
Leases - Other Information (Det
Leases - Other Information (Details) | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Weighted-average remaining lease term: Operating leases | 5 years 6 months | 5 years 10 months 24 days |
Weighted-average discount rate: Operating leases | 7.20% | 6.90% |
Leases - Maturity (Details)
Leases - Maturity (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
2023 (remainder of year) | $ 17,023 | |
2024 | 66,674 | |
2025 | 56,647 | |
2026 | 49,767 | |
2027 | 38,358 | |
Thereafter | 77,239 | |
Total undiscounted future cash flows | 305,708 | |
Less: Imputed Interest | (56,273) | |
Present value of future cash flows | 249,435 | |
Presentation on Balance Sheet: | ||
Current | 52,351 | $ 47,676 |
Non-current | $ 197,084 | $ 218,424 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 10 Months Ended | |||
Aug. 16, 2021 plaintiff | Sep. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 22, 2022 plaintiff | Nov. 21, 2022 segment | |
Loss Contingencies [Line Items] | ||||||
Contractual obligation | $ | $ 12.2 | $ 12.2 | ||||
Number of plaintiffs who filed consolidated amended complaint | segment | 4 | |||||
Insurance recoveries | $ | $ 4.3 | $ 4.3 | ||||
Payor Dispute | ||||||
Loss Contingencies [Line Items] | ||||||
Loss on litigation settlement | $ | $ 3 | |||||
ATI Shareholders vs ATI Individual Defendants | ||||||
Loss Contingencies [Line Items] | ||||||
Number of plaintiffs | plaintiff | 2 | |||||
Derivative Action | ||||||
Loss Contingencies [Line Items] | ||||||
Number of plaintiffs | plaintiff | 5 | |||||
Claims filed | plaintiff | 4 |
Loss per Share - Loss per Share
Loss per Share - Loss per Share Calculation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Basic and diluted loss per share: | ||||||||
Net loss | $ (14,611) | $ (116,694) | $ (61,570) | $ (390,640) | ||||
Less: Net income (loss) attributable to non-controlling interests | 586 | $ 956 | $ 1,060 | (376) | $ (177) | $ (473) | 2,602 | (1,026) |
Less: Series A Senior Preferred redemption value adjustments | (2,927) | 0 | 41,769 | 0 | ||||
Less: Series A Senior Preferred Stock cumulative dividend | 6,075 | 5,274 | 17,087 | 12,263 | ||||
Loss available to common stockholders, basic | (18,345) | (121,592) | (123,028) | (401,877) | ||||
Loss available to common stockholders, diluted | $ (18,345) | $ (121,592) | $ (123,028) | $ (401,877) | ||||
Weighted average shares outstanding, basic (in shares) | 4,154 | 4,086 | 4,125 | 4,054 | ||||
Weighted average shares outstanding, diluted (in shares) | 4,154 | 4,086 | 4,125 | 4,054 | ||||
Basic loss per share (in dollars per share) | $ (4.42) | $ (29.76) | $ (29.83) | $ (99.13) | ||||
Diluted loss per share (in dollars per share) | $ (4.42) | $ (29.76) | $ (29.83) | $ (99.13) |
Loss per Share - Antidilutive S
Loss per Share - Antidilutive Securities (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||||
Jun. 16, 2021 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Jun. 15, 2023 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 9,629,000 | 543,000 | 9,629,000 | 543,000 | ||
2L Notes | Convertible Debt | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Debt instrument, convertible, conversion price ( in usd per share) | $ 12.50 | |||||
Earnout Shares | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Contingent consideration liability (in shares) | 300,000 | |||||
Vesting Shares | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Contingent consideration liability (in shares) | 200,000 | |||||
2L Notes | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 8,454,000 | 0 | 8,454,000 | 0 | ||
Series I Warrants | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 105,000 | 105,000 | 105,000 | 105,000 | ||
IPO Warrants | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 197,000 | 197,000 | 197,000 | 197,000 | ||
Restricted shares | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 2,000 | 5,000 | 2,000 | 5,000 | ||
Restricted shares | Wilco Holdco, Inc. | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 6,000 | 10,000 | 6,000 | 10,000 | ||
Stock options | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 101,000 | 128,000 | 101,000 | 128,000 | ||
RSUs | ||||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||
Total antidilutive securities (in shares) | 764,000 | 98,000 | 764,000 | 98,000 |