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While no longer at the helm of Tabula Rasa Healthcare, former CEO Calvin Knowlton and his wife Orsula Knowlton, the company's former president and chief new business and marketing officer, will still be getting paychecks from the company into 2024.
The Knowltons' separation agreement, which includes more than $4.7 million in cash and stock for the couple, was disclosed in documents the South Jersey medical technology company filed with the Securities and Exchange Commission.
Moorestown-based Tabula Rasa (NASDAQ: TRHC) released its third quarter financial report earlier this month, which showed the company's revenue increased 14% to $77.1 million, up from $67.9 million during the same period in 2021. The company, however, remained in the red, posting a net loss of $25.9 million compared to a loss of $11.8 million during the third quarter of last year. Tabula Rasa said the decline was "largely driven by costs, including stock-based compensation of $8.1 million and other expenses related to the leadership transition and cooperation agreement" with Indaba Capital Management announced on Sept. 14.
On Sept. 13, the Knowltons stepped down from their executive positions at the company after several months of battling with Indaba Capital, a San Francisco-based hedge fund and Tabula Rasa's largest outside investor. The couple co-founded Tabula Rasa, a developer and provider of software and services related to medication safety and management, in 2009.
Indaba in July called for the removal of the Knowltons citing poor management and decision-making, such as acquiring businesses it later sold at a loss, which led to the "sustained value destruction" of Tabula Rasa since the Burlington County company went public in 2016.
Tabula Rasa went public at $12 a share. By the time Indaba called for a management change, the company's stock was at $2.53 per share — a drop of 79% from the IPO price. The company's stock closed Wednesday at $3.78 per share.
The details of the separation agreement show both Calvin and Orsula Knowlton will receive their base salary for a period of 18 months, starting on the first payroll date following the Sept. 13 employment termination date.
Calvin Knowlton's base pay is $566,500 and Orsula Knowlton's is $463,500, according to the SEC documents.
The Knowltons will also receive, according to the SEC filing, continued health insurance coverage for 18 months and reimbursement for reasonable fees and costs they incur for outplacement services during the 12 months following the termination date, up to a maximum of $25,000.
Additionally, Calvin Knowlton had 424,707 unvested shares of restricted stock that became vested. All his other restricted stock awards, including all performance stock unit awards, that were unvested were terminated and canceled.
Orsula Knowlton had 301,542 unvested shares of restricted stock that became vested. Her other restricted stock awards, including all performance stock unit awards, that were unvested were also terminated and canceled.
The value of the vested shares could not be precisely determined based on the available information in the SEC filing. Tabula Rasa's opening stock price on Sept. 13 was $4.45 per share, putting the values of their shares on that date at about $1.9 million and $1.3 million, respectively.
The separation agreement also disclosed Calvin and Orsula Knowlton both entered into agreements with Tabula Rasa to provide consulting and advisory services to company’s board of directors and interim CEO Brian Adams on an as-needed basis, at the direction of the board between Sept. 13 and the end of this year. The payment rate for Calvin Knowlton is $265 per hour; the rate for Orsula Knowlton is $216 per hour.
The services include assisting with the transition of key client relationships and strategic business partners and prospects. The company's quarterly report did not indicate if either one provided such consulting services.
Efforts to reach the Knowltons for comment on the separation agreement were unsuccessful. The agreement does contain restrictions on what the couple can publicly discuss.
