Form 8-K - Current report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

January 22, 2024

Date of Report (date of earliest event reported)

CLARIVATE PLC

(Exact name of registrant as specified in its charter)

Jersey, Channel Islands

(State or other jurisdiction of incorporation or organization)

001-38911

(Commission File Number)

N/A

(I.R.S. Employer Identification No.)

70 St. Mary Axe

London EC3A 8BE
United Kingdom

(Address of Principal Executive Offices)

(44) 207-433-4000

Registrant’s telephone number, including area code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, no par value	CLVT	New York Stock Exchange
5.25% Series A Mandatory Convertible Preferred Shares, no par value	CLVT PR A	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Item 2.02. Results of Operations and Financial Condition.

On January 22, 2024, Clarivate Plc (“Clarivate” or the “Company” or “we” or “us” or “our”) issued a press release announcing that it is launching a process to refinance its outstanding senior secured term loans under its existing term loan B, scheduled to mature in October 2026. As part of this effort, the Company will seek to enter into a new, seven-year senior secured $2.2 billion term loan B credit facility. The strategic refinancing is intended to improve financial flexibility, including extending the company's debt maturities.

In connection with the launch of the debt refinancing process, Clarivate is announcing that it expects to incur a goodwill impairment charge in the range of $800 million to $900 million across the Intellectual Property and Life Sciences & Healthcare segment reporting units in the fourth quarter 2023. We perform goodwill impairment testing during the fourth quarter of each year, or more frequently if events or changes in circumstances indicate that carrying value may not be recoverable. In assessing whether a potential impairment event has occurred, we evaluate various factors, many of which are subjective and require significant judgment.

The charge is expected to lower the Company’s 2023 forecast of a GAAP net loss but will have no impact on the 2023 full year outlook for Revenues, Organic Revenue Growth, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Diluted EPS and Free Cash Flow as outlined in its third quarter 2023 earnings press release issued on November 7, 2023.

The press release has been furnished with this Form 8-K as Exhibit 99.1 and is posted on the investor relations section of the Company’s website (http://ir.clarivate.com/).

The information in this Item 2.02, including Exhibit 99.1 furnished herewith, is being furnished and shall not be deemed “filed” for the 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 and shall not be incorporated by reference into any filing pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as otherwise expressly stated in such filing.

Forward-Looking Statements

This communication contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events, trends, contingencies, financial performance, or financial condition, appear at various places in this communication and may use words like “aim,” “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “see,” “seek,” “should,” “strategy,” “strive,” “target,” “will,” and “would” and similar expressions, and variations or negatives of these words. Examples of forward-looking statements include, among others, statements we make regarding: guidance outlook and predictions relating to expected operating results, such as revenue growth and earnings; strategic actions such as acquisitions, joint ventures, and dispositions, including the anticipated benefits therefrom, and our success in integrating acquired businesses; anticipated levels of capital expenditures in future periods; our ability to successfully realize cost savings initiatives and transition services expenses; our belief that we have sufficient liquidity to fund our ongoing business operations; expectations of the effect on our financial condition of claims, litigation, environmental costs, the impact of inflation, the impact of foreign currency fluctuations, the COVID-19 pandemic and governmental responses thereto, international hostilities, contingent liabilities, and governmental and regulatory investigations and proceedings; and our strategy for customer retention, growth, product development, market position, financial results, and reserves. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on management’s current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. Because forward-looking statements relate to the future, they are difficult to predict and many of which are outside of our control. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include those factors discussed under the caption “Risk Factors” in our annual report on Form 10-K/A, along with our other filings with the U.S. Securities and Exchange Commission (“SEC”). However, those factors should not be considered to be a complete statement of all potential risks and uncertainties. Additional risks and uncertainties not known to us or that we currently deem immaterial may also impair our business operations. Forward-looking statements are based only on information currently available to our management and speak only as of the date of this communication. We do not assume any obligation to publicly provide revisions or updates to any forward-looking statements, whether as a result of new information, future developments or otherwise, should circumstances change, except as otherwise required by securities and other applicable laws. Please consult our public filings with the SEC or on our website at www.clarivate.com.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits.

No.	Description
99.1	Press release issued by Clarivate Plc dated January 22, 2024
104	The cover page from the Company's Current Report on Form 8-K dated January 22, 2024, formatted in Inline XBRL

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CLARIVATE PLC

Date: January 22, 2024	By: /s/ Jonathan M. Collins
	Name: Jonathan M. Collins
	Executive Vice President & Chief Financial Officer

Exhibit 99.1

Clarivate Announces Commencement of Term Loan Refinancing Transaction

London, U.K., January 22, 2024 – Clarivate Plc (NYSE: CLVT) (the “Company” or “Clarivate”), a global leader in connecting people and organizations to intelligence they can trust to transform their world, announced today the launch of a process to refinance the Company’s 2026 Term Loan B credit facility that would extend the maturity to 2031 for a new combined term loan amount of $2.2 billion.

“We are proactively capitalizing on the favorable debt market environment in order to provide further flexibility within our capital structure,” said Jonathan Collins, Executive Vice President and Chief Financial Officer. “With our strong free cash flow, we continue to focus on investing for growth and reducing our debt to drive long-term shareholder value.”

The Company also announced that it expects to record a non-cash goodwill impairment charge in the range of approximately $800 million to $900 million in the fourth quarter 2023, across the Intellectual Property and Life Sciences & Healthcare segments. The charge is expected to lower the Company’s 2023 forecast of a GAAP net loss but will have no impact on the 2023 full year outlook for Revenues, Organic Revenue Growth, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Diluted EPS and Free Cash Flow as outlined in its third quarter 2023 earnings press release issued on November 7, 2023.

Terms of the potential refinancing will be disclosed upon the completion of the transaction. The proposed refinancing is subject to market and other conditions, and there can be no assurance that it will be completed on favorable terms or at all.

About Clarivate

Clarivate™ is a leading global information services provider. We connect people and organizations to intelligence they can trust to transform their perspective, their work and our world. Our subscription and technology-based solutions are coupled with deep domain expertise and cover the areas of Academia & Government, Intellectual Property and Life Sciences & Healthcare. For more information, please visit clarivate.com.

Use of Non-GAAP Financial Measures

Non-GAAP results are not presentations made in accordance with U.S. generally accepted accounting principles ("GAAP") and are presented only as a supplement to our financial statements based on GAAP. Non-GAAP financial information is provided to enhance the reader’s understanding of our financial performance, but none of these non-GAAP financial measures are recognized terms under GAAP. They are not measures of financial condition or liquidity, and should not be considered as an alternative to profit or loss for the period determined in accordance with GAAP or operating cash flows determined in accordance with GAAP. As a result, you should not consider such measures in isolation from, or as a substitute for, financial measures or results of operations calculated or determined in accordance with GAAP.

We use non-GAAP measures in our operational and financial decision-making. We believe that such measures allow us to focus on what we deem to be a more reliable indicator of ongoing operating performance and our ability to generate cash flow from operations, and we also believe that investors may find these non-GAAP financial measures useful for the same reasons. Non-GAAP measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies comparable to us, many of which present non-GAAP measures when reporting their results. These measures can be useful in evaluating our performance against our peer companies because we believe the measures provide users with valuable insight into key components of GAAP financial disclosures. However, non-GAAP measures have limitations as analytical tools and because not all companies use identical calculations, our presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

Definitions and reconciliations of non-GAAP measures, such as Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow and Standalone Adjusted EBITDA to the most directly comparable GAAP measures are provided within the schedules attached to this release. Our presentation of non-GAAP measures should not be construed as an inference that our future results will be unaffected by any of the adjusted items, or that any projections and estimates will be realized in their entirety or at all.

Forward-Looking Statements

The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA Margin for the 2023 outlook and reconciles these measures to our Net loss for the same period:

	AS PRESENTED - Q3'23						UPDATED FOR EXPECTED IMPAIRMENT						CHANGE
	Year Ending December 31, 2023 (Forecasted)						Year Ending December 31, 2023 (Forecasted)						Year Ending December 31, 2023 (Forecasted)
(in millions, except percentages)	Low			High			Low			High			Low			High
Net loss attributable to ordinary shares	$	(182	)	$	(132	)	$	(1,082	)	$	(932	)	$	(900	)	$	(800	)
Dividends on preferred shares⁽¹⁾		75			75			75			75			-			-
Net loss	$	(107	)	$	(57	)	$	(1,007	)	$	(857	)	$	(900	)	$	(800	)
(Benefit) provision for income taxes		(63	)		(63	)		(63	)		(63	)		-			-
Depreciation and amortization		707			707			707			707			-			-
Interest expense, net		292			292			292			292			-			-
Restructuring and lease impairments⁽²⁾		30			30			30			30			-			-
Goodwill and intangible asset impairments⁽³⁾		135			135			1,035			935			900			800
Transaction related costs		5			5			5			5			-			-
Mark to market adjustment on financial instruments		(14	)		(14	)		(14	)		(14	)		-			-
Share-based compensation expense		130			130			130			130			-			-
Other⁽⁴⁾		(25	)		(25	)		(25	)		(25	)		-			-
Adjusted EBITDA	$	1,090		$	1,140		$	1,090		$	1,140		$	0		$	0
Adjusted EBITDA margin		42.0	%		42.5	%		42.0	%		42.5	%		0.0	%		0.0	%

⁽¹⁾ Dividends on our mandatory convertible preferred shares (“MCPS”) are payable quarterly at an annual rate of 5.25% of the liquidation preference of $100 per share. For the purposes of calculating net loss attributable to Clarivate, we have excluded the accrued and anticipated MCPS dividends.

⁽²⁾ Reflects restructuring costs expected to be incurred in 2023 associated with the ProQuest acquisition and Segment Optimization restructuring programs.

⁽³⁾ Primarily represents goodwill impairment related to the quantitative goodwill impairment assessment performed over the Company’s reporting units and intangible assets impairment related to Assets Held-for-Sale.

⁽⁴⁾ Primarily includes the gain on legal settlement partially offset by a net loss on foreign exchange re-measurement.

Category: Debt

Source: Clarivate Plc

Investor Relations Contact
Mark Donohue, Head of Investor Relations

investor.relations@clarivate.com

Media Contact
Amy Bourke-Waite, Senior Director, Corporate Communications

newsroom@clarivate.com

Cover	Jan. 22, 2024
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 22, 2024
Entity File Number	001-38911
Entity Registrant Name	CLARIVATE PLC
Entity Central Index Key	0001764046
Entity Tax Identification Number	00-0000000
Entity Incorporation, State or Country Code	Y9
Entity Address, Address Line One	70 St. Mary Axe
Entity Address, City or Town	London
Entity Address, Country	GB
Entity Address, Postal Zip Code	EC3A 8BE
City Area Code	44
Local Phone Number	207-433-4000
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Emerging Growth Company	false
Common Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	Ordinary Shares, no par value
Trading Symbol	CLVT
Security Exchange Name	NYSE
Series A Preferred Stock [Member]
Document Information [Line Items]
Title of 12(b) Security	5.25% Series A Mandatory Convertible Preferred Shares, no par value
Trading Symbol	CLVT PR A
Security Exchange Name	NYSE