Procaps Group, S.A. (NASDAQ: PROC) (“Procaps” or the “Company”), a
leading integrated LatAm healthcare and pharmaceutical services,
today issued the below letter to shareholders from José Antonio
Vieira, CEO of Procaps, providing critical updates on the Company’s
ongoing independent investigation, financial restatement,
governance enhancements, and commitment to long-term stability.
“Dear Shareholders,
As we navigate recent challenges at Procaps, I
want to personally reaffirm our dedication to transparency,
compliance, and sustainable management. We are committed to
addressing the findings from our ongoing investigation with the
utmost integrity for Procaps to emerge as a stronger, more
resilient company and have developed a remediation plan to ensure
we achieve that goal.
Our approach centers on four key areas of
improvement:
1.
Completing the Independent Investigation
The independent investigation led by our Audit
Committee, supported by external advisors, to address historical
accounting matters remains ongoing. As disclosed in our recent 6-K
filing, the preliminary findings underscore challenges from past
practices; however, we have made considerable progress toward
resolution and are focused on implementing the necessary steps to
strengthen Procaps for the future.
As part of this process, we have confirmed the
need for applicable historical financial statements to be restated.
While we aim to progress the restatement process and finalize the
2023 20-F as promptly as possible, we recognize that, given the
complexity of this effort, our timeline to do so will extend
significantly beyond our original expectations. We are focused on
ensuring our disclosures are complete, accurate, and aligned with
required standards.
2. Addressing Financial Discrepancies
and Financial Restatement
The independent investigation has identified
certain historical transactions that were improperly accounted for
and other accounting errors, as described in our most recent 6-K
filing. These transactions, although they originated prior to our
listing on Nasdaq, have had a continuing impact our financial
statements.
We are working diligently to address these
matters, including through the restatement of our financials and
enhancements to our internal controls. Our commitment to integrity
and transparency is unwavering, and we will continue to take all
necessary steps to rectify these issues.
3. Governance
and Compliance Enhancements
To strengthen oversight and in response to the
findings of the ongoing independent investigation, we are
implementing a comprehensive remediation plan designed to
strengthen governance and compliance across all levels. Key
elements of this plan include:
-
Board and Management Oversight: To strengthen governance at the
highest levels, we are implementing a multi-year plan to transition
to an independent board that includes independent search for
directors - led by the Nomination and Governance Committee - with
expertise in SOX compliance, corporate governance, and industry
knowledge and any other key capabilities essential to Procaps'
strategic goals. Following the recent resignation of a Board
member, the Board is actively working to identify a qualified
successor who will support our commitment to enhanced governance
and alignment with long-term objectives.
-
Strengthening Internal Controls: As part of our remediation Plan,
we are redesigning our finance and supporting functions, such as
centralizing oversight of all finance areas, launching training
programs focused on internal controls and SOX compliance, and
enhancing the oversight role of our Audit Committee. These measures
are intended to prevent future issues and restore the trust of our
stakeholders.
-
Enhanced Financial Controls and Compliance: We are reinforcing
financial reporting processes and SOX compliance by implementing
automated controls, improved monitoring systems, and regular SOX
compliance training for all relevant teams. These improvements are
already underway and will be further strengthened as necessary in
response to the findings of the investigation.
-
Thorough Personnel and Contract Review: We are conducting a
comprehensive review of all other personnel potentially involved in
the transactions being investigated and assessing existing related
party contracts for alignment with our governance standards.
-
Culture of Ethics and Transparency: We are launching targeted
training programs to promote ethics and compliance across all
organizational levels, reinforcing a culture of integrity and
accountability.
These initiatives are designed to reinforce
ethical governance across every level of the organization, with a
commitment to ensuring that Procaps operates in accordance with the
highest industry standards.
4.
Restructuring Plan and Financial Stability
We recognize the critical importance of a stable
financial foundation. In conjunction with our remediation plan, we
are also pursuing a long-term restructuring plan that involves
exploring new funding sources and other strategies to support the
long-term sustainability of our operations.
This includes proactive engagement with our
lenders, shareholders, and strategic partners to secure new capital
and resources aligned with our strategic goals.
Executing this Restructuring Plan is essential
not only for our financial health and to achieve our full
potential, but also for maintaining strong relationships with
suppliers, providers, and other stakeholders.
Commitment to Long-Term Stability and
Value Creation
While addressing these internal priorities, we
remain focused on creating long-term stability and value creation
for our stakeholders. The support of our shareholders and lenders
remains critical as we implement our remediation and strategic
plans and restructure our business to operate more efficiently and
sustainably.
We will continue to keep you informed of our
progress and provide regular updates as we implement the
Remediation Plan and progress with the Restructuring Plan.
Thank you for your continued support and trust
in Procaps Group.
Sincerely,
José Antonio VieiraCEO of Procaps Group”
This press release shall not constitute an offer
to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of any securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
About Procaps Group
Procaps Group, S.A. (“Procaps”) (NASDAQ: PROC)
is a leading developer of pharmaceutical and nutraceutical
solutions, medicines, and hospital supplies that reach more than 50
countries in all five continents. Procaps has a direct presence in
13 countries in the Americas and nearly 5,000 employees working
under a sustainable model. Procaps develops, manufactures, and
markets over-the-counter (OTC) pharmaceutical products,
prescription pharmaceutical drugs (Rx), nutritional supplements,
and high-potency clinical solutions.
For more information, visit www.procapsgroup.com
or Procaps’ investor relations website
investor.procapsgroup.com.
Investor Contact:Melissa Angelini
ir@procapsgroup.com +1 754 260-6476investor.procapsgroup.com
Forward-Looking StatementsThis
press release includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Forward-looking
statements may be identified by the use of words such as
"forecast," "intend," "seek," "target," "anticipate," "believe,"
"expect," "estimate," "plan," "outlook," “goal,” “objective,”
“will,” “may,” “should,” “can,” “project” and other similar
expressions that predict or indicate future events, objectives,
results or trends or that are not statements of historical matters.
Such forward-looking statements include, without limitation,
projected financial information, the Company’s expectations about
the timing of completion of the independent investigation,
financial restatement and filing of the 2023 20-F, the Company’s
statements regarding seeking additional financing, statements
related to the Company’s plans, outlook and strategy, other Company
initiatives and objectives or forecasts related to the Company’s
business, performance and industry. These forward-looking
statements involve substantial risks and uncertainties, or
assumptions that may cause actual results or performance to be
materially different from those expressed or implied by these
forward-looking statements, and actual results could vary
materially from these forward-looking statements. Factors that may
cause future results to differ materially from management’s current
expectations include, among other things, the discovery of
additional information relevant to the investigation; the
conclusions of management (and the timing of the conclusions)
concerning matters relating to the investigation; the timing of the
review by, and the conclusions of, the Company’s independent
registered public accounting firm regarding the internal
investigation and the Company’s financial statements; the
possibility that additional errors may be identified; the risk that
the completion and filing of the 2023 20-F will take longer than
expected; the inability to successfully implement or execute on the
Company’s strategic objectives or initiatives, including governance
and compliance enhancements; the inability to obtain additional
financing; the inability to successfully implement or execute on
our restructuring plans; changes in applicable laws or regulations;
the possibility that the Company may be adversely affected by other
economic, business, and/or competitive factors; the inability of
the Company to execute on its expense reductions plans or growth
initiatives; and other risks and uncertainties indicated from time
to time in documents filed or to be filed with the Securities and
Exchange Commission ("SEC") by the Company. The Company disclaims
any obligation to update information contained in these
forward-looking statements whether as a result of new information,
future events, or otherwise.
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