Prospectus summary

This summary highlights information contained in greater detail elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our ordinary shares, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus, and the information set forth under “Risk factors” and “Management’s discussion and analysis of financial condition and results of operations.”

Unless otherwise indicated in this prospectus, references to the “Company,” “we,” “us” and “our” refer to UK Holdco and its consolidated subsidiaries after giving effect to the Reorganization Transactions. References to “underwriters” refer to the firms listed on the cover page of this prospectus.

Our company

We are a pure-play in vitro diagnostics (“IVD”) business driven by our credo, “Because Every Test is A Life.” This guiding principle reflects the crucial role diagnostics play in global health and guides our priorities as an organization. As a leader in IVD, we impact approximately 800,000 patients every day. We are dedicated to improving outcomes for these patients and saving lives through providing innovative and reliable diagnostic testing solutions to the clinical laboratory and transfusion medicine communities. Our global infrastructure and commercial reach allow us to serve these markets with significant scale. We have an intense focus on the customer. We support our customers with high quality diagnostic instrumentation, a broad test portfolio and market leading service. Our products deliver consistently fast, accurate and reliable results that allow clinicians to make better-informed treatment decisions. Our business model generates significant recurring revenues and strong cash flow streams from ongoing sales of high margin consumables. In 2019, these consumables contributed more than 90% of our total revenue and approximately 93% of our core revenue. We maintain close connectivity with our customers through our global presence, with more than 4,500 employees, including approximately 2,200 commercial sales, service and marketing teammates. This global organization allows us to support our customers across more than 130 countries and territories.

We have been pioneering life-impacting advances in diagnostics for over 80 years, from our earliest work in blood typing, to our innovation in infectious diseases and our latest developments in laboratory solutions. In 2014, we were acquired by The Carlyle Group from Johnson & Johnson and became an independent organization, solely focused on delivering high quality IVD products and service to our diagnostic customer base. At the time of the separation, our business had global scale, a reputation for high quality products, a strong quality management system and a research and development team with extensive scientific expertise. Over the past six years, we have significantly invested in our business with the objective of creating a highly efficient, innovative and lean organization capable of scaling to meet our customers’ needs. These investments included the following focus areas:

 

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Infrastructure:    We invested over $500 million in IT, finance, supply chain and other support functions to build out our infrastructure and capabilities as a standalone business and drive long-term, profitable growth.

 

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Research and development:    We increased our focus on innovation by investing approximately $550 million in research and development to enhance our existing capabilities and develop new instruments and assays to supplement our portfolio.

 

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Commercial:    We redesigned our go-to-market strategy across all key regions, expanded our sales force, implemented new customer information systems and launched ORTHOCARE to enhance our service capabilities.

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Operations:    We consolidated and streamlined our manufacturing capabilities and other global functions to improve profitability and cash flow, achieving more than $200 million in savings since our acquisition by Carlyle.

 

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Leadership:    To capitalize on these investments, we recruited a highly qualified management team of experienced diagnostic and healthcare leaders focused on our customers and accelerated growth.

With these investments, we have reinvigorated our portfolio, transformed our commercial model and emerged as a focused leader in the IVD market, which we believe positions our business for future growth.

IVD testing is a critical tool in evaluating health in many different settings around the world. IVD is a core component of routine health care check-ups for those who are presenting with symptoms or require procedures, and it influences up to 70% of critical healthcare clinical decision-making. Consequently, our IVD solutions have a profound impact on the assessment of health and the delivery of care. IVD is also critical in monitoring the transmission and spread of infectious disease outbreaks, where Ortho’s longstanding excellence in infectious disease testing is particularly relevant. Our solutions are central to the operations of hospitals, clinics, blood banks and donor centers around the world, where they are used to help diagnose certain conditions, such as cancer or heart attacks, and infectious diseases, such as hepatitis, HIV, and most recently, COVID-19, where we have launched two antibody tests and an antigen test, and we are actively expanding our menu of tests to address the global pandemic.

We operate in an approximately $26 billion addressable market, which is expected to grow at a compound annual growth rate (“CAGR”) of approximately 5% from 2020 to 2024. We compete in the two largest IVD markets, Immunoassay and Clinical Chemistry, which together comprise our Clinical Laboratories business and represent approximately $24 billion of our current addressable market. We expect our Clinical Laboratories business will be favorably impacted by an aging population, an increased need for testing of chronic conditions, the expansion of access to healthcare services, the emergence of new disease states and other macro trends. We are also the global leader in Transfusion Medicine, which includes hospital-based Immunohematology and Donor Screening for blood and plasma at hospitals and other donation centers. Transfusion Medicine represents approximately $2 billion of our current addressable market. We expect our Transfusion Medicine business will be favorably impacted by increases in the number and type of surgical procedures, an aging population and other macro trends. There is significant overlap in our customer base given we currently sell to about 70% of the hospitals in the United States, and we are often able to leverage our leadership within Transfusion Medicine to cross-sell our Clinical Laboratories solutions. Because we focus primarily on acute or critical care diagnostics that are core to therapeutic decisions in hospitals, our markets are relatively resilient across business cycles. We offer our products and services globally, with distinct offerings targeted to the needs of customers in developed and emerging markets.

Today, we operate two lines of business, Clinical Laboratories and Transfusion Medicine, which together generate our core revenue:

 

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Clinical Laboratories:    Comprised of Clinical Chemistry, which is the measurement of target chemicals in bodily fluids for the evaluation of health and the clinical management of patients, and Immunoassay, which is the measurement of proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health.

 

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Transfusion Medicine:    Comprised of Donor Screening, where blood and plasma is screened at donation for blood type and target diseases, and Immunohematology, where blood is typed and screened at the hospital blood bank before being transfused into the patient.

Our broad offerings allow us to support our customer base and maximize the opportunity to provide each of our customers with a comprehensive array of products and services over time. We refer to this mutually beneficial

approach as focusing on Lifetime Customer Value (“LCV”). Our focus on LCV underpins everything we do, from the design and execution of our commercial and service model, to our instrument and assay innovation, to the composition of our global footprint. Our approach has informed our choice to focus on medium- to high-volume laboratories, which in turn has helped us become a focused leader in our selected markets and transformed our financial profile. We intend to continue to invest in and evolve our LCV framework to best support our customers and maximize our financial results.

As an example, we may begin a Clinical Laboratories customer relationship by providing a standalone instrument (often a clinical chemistry analyzer) and a set of assays that are relevant to that customer’s specific testing needs. As the customer and its testing needs grow, we look to migrate the customer, where appropriate, to an integrated analyzer that performs both clinical chemistry and immunoassay testing. This migration helps us increase our customers’ testing capabilities as well as the revenue we generate from customers. For our larger customers, we ultimately may expand their testing throughput by installing automation tracks that connect multiple analyzers along the automation track, while providing the full suite of our ever-expanding assay menu. As we have significantly expanded our test menu offering, our integrated analyzers are now more often where our Clinical Laboratories relationship starts. In Transfusion Medicine, the life cycle is similar, as customers graduate from manual testing processes to semi-automated capabilities to fully-automated blood and plasma screening instrumentation as their testing volumes and technical competencies grow over time. We focus on building long-term customer relationships and continuing to enhance both our offering and the customer’s ability to care for their patients—ultimately deepening our commercial relationship and driving our financial model.

We believe that the strong clinical performance of our assays, our instruments’ ease-of-use and reliability, our best-in-class customer service and low total cost of ownership contribute to our high revenue retention rate of approximately 99% in 2019. We have longstanding relationships with customers, with an average Clinical Laboratories customer relationship of almost 13 years and an average Transfusion Medicine customer relationship of almost 15 years. Our customer relationships are particularly strong in the medium- to high-volume laboratories (our “Focus Markets”), which compares to the broader market that includes low- and ultra high-volume laboratories. In addition, our dry slide technology has an environmentally friendly profile as it doesn’t require water system plumbing, it reduces hazardous waste and it requires less space for liquid storage. All of these attributes resonate particularly well with customers who are pursuing environmental goals or customers who operate in regions with scarce water supply.

Our revenue is driven by a “razor-razor blade” business model. Through this model, we generally sell or place instruments under long-term contracts, which support the ongoing sale of our assays, reagents and consumables. Our instruments are closed systems, requiring customers to purchase the assays, reagents and consumables from us. These sales generate a high proportion of recurring revenues. As of September 27, 2020, we had an installed base of approximately 20,000 instruments, which increased approximately 5% since September 2019. We also generate non-core revenue, including through our contract manufacturing business and certain business collaborations, which accounted for approximately 3% of our net revenue during the fiscal year ended December 29, 2019. During the fiscal year ended December 29, 2019, we recorded net revenue of $1.8 billion, net loss of $157 million and Adjusted EBITDA of $478 million. During the fiscal nine months ended September 27, 2020, we recorded net revenue of $1,250 million, net loss of $171 million and Adjusted EBITDA of $322 million. As of September 27, 2020, we had total indebtedness of $3,713.7 million, and for the fiscal nine months ended September 27, 2020, our interest expense was $148.6 million. We note that our net revenue for the fiscal nine months ended September 27, 2020 was approximately 5.9% lower as compared to the prior year period, primarily due to decreased shipments to customers as a result of the global COVID-19 pandemic. However, during the three months ended September 27, 2020, we began to experience a rebound towards the positive quarterly trajectory we saw prior to the beginning of the pandemic. As an example of such quarterly

trajectory, during the four quarters prior to the second fiscal quarter of 2020, our quarterly core revenue (excluding local HCV) was growing in the range of approximately 3.8% to 5.8% on a constant currency basis as compared to the relevant prior year period. As a result of the COVID-19 pandemic, during the fiscal three months ended June 28, 2020, we experienced significantly reduced testing volumes and a 12.2% decline in core revenue (excluding local HCV) on a constant currency basis as compared to the fiscal three months ended June 30, 2019. However, for the fiscal three months ended September 27, 2020, our core revenue (excluding local HCV) increased approximately 3.7% on a constant currency basis as compared to the fiscal three months ended September 29, 2019, which growth rate is more consistent with the trend we experienced prior to the COVID-19 pandemic. For example, during the three months ended September 27, 2020, our core recurring revenue in North America increased by approximately 11.1% and our core revenue in Greater China increased by approximately 7.9%, in each case, as compared to the prior year period.

Our competitive strengths

We believe we are well-positioned to drive sustained and profitable growth through our relentless focus on LCV. This customer-centric approach informs the execution of our commercial and service model and underpins our go-to-market strategy. Our customer focus allows us to retain and grow our customers by providing a superior customer experience driven by unparalleled quality of service, continuous innovation and access to a diverse product portfolio. We are able to leverage our global footprint to gain differentiated and leading positions across our Focus Markets. This intense focus on our customers has resulted in an attractive business model with high recurring revenues that allows us to continue to invest to reinforce our competitive strengths, which include:

 

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Intense customer focus enabled by our broad portfolio and market leading positions

 

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Superior customer experience and brand loyalty resulting in high customer retention and win rates

 

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Highly compelling solutions supported by our leading and innovative research and development capabilities

 

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Extensive and balanced global commercial footprint with reinvigorated focus on growth

 

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Disciplined approach to streamline operations and optimize our cost structure

 

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Deeply committed leadership team with broad experience in healthcare and diagnostics.

Our growth strategy

Our heritage and strength lie in our long-term customer relationships and trusted brand, which create a steady base of recurring revenue and a foundation for future growth. By focusing on LCV, we identify ways in which we can utilize product innovation and impactful customer service and solutions to deepen these partnerships and add value over time. We plan to grow our business by broadening our existing relationships, winning new customers and targeting high-growth end markets and adjacencies. We are focused on sustainable long-term growth through commercial excellence that maximizes LCV, strengthens existing relationships through superior service and delivers innovative products for our customers and their patients. The key elements of our strategy to accelerate and sustain revenue growth and operating leverage include:

 

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Focusing relentlessly on maximizing LCV, which is designed to produce and maintain a growing and recurring, high margin, durable financial profile and contributes to growth

 

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Providing an unparalleled customer experience to retain and attract existing and new customers

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Leveraging our global footprint to deliver innovative solutions to meet our customers’ needs in both developed and emerging markets

 

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Creating meaningful product innovation through menu expansion, development of novel instruments and enhancement of automation and informatics

 

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Continuing to identify operating efficiencies to allow for reinvestment in growth and improve margins

 

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Pursuing business development opportunities, partnerships and strategic acquisitions to enter adjacencies or expand our current business units.

Our products and services

Clinical Laboratories

Our Clinical Laboratories business focuses on clinical chemistry and immunoassay instruments and tests to detect and monitor disease progression across a broad spectrum of therapeutic areas. Our flagship Clinical Laboratories platform is the VITROS family of instruments, which includes a series of clinical chemistry, immunoassay, integrated (combined chemistry and immunoassay) systems and automation and middleware solutions. VITROS instruments are placed in centralized, higher-throughput testing sites (hospitals and laboratories) and decentralized, lower-throughput sites (physician offices, clinics and specialty settings).

 

 

Transfusion Medicine

Immunohematology

Within Transfusion Medicine, our Immunohematology business is focused on immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions. Our flagship Immunohematology analyzers are the ORTHO VISION and ORTHO VISION Max systems that automate blood typing and serology disease screening for blood banks. In addition, we sell the semi-automated ORTHO Workstation for blood bank customers that have lower volumes or need for test automation.

 

 

Donor Screening

Our Donor Screening business is focused on instruments and tests used for blood and plasma screening for infectious diseases for customers, which include some of the largest donor testing institutions, primarily in the United States. In Donor Screening, our core instrument offering is the ORTHO VERSEIA Integrated Processor—an automated pipetting and processing system that brings together the ORTHO VERSEIA pipettor and ORTHO Summit Processor to enable end-to-end pipetting and processing.

Our services

In addition to the products we provide, ORTHOCARE Services are a critical element of how we deliver value to our customers. As of September 2020, we have approximately 900 service teammates globally. We employ highly trained service professionals including over 340 laboratory specialists with advanced qualifications. For example, more than 95% of our U.S. laboratory specialists have medical technician degrees.

Estimated preliminary results

Set forth below are certain preliminary results for the fiscal year ended January 3, 2021. We have provided ranges, rather than specific amounts, because these results are preliminary and subject to change. These ranges are based on the information currently available to us as of the date of this prospectus. Our actual financial results for the fiscal year ended January 3, 2021 are not yet available, and our closing procedures for the fiscal year ended January 3, 2021 are not yet completed. Our actual results may vary from the estimated preliminary results and other data presented here and will not be finalized until after the completion of this offering.

These are forward-looking statements and are not guarantees of future performance and may differ from actual results. The estimated preliminary results below should not be viewed as a substitute for our full annual financial statements prepared in accordance with GAAP. There can be no assurance that the estimated preliminary results or other data will be realized, and estimates are subject to risks and uncertainties. Please refer to “Risk factors” and “Special note regarding forward-looking statements.” The estimated preliminary results below should be read in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements included elsewhere in this prospectus.

The preliminary financial results included in this prospectus have been prepared by, and are the responsibility of, our management. PricewaterhouseCoopers LLP has not audited, reviewed, compiled, or applied agreed-upon procedures with respect to the preliminary financial results. Accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto.

 

		Fiscal year ended
($ in millions)		January 3, 2021								December 29, 2019
		Low				High
Selected financial data
Net revenue		$				$				$	1,801.5
Core revenue											1,740.3
Income from operations											85.5
Adjusted EBITDA											477.5
Consolidated balance sheet data:
Cash and cash equivalents		$				$				$	72.0
Total debt											3,599.1

The following table reconciles Income from operations (the most directly comparable GAAP measure reasonably available to us at this time) to Adjusted EBITDA for the periods presented:

 

		Fiscal year ended
		January 3, 2021								December 29, 2019
($ in millions)		Low				High
Income from operations		$				$				$	85.5
Depreciation and amortization											327.5
Restructuring and severance related costs(a)											36.0
Stock-based compensation(b)											18.6
Other adjustments(c)											9.9
Adjusted EBITDA		$				$				$	477.5

 

(a)

Represents restructuring and severance costs related to several discrete initiatives intended to strengthen operational performance and to support building our commercial capabilities.

 

(b)

Represents stock-based compensation expense including the $14.7 million modification impact of a 2019 amendment to our stock option agreement, where performance-based options that did not previously vest based on applicable minimum earnings targets have vested or will vest over a specified future period of time.

 

(c)

Represents miscellaneous other adjustments related to unusual items impacting our results including the                     .

For the fiscal year ended January 3, 2021, we expect to report net revenue in the range of $                 million to $                 million, representing an increase of         % to         % compared to the fiscal year ended

December 29, 2019. For the fiscal year ended January 3, 2021, we expect to report core revenue in the range of $                 million to $                 million, representing an increase of         % to         % compared to the fiscal year ended December 29, 2019. The increase in net and core revenue, which includes a negative impact of approximately         % from foreign currency fluctuations, was primarily driven by                      during the fiscal three months ended January 3, 2021 as compared to the fiscal three months ended December 29, 2019, for the low and high estimated preliminary results, respectively.

For the fiscal year ended January 3, 2021, we expect Adjusted EBITDA in the range of $                 million to $                 million, representing an increase of         % to         % compared to the fiscal year ended December 29, 2019. The increase in Adjusted EBITDA was primarily driven by                      during the fiscal three months ended January 3, 2021 as compared to the fiscal three months ended December 29, 2019 for the low and high estimated preliminary results, respectively.

Risks related to our business

Investing in our ordinary shares involves a high degree of risk. You should carefully consider these risks before investing in our ordinary shares, including the risks related to our business and industry described under “Risk factors” elsewhere in this prospectus. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our business strategy, which could cause a decline in the price of our ordinary shares and result in a loss of all or a portion of your investment:

 

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the ongoing global coronavirus (COVID-19) pandemic;

 

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increased competition;

 

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manufacturing problems or delays or failure to develop and market new or enhanced products or services;

 

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adverse developments in global market, economic and political conditions;

 

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our ability to obtain additional capital on commercially reasonable terms may be limited or non-existent;

 

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our inability to implement our strategies for improving growth or to realize the anticipated benefits of any acquisitions and divestitures, including as a result of difficulties integrating acquired businesses with, or disposing of divested businesses from, our current operations;

 

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a need to recognize impairment charges related to goodwill, identified intangible assets and fixed assets;

 

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our ability to operate according to our business strategy should our collaboration partners fail to fulfill their obligations;

 

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risk that the insurance we will maintain may not fully cover all potential exposures;

 

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product recalls or negative publicity may harm our reputation or market acceptance of our products;

 

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decreases in the number of surgical procedures performed, and the resulting decrease in blood demand;

 

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fluctuations in our cash flows as a result of our reagent rental model;

 

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terrorist acts, conflicts, wars and natural disasters that may materially adversely affect our business, financial condition and results of operations;

 

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the outcome of legal proceedings instituted against us and/or others;

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risks associated with our non-U.S. operations, including currency translation risks, the impact of possible new tariffs and compliance with applicable trade embargoes;

 

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the effect of the United Kingdom’s withdrawal from the European Union;

 

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our inability to deliver products and services that meet customers’ needs and expectations;

 

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failure to maintain a high level of confidence in our products;

 

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significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs;

 

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reductions in government funding and reimbursement to our customers;

 

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price increases or interruptions in the supply of raw materials, components for our products, and products and services provided to us by certain key suppliers and manufacturers;

 

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our ability to recruit and retain the experienced and skilled personnel we need to compete;

 

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work stoppages, union negotiations, labor disputes and other matters associated with our labor force;

 

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consolidation of our customer base and the formation of group purchasing organizations;

 

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unexpected payments to any pension plans applicable to our employees;

 

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our inability to obtain required clearances or approvals for our products;

 

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failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals;

 

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the inability of government agencies to hire, retain or deploy personnel or otherwise prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner;

 

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disruptions resulting from President Trump’s invocation of the Defense Production Act;

 

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our inability to maintain our data management and information technology systems;

 

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data corruption, cyber-based attacks, security breaches and privacy violations;

 

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our inability to protect and enforce our intellectual property rights or defend against intellectual property infringement suits against us by third parties;

 

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risks related to changes in income tax laws and regulations;

 

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risks related to our substantial indebtedness, which includes $2,200.0 million outstanding under our Dollar Term Loan Facility, $390.4 million outstanding under our Euro Term Loan Facility, $400.0 million aggregate principal amount of 2025 Notes outstanding and $675.0 million aggregate principal amount of 2028 Notes outstanding, in each case, as of September 27, 2020;

 

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our ability to generate cash flow to service our substantial debt obligations;

 

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risks related to this offering and ownership of our ordinary shares, including the fact that, after completion of this offering, we are expected to be a “controlled company” within the meaning of the corporate governance standards of Nasdaq; and

 

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other factors set forth under “Risk factors” in this prospectus.

Reorganization Transactions

UK Holdco is a public limited company incorporated under the laws of England and Wales for purposes of becoming the new holding company of Bermuda Holdco and its subsidiaries and has an initial share capital of one ordinary share and 50,000 preferred redeemable shares. Prior to the consummation of the Reorganization Transactions, UK Holdco will have no subsidiaries or operations. In connection with the consummation of the offering and prior to effectiveness of the Registration Statement of which this prospectus forms a part, Carlyle and all other shareholders of Bermuda Holdco will contribute all of their outstanding equity interests in Bermuda Holdco to UK Holdco in exchange for ordinary shares of UK Holdco on a 1-for-1 basis. Following the Reorganization Transactions, the Incorporation Shares held by Carlyle will be deferred, with no economic or voting rights attributable to such shares.

Following the consummation of this offering, we expect that Bermuda Holdco will be dissolved and UK Holdco will directly own all outstanding equity interests of Holdings and will indirectly own all outstanding equity interests of Holdings’ subsidiaries.

Corporate structure

The following chart summarizes our corporate structure after giving effect to the Reorganization Transactions. This chart is provided for illustrative purposes only and does not represent all legal entities affiliated with, or all subsidiaries of, the Company:

 

 

 

(1)

After completion of the offering, Carlyle is expected to own approximately     % of our outstanding ordinary shares. As a result, we will be a “controlled company” within the meaning of the corporate governance standards of Nasdaq. As a result, we may elect not to comply with certain corporate governance requirements. See “Risk factors—Risk related to this offering and ownership of our ordinary shares—We will be a “controlled company” within the meaning of Nasdaq rules and the rules of the SEC. As a result, we will qualify for exemptions from certain corporate governance requirements that provide protection to shareholders of other companies.”

 

(2)

The Lux Co-Issuer and the U.S. Co-Issuer are co-borrowers under our Senior Secured Credit Facilities as well as co-issuers of $400.0 million in aggregate principal amount of 2025 Notes and $675.0 million in aggregate principal amount of 2028 Notes. Our Senior Secured Credit Facilities consist of (a) our $2,375.0 million Dollar Term Loan Facility, (b) our €337.4 million Euro Term Loan Facility and (c) our $350.0 million Revolving Credit Facility. The restrictions imposed by the terms of our substantial indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations and prevent us from fulfilling our obligations under our indebtedness. See “Risk factors—Risks associated with our indebtedness.”

Our Principal Shareholder

Our Principal Shareholder is an investment fund affiliated with Carlyle. Carlyle acquired us from Johnson & Johnson in 2014 for aggregate consideration of $3,893.1 million, including debt financing consisting of $2,175.0 million of term loans pursuant to the Credit Agreement and $1,300.0 million of senior unsecured notes, all of which has since been refinanced. Affiliates of Carlyle currently hold approximately $93.1 million of indebtedness under the Dollar Term Loan Facility and approximately $53.2 million of indebtedness under the Euro Term Loan Facility. We intend to use the proceeds from this offering to, among other things, repay a portion of our indebtedness under the Dollar Term Loan Facility. See “Use of proceeds.” In connection with the Reorganization Transactions, we expect to enter into the Shareholders Agreement with Carlyle, pursuant to which Carlyle will have the right to designate nominees to our board of directors and to cause us to file registration statements under the Securities Act covering resales of our ordinary shares held by Carlyle, subject to certain exceptions. See “Certain relationships and related party transactions—Shareholders agreement.”

Founded in 1987, Carlyle is a global investment firm and one of the world’s largest global private equity firms with approximately $230 billion of assets under management across 397 investment vehicles as of September 30, 2020. Carlyle invests across four segments—Corporate Private Equity, Real Assets, Global Credit, and Investment Solutions—in North America, South America, Europe, the Middle East, Africa, Asia and Australia. Carlyle has expertise in various industries, including aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrials & transportation, technology & business services and telecommunications & media. Carlyle employs more than 1,800 employees, including more than 675 investment professionals, in 30 offices across six continents.

Carlyle is one of the leading private equity investors in the healthcare sector, having completed 73 total healthcare transactions representing approximately $16 billion in equity invested since inception. Recent transactions include Grand Rounds (tech-enabled expert medical opinion and healthcare quality and clinical navigation provider), TriNetX (a global health research network optimizing clinical research), Sedgwick (a global multiline claims management firm), One Medical (technology-enabled primary care provider), CorroHealth (a business service provider for healthcare companies), Millicent (a pharmaceutical company), MedRisk (a physical therapy-focused workers’ compensation solutions company), Albany Molecular Research (a pharmaceutical contract development and manufacturing organization), WellDyneRx (an independent pharmacy benefit manager), Rede D’Or São Luiz S.A. (a leading hospital provider in Brazil) and Pharmaceutical Product Development (a global contract research organization).

Corporate information

UK Holdco is a public limited company incorporated under the laws of England and Wales with the legal name Ortho Clinical Diagnostics Holdings plc and with the company number 13084624 for purposes of becoming the new holding company of Bermuda Holdco and its subsidiaries. Our principal executive offices are located at 1001 Route 202, Raritan, New Jersey 08869. Our telephone number at this address is 908-218-8000. UK Holdco’s registered address is 11-12 St. James’s Square, Suite 1, 3rd Floor, London, United Kingdom SW1Y 4LB. Our website address is www.orthoclinicaldiagnostics.com. Information contained on, or that can be accessed through, our website does not constitute part of this prospectus, and inclusions of our website address in this prospectus are inactive textual references only. You should rely only on the information contained in this prospectus when making a decision as to whether to invest in the ordinary shares.

The offering

 

Ordinary shares offered by us

shares.

 

Ordinary shares to be outstanding immediately after this offering

shares.

 

Option to purchase additional ordinary shares

The underwriters have been granted an option to purchase up to             additional ordinary shares from us at any time within 30 days from the date of this prospectus to cover over-allotments.

 

Use of proceeds

We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $             million, based on the assumed initial public offering price of $             per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus.

 

We intend to use the net proceeds from this offering (i) to redeem $160.0 million in aggregate principal amount of 2025 Notes, (ii) to redeem $270.0 million in aggregate principal amount of 2028 Notes, (iii) to repay $                million in aggregate principal amount of borrowings under our Dollar Term Loan Facility, (iv) to pay offering fees and expenses as well as accrued and unpaid interest on indebtedness to be repaid and related premiums in an aggregate amount of approximately $                million and (v) for working capital and general corporate purposes, which may include further repayment of indebtedness under the Credit Agreement. See “Use of proceeds.”

 

A $1.00 increase (decrease) in the assumed initial public offering price of $             per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) the net proceeds to us from this offering by $             million, assuming the number of ordinary shares offered by us, as set forth on the front cover of this prospectus, remains the same and after deducting the assumed underwriting discounts and commissions and estimated offering expenses payable by us. An increase (decrease) of 100,000 ordinary shares from the expected number of ordinary shares to be sold by us in this offering, assuming no change in the assumed initial public offering price per ordinary share, which is the midpoint of the price range set forth on the front cover of this prospectus, would increase (decrease) our net proceeds from this offering by $             million. Such increase (decrease) in net proceeds will correspondingly increase (decrease) the amount of borrowings under our Dollar Term Loan Facility we intend to repay and/or the amount used for working capital and general corporate purposes, which may include an increase (decrease) in the repayment of other indebtedness under the Credit Agreement.

Conflicts of Interest

Affiliates of Carlyle beneficially own in excess of 10% of our issued and outstanding common stock. Because TCG Capital Markets L.L.C., an affiliate of Carlyle, is an underwriter, this offering is being made in compliance with the requirements of Rule 5121 of the Financial Industry Regulatory Authority, Inc. (“FINRA”). Pursuant to that rule, the appointment of a “qualified independent underwriter” is not required in connection with this offering as TCG Capital Markets L.L.C. is not primarily responsible for managing this offering. TCG Capital Markets L.L.C. will not confirm sales of the securities to any account over which it exercises discretionary authority without the specific written approval of the account holder. See “Underwriting (Conflicts of Interest).”

 

Risk factors

See “Risk factors” and the other information included in this prospectus for a discussion of the factors you should consider carefully before deciding to invest in our ordinary shares.

 

Dividend policy

We currently do not intend to declare any dividends on our ordinary shares in the foreseeable future. Our ability to pay dividends on our ordinary shares may be limited by the covenants contained in the agreements governing the Senior Notes and the Senior Secured Credit Facilities. See “Dividend policy.”

 

Proposed stock exchange symbol

“OCDx.”

Except as otherwise indicated, all information in this prospectus:

 

•

assumes the effectiveness, at the time of this offering, of our articles of association, the form of which is filed as an exhibit to the Registration Statement of which this prospectus is a part;

 

•

assumes the consummation of the Reorganization Transactions;

 

•

assumes no exercise by the underwriters of their option to purchase up to                  additional ordinary shares from us;

 

•

assumes an initial public offering price of $             per ordinary share, which is the midpoint of the price range set forth on the cover of this prospectus;

 

•

does not reflect              ordinary shares issuable upon the exercise of options outstanding as of                 , 2021 with a weighted average exercise price of $             per ordinary share; and

 

•

does not reflect              ordinary shares available for future issuance under our new Incentive Award Plan (the “2021 Incentive Award Plan”), which we intend to adopt in connection with this offering.

Summary consolidated financial data

The following tables summarize the consolidated financial data of Bermuda Holdco for the periods and dates indicated. The summary historical consolidated financial data as of and for each of the fiscal years ended December 29, 2019, December 30, 2018, December 31, 2017, January 1, 2017 and January 3, 2016 have been prepared in accordance with GAAP. The balance sheet data as of September 27, 2020 and the statement of operations and cash flow data for the nine months ended September 27, 2020 and September 29, 2019 have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The statement of operations and cash flow data for the years ended December 29, 2019, December 30, 2018 and December 31, 2017 have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The statement of operations and cash flow data for the years ended January 1, 2017 and January 3, 2016 have been derived from our audited consolidated financial statements not included in this prospectus. In the opinion of management, the unaudited financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of such financial data.

Our historical financial data is not necessarily indicative of our future performance. The summary consolidated financial data set forth below should be read in conjunction with “Risk factors,” “Capitalization,” “Dilution,” “Selected consolidated financial data,” “Management’s discussion and analysis of financial condition and results of operations” and our unaudited consolidated financial statements and audited consolidated financial statements included elsewhere in this prospectus.

 

		Fiscal nine months ended												Fiscal year ended
($ in millions, except per share data)		September 27, 2020				September 29, 2019								December 29, 2019				December 30, 2018				December 31, 2017				January 1, 2017				January 3, 2016
		(Unaudited)
Statement of operations data:
Net revenue		$	1,249.6			$	1,327.8							$	1,801.5			$	1,787.3			$	1,781.7			$	1,695.6			$	1,543.4
Cost of revenue, excluding amortization of intangible assets			650.2				684.0								922.4				930.5				897.7				906.3				842.2
Gross profit			599.4				643.8								879.1				856.8				884.0				789.3				701.2
Operating expenses:
Selling, marketing and administrative expenses			347.9				379.5								515.1				491.6				499.8				531.5				484.7
Research and development expense			82.1				73.7								98.0				98.7				96.4				99.9				107.1
Amortization of intangible assets			98.7				98.7								131.7				128.8				162.0				159.6				154.5
Intangible asset impairment charge			—				—								—				—				11.0				—				—
Gain on bargain purchase of Day 2 Countries			—				—								—				—				—				1.0				(32.5	)
Other operating expense, net			22.8				36.7								48.8				71.2				79.5				53.3				33.7
Total operating expenses			551.5				588.6								793.6				790.3				848.7				845.3				747.5

		Fiscal nine months ended												Fiscal year ended
($ in millions, except per share data)		September 27, 2020				September 29, 2019								December 29, 2019				December 30, 2018				December 31, 2017				January 1, 2017				January 3, 2016
		(Unaudited)
Income (loss) from operations			47.9				55.2								85.5				66.5				35.3				(56.0	)			(46.3	)
Other expense (income):
Interest expense, net			148.6				177.7								231.4				235.6				239.8				216.9				210.8
Tax indemnification expense (income)			11.6				31.4								29.2				(13.1	)			(124.1	)			5.5				(1.3	)
Other expense (income), net			61.1				34.5								5.7				61.6				(66.1	)			109.3				61.1
Total other expense			221.3				243.6								266.3				284.1				49.6				331.7				270.6
Loss before (benefit from) provision for income taxes			(173.4	)			(188.4	)							(180.8	)			(217.6	)			(14.3	)			(387.7	)			(316.9	)
(Benefit from) provision for income taxes			(2.4	)			(29.9	)							(23.9	)			31.2				102.0				3.0				13.7
Net loss		$	(171.0	)		$	(158.5	)						$	(156.9	)		$	(248.8	)		$	(116.3	)		$	(390.7	)		$	(330.6	)
Per share data:
Basic and diluted net loss per share attributable to common stockholders		$	(1.86	)		$	(1.73	)						$	(1.72	)		$	(2.73	)		$	(1.28	)		$	(4.31	)		$	(3.65	)
Basic and diluted weighted-average common shares outstanding			91.9				91.4								91.3				91.0				90.9				90.6				90.5

 

		Fiscal nine months ended												Fiscal year ended
($ in millions)		September 27, 2020				September 29, 2019								December 29, 2019				December 30, 2018				December 31, 2017				January 1, 2017				January 3, 2016
		(Unaudited)
Cash flow data:
Net cash (used in) provided by:
Operating activities		$	(48.6	)		$	97.0							$	143.0			$	69.6			$	68.0			$	(59.9	)		$	(46.5	)
Investing activities			(27.5	)			(47.5	)							(68.5	)			(87.1	)			(118.0	)			(187.4	)			(31.4	)
Financing activities			71.3				(51.9	)							(64.4	)			(8.2	)			84.9				159.0				0.9
Cash paid for interest			155.5				120.0								189.7				218.8				222.3				201.8				211.3
Cash paid for income taxes, net			13.7				6.0								8.4				13.4				9.1				20.6				15.9

		As of
($ in millions)		September 27, 2020						December 29, 2019				December 30, 2018				December 31, 2017				January 1, 2017				January 3, 2016
		(Unaudited)
Consolidated balance sheet data:
Cash and cash equivalents		$	68.6					$	72.0			$	56.4			$	93.3			$	60.8			$	152.7
Total assets			3,334.6						3,589.2				3,687.4				3,936.8				3,865.7				4,230.8
Working capital(1)			234.7						138.7				188.8				234.0				79.0				278.0
Total liabilities			4,361.6						4,402.0				4,342.1				4,353.5				4,195.4				4,169.3
Accumulated deficit			(1,876.6	)					(1,705.6	)			(1,548.9	)			(1,312.0	)			(1,195.7	)			(805.0	)
Total stockholders’ (deficit) equity			(1,027.0	)					(812.8	)			(654.7	)			(416.7	)			(329.7	)			61.5

 

		Fiscal nine months ended										Fiscal year ended
($ in millions)		September 27, 2020				September 29, 2019						December 29, 2019				December 30, 2018				December 31, 2017				January 1, 2017
		(Unaudited)
Other financial and operating data
Net revenue—Clinical Laboratories		$	819.2			$	845.5					$	1,142.3			$	1,102.5			$	1,097.9			$	1,008.5
Net revenue—Transfusion Medicine			414.5				439.6						598.0				616.1				598.7				611.0
Core revenue(2)			1,233.7				1,285.1						1,740.3				1,718.6				1,696.6				1,619.5
Core revenue growth rate(2)			(4.0)%				0.8%						1.3%				1.3%				4.8%				10.7%
Core revenue constant currency growth rate(2)(3)			(2.7)%				2.9%						2.9%				1.0%				4.8%				N/A
Adjusted EBITDA(4)(5)			322.4				348.4						477.5				467.8				477.6				445.5
Adjusted EBITDA margin(4)(5)(6)			25.8%				26.2%						26.5%				26.2%				26.8%				26.3%
Adjusted Net Income(4)(5)			22.1				12.6						32.7				6.7				39.9				N/A

 

(1)

We define working capital as current assets less current liabilities. Refer to our consolidated financial statements included elsewhere in this prospectus for further details regarding our current assets and current liabilities.

 

(2)

Core revenue refers collectively to revenue generated in our Clinical Laboratories and our Transfusion Medicine lines of business which historically make up more than 95% of our net revenue.

 

(3)

When we use the term “constant currency,” it means that we have translated local currency revenues for all reporting periods into U.S. dollars using the same comparable foreign currency exchange rates. This additional non-GAAP financial information is not meant to be considered in isolation from or as substitute for financial information prepared in accordance with GAAP. The following table reconciles core revenue to core revenue constant currency growth rate for the periods presented:

 

		Fiscal nine months ended										Fiscal year ended
($ in millions)		September 27, 2020(b)				September 29, 2019(b)						December 29, 2019(b)				December 30, 2018				December 31, 2017(a)
		(Unaudited)
Core revenue			1,233.7				1,285.1						1,740.3				1,718.6				1,696.6
Foreign currency translation			14.9				(1.7)						0.2				(27.2	)			(21.7)
Core revenue constant currency			1,248.6				1,283.4						1,740.5				1,691.4				1,674.9
Core revenue constant currency growth rate			(2.7)%				2.9%						2.9%				1.0%				4.8%

 

(a)

Core revenue and Core revenue constant currency does not include revenue from Day 2 Countries (as defined herein) prior to their respective acquisition dates.