UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry into a Material Definitive Agreement. |
Purchase and Sale Agreement
On August 1, 2023, EverQuote, Inc. (the “Company”) entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with MyPlanAdvocate Insurance Solutions Inc. (the “Buyer”), a Delaware corporation, pursuant to which the Company agreed to sell to the Buyer assets relating to its health insurance vertical (as further described in the Purchase Agreement, the “Disposed Assets”), by selling to the Buyer all of the issued and outstanding membership interests of its subsidiary, Eversurance, LLC, an Indiana limited liability company, for cash consideration of $13.2 million, subject to customary post-closing adjustments (collectively, the “Transaction”). The Transaction closed concurrently with execution of the Purchase Agreement.
The Purchase Agreement contains customary representations and warranties by the Company, on the one hand, and the Buyer, on the other hand. It also contains customary covenants, including covenants preventing the Company, together with its direct and indirect subsidiaries, from engaging in the operation of a direct to consumer agency for the sale of health insurance and Medicare plans to consumers, subject to certain exceptions, for a period of three years following the closing.
The Purchase Agreement provides for customary post-closing indemnification by each party of certain liabilities specified in the Purchase Agreement, subject to customary limitations.
The foregoing description of the Purchase Agreement is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The Purchase Agreement has been attached as an exhibit to provide investors and security holders with information regarding its terms. It is not intended to provide any other factual information about the Company, the Disposed Assets or the Buyer. The representations, warranties and covenants contained in the Purchase Agreement were made only for the purposes of such agreement and as of specified dates, were solely for the benefit of the parties to such agreement and may be subject to limitations agreed upon by the contracting parties. The representations and warranties may have been made for the purposes of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors. Investors are not third-party beneficiaries under the Purchase Agreement and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company, the Disposed Assets or the Buyer or any of their respective subsidiaries or affiliates. In addition, the assertions embodied in the representations and warranties contained in the Purchase Agreement are qualified by information in a confidential disclosure schedule that the parties have exchanged. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts, since (i) they were made only as of the date of such agreement or a prior, specified date, (ii) in some cases they are subject to qualifications with respect to materiality, knowledge and/or other matters, and (iii) they may be modified in important part by the underlying disclosure schedule. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.
Loan and Security Modification Agreement (August 1, 2023)
On August 1, 2023, the Company entered into a Loan and Security Modification Agreement (the “Consent and Release”) with Western Alliance Bank (the “Lender”), which modified the Amended and Restated Loan and Security Agreement, dated August 7, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) between the Company and the Lender. Pursuant to the Consent and Release, the Lender consented to the Transaction and released its security interests in the Disposed Assets arising under the Loan Agreement.
The foregoing description of the Consent and Release is qualified in its entirety by reference to the full text of the Consent and Release, which is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Loan and Security Modification Agreement (August 7, 2023)
On August 7, 2023, the Company entered into an additional Loan and Security Modification Agreement (the “Loan Amendment”) with the Lender, which further modified the Loan Agreement (the Loan Agreement, as amended by the Loan Amendment, the “Amended Loan Agreement”).
The Loan Amendment (i) eliminates the term loan availability, (ii) decreases the revolving line of credit under the Amended Loan Agreement from $35.0 million to $25.0 million, (iii) updates the interest rate for borrowings under the revolving line of credit from (A) the greater of 4.25% and the prime rate to (B) the greater of 7.00% and the prime rate and (iv) updates certain financial and other covenants.
Pursuant to the Loan Amendment, the existing minimum asset coverage ratio, fixed charge coverage ratio and leverage ratio covenants under the Amended Loan Agreement have been eliminated and replaced with a minimum adjusted quick ratio of 1.10 to 1.00 (defined as (1) the sum of (x) unrestricted cash and cash equivalents held at the Lender plus (y) net accounts receivable reflected on the Company’s balance sheet to (2) current liabilities, including all borrowings outstanding under the Amended Loan Agreement, but excluding the current portion of deferred revenue, in each case determined in accordance with U.S. generally accepted accounting principles) (the “Adjusted Quick Ratio”). At any time when the Adjusted Quick Ratio is less than 1.30 to 1.00, the Lender shall have the ability to use the Company’s cash receipts to repay outstanding obligations until such time as the Adjusted Quick Ratio is equal to or greater than 1.30 to 1.00 for two consecutive months.
The foregoing description of the Loan Amendment is qualified in its entirety by reference to the full text of the Loan Amendment, which is attached as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 2.02 | Results of Operations and Financial Condition. |
On August 7, 2023, the Company issued a press release reporting financial results for the fiscal quarter ended June 30, 2023. The full text of the press release is furnished as Exhibit 99.3 to this Current Report on Form 8-K.
The information contained in Item 2.02 in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such a filing.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 of this Current Report on Form 8-K with respect to the Amended Loan Agreement is incorporated by reference into this Item 2.03.
| Item 7.01 | Regulation FD Disclosure. |
On August 7, 2023, the Company posted an investor presentation to its website (www.everquote.com). A copy of the investor presentation is furnished as Exhibit 99.4 to this Current Report on Form 8-K.
The information contained in Item 7.01 in this Current Report on Form 8-K (including Exhibit 99.4) shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 2.1 | Purchase and Sale Agreement, dated August 1, 2023, by and between MyPlanAdvocate Insurance Solutions Inc. and the Company. | |
| 99.1 | Loan and Security Modification Agreement, dated August 1, 2023, by and between Western Alliance Bank and the Company. | |
| 99.2 | Loan and Security Modification Agreement, dated August 7, 2023, by and between Western Alliance Bank and the Company. | |
| 99.3 | Press release dated August 7, 2023 | |
| 99.4 | Investor Presentation dated August 7, 2023 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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EVERQUOTE, INC. | ||||
| Date: August 7, 2023 |
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By: | /s/ Julia Brncic | |||
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Julia Brncic | |||
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Secretary and General Counsel | |||