spok-20220216
false000128994500012899452022-02-162022-02-16

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
Date of Report (Date of Earliest Event Reported): February 16, 2022
 
SPOK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
 
 
Delaware 001-32358 16-1694797
(State or other jurisdiction
of incorporation)		 (Commission
File Number)		 (I.R.S. Employer
Identification No.)
 
5911 Kingstown Village Pkwy, 6th Floor22315
Alexandria,Virginia
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (800) 611-8488
Not Applicable
Former name or former address, if changed since last report
 
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 classTrading symbolName of each exchange on which registered
Common Stock, par value $0.0001 per shareSPOKNASDAQ


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 February 17, 2022, Spok Holdings, Inc. (the “Company”) issued a press release announcing financial results for the fourth quarter and year ended December 31, 2021. A copy of the press release is furnished as Exhibit 99.1 to this report.
The information in this Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (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 of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 2.05 Costs Associated with Exit or Disposal Activities.
On February 16, 2022, the Board of Directors of the Company (“the Board”) authorized a new strategic business plan that includes a restructuring program to discontinue Spok Go, eliminate all associated costs, and to optimize the Company’s existing structure to drive continued cost improvement. As part of the restructuring program, the Company intends to eliminate approximately 175 positions, primarily in research and development, but also in professional services, selling and marketing, and back-office support functions.
The Company expects to record one-time, pre-tax restructuring charges of approximately $6.4 million to $10.2 million, comprised of approximately $5.0 million to $6.6 million in severance and personnel related costs and approximately $1.4 million to $3.6 million in contractual terminations. Future cash payments related to these charges are expected to generally be within the same ranges. The restructuring actions associated with these charges are expected to be substantially complete in 2022.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 16, 2022, the Company entered into a letter agreement with Vincent D. Kelly, the Company’s President and Chief Executive Officer. The letter agreement extends the term of Mr. Kelly’s employment agreement with the Company through December 31, 2024 and sets forth certain changes to Mr. Kelly’s compensation. For 2022, Mr. Kelly’s annual base salary is $600,000, his target annual bonus award level is $500,000 and the target amount of his annual long-term incentive award is valued at $1,000,000. These amounts are reduced for 2023 and 2024 to $500,000, $400,000 and $800,000, respectively.
In addition, on February 16, 2022, the Company approved an amended retention bonus program for certain company officers, including Michael Wallace, the Company’s Chief Financial Officer and Chief Operating Officer, and Sharon Woods Keisling, the Company’s Corporate Secretary and Treasurer. Under the program, as amended, retention bonuses will be paid in a single lump sum upon the earlier of December 31, 2022 or the date of consummation of a Company sale or other change in control transaction, subject to the recipient’s continued employment with the Company through such date. This retention bonus program amends and replaces, without duplication, the retention bonus program previously approved by the Company on September 11, 2021 in connection with the commencement of its strategic alternatives review process. The amended retention bonus program provides retention bonuses of $200,000 for Mr. Wallace and $87,500 for Ms. Woods Keisling.



Item 7.01 Regulation FD Disclosure.
On February 17, 2022, the Company issued a press release announcing the new strategic business plan described under Item 2.05 above. A copy of the press release is furnished as Exhibit 99.2 to this report.
The information in this Item 7.01 of this Current Report on Form 8-K, including Exhibit 99.2, 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 8.01 Other Events.
On February 16, 2022, the Board declared a regular quarterly dividend of $0.3125 per share of the Company's common stock payable on March 30, 2022, to stockholders of record on March 16, 2022.
Also on February 16, 2022, the Board authorized a share repurchase program for up to $10 million of the Company’s common stock. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit
No.Description
99.1
99.2
104Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)




SIGNATURES
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 hereunto duly authorized.
 
  
Spok Holdings, Inc.
Date:February 17, 2022 By:/s/ Michael W. Wallace
  Name:Michael W. Wallace
  Title:Chief Financial Officer





Exhibit 99.1
NEWS RELEASE
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CONTACT:
Lisa Fortuna or Mike Cummings            
312-445-2866        
[email protected]    

Spok Reports Fourth Quarter and Full Year 2021 Results
Dividend Increases by 150%, from $0.125 per quarter to $0.3125 per quarter in Connection with Announcement of New Strategic Business Plan

Alexandria, Va. (February 17, 2022) - Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the fourth quarter and full year ended December 31, 2021. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.3125 per share, payable on March 30, 2022, to stockholders of record on March 16, 2022.

2021 Fourth Quarter and Full Year Highlights:
•Achieved full year 2021 financial guidance for revenue, adjusted operating expenses and capital expenditures
•Cash, cash equivalents and short-term investments balance of $59.6 million at December 31, 2021, and no debt
•Wireless ARPU (average revenue per unit) in 2021 totaled $7.30, equivalent to 2020
•Launched the Next Generation of Paging with the Launch of its new GenATM Pager
•Subsequent to the end of the fourth quarter 2021, was voted top-rated secure communications platform by healthcare industry clients in Black Box Industry 2022 survey



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Exhibit 99.1
NEWS RELEASE
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2021 Fourth Quarter and Full Year Results:
Consolidated revenue for the fourth quarter of 2021 under Generally Accepted Accounting Principles (“GAAP”) was $34.5 million, compared to $37.5 million in the fourth quarter of 2020. For the year ended December 31, 2021, consolidated revenue totaled $142.2 million, compared to $148.2 million in the prior year.
For the Three Months Ended December 31,For the year ended December 31,
(Dollars in thousands)20212020Change (%)20212020Change (%)
Wireless revenue
Paging revenue$18,513 $19,513 (5.1)%$75,845 $79,916 (5.1)%
Product and other revenue690 787 (12.3)%2,981 3,677 (18.9)%
Total wireless revenue$19,203 $20,300 (5.4)%$78,826 $83,593 (5.7)%
Software revenue
License$1,495 $1,487 0.5 %$5,494 $5,179 6.1 %
Professional services3,783 4,777 (20.8)%17,161 17,910 (4.2)%
Hardware573 961 (40.4)%2,267 2,841 (20.2)%
Subscription155 42 269.0 %423 66 540.9 %
Maintenance9,335 9,913 (5.8)%37,982 38,591 (1.6)%
Total software revenue15,341 17,180 (10.7)%63,327 64,587 (2.0)%
Total revenue$34,544 $37,480 (7.8)%$142,153 $148,180 (4.1)%

Operating expenses in the fourth quarter of 2021 totaled $55.4 million and included $15.7 million in noncash impairment charges for capitalized software development, and $1.1 million in additional payroll and related costs from less time on furlough for employees in 2021 compared to 2020. Operating expenses for the full year 2021 totaled $169.9 million and included $15.7 million in noncash impairment charges for capitalized software development, and $3.8 million in additional payroll and related costs from less time on furlough for employees in 2021 compared to 2020.

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Exhibit 99.1
NEWS RELEASE
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Adjusted operating expenses (which excludes depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs) totaled $39.5 million in the fourth quarter of 2021. Adjusted operating expenses for the full year 2021 totaled $154.3 million.
For the three months ended December 31,For the year ended December 31,
(Dollars in thousands)20212020
Change (%)
20212020
Change (%)
Operating expenses$55,355 $61,930 10.6 %$169,871 $170,845 0.6 %
Adjusted operating expenses$39,535 $37,109 (6.5)%$154,284 $147,342 (4.7)%

GAAP net loss for the fourth quarter of 2021 was $16.7 million, or a loss of $0.86 per diluted share, compared to net loss of $46.6 million, or $2.44 per diluted share, in the fourth quarter of 2020. GAAP net loss for the year ended December 31, 2021, was $22.2 million, or a loss of $1.14 per diluted share, compared to net loss of $44.2 million, or $2.32 per diluted share, in the prior year period.

For the fourth quarter of 2021, adjusted EBITDA loss totaled $3.8 million compared to adjusted EBITDA of $1.7 million in the fourth quarter of 2020. For the year ended December 31, 2021, adjusted EBITDA loss totaled $4.9 million, compared to adjusted EBITDA of $6.3 million in the prior year period. Based on the Company's fourth quarter assessment of its capitalized software development costs, the 2021 fourth quarter and full year net loss included a non-cash impairment charge of $15.7 million, which increased the 2021 fourth quarter and full year net loss per basic share by $0.81.
For the three months ended December 31,For the year ended December 31,
(Dollars in thousands)20212020
Change (%)
20212020
Change (%)
Net loss$(16,669)$(46,610)64.2 %$(22,180)$(44,225)49.8 %
Basic and diluted net loss per common share$(0.86)$(2.44)64.8 %$(1.14)$(2.32)50.9 %
Adjusted EBITDA$(3,788)$1,719 (320.4)%$(4,892)$6,346 (177.1)%

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Exhibit 99.1
NEWS RELEASE
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Financial Outlook:
Regarding financial guidance, the Company expects the following for 2022:
(Unaudited and in millions)Current Guidance
Full Year 2022
FromTo
Revenue
Wireless$71.6 $77.0 
Software$54.4 $62.2 
Total Revenue$126.0 $139.2 
Adjusted Operating Expenses$118.8 $128.6 
Capital Expenditures$3.4 $4.2 

2021 Fourth Quarter Call:

A conference call will be held today, February 17, 2022, at 8:30 a.m. Eastern Time to discuss fourth quarter and full year 2021 results and Spok's new strategic business plan that was announced today.

Telephone Conference Dial-Ins:

Participant / Guest (Toll-Free):
877-407-0890
Participant / Guest (International):
201-389-0918


Webcast Links:

Live-Link (after the event the OnDemand version will be available under this URL as well):

https://www.webcast-eqs.com/spok02172022_en/en
* * * * * * * * *
About Spok
Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Alexandria, Virginia, is proud to be a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on Spok Care Connect® platforms to enhance workflows for clinicians and support administrative compliance. Our customers send over 100 million messages each month through their Spok®
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Exhibit 99.1
NEWS RELEASE
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solutions. When seconds count and patients' lives are at stake, Spok enables smarter, faster clinical communication. For more information, visit spok.com or follow @spoktweets on Twitter.
Spok is a trademark of Spok Holdings, Inc. Spok Go and Spok Care Connect are trademarks of Spok, Inc.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: adjusted operating expenses and adjusted EBITDA. Adjusted operating expenses excludes depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs. Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax expense/benefit, depreciation, amortization and accretion expense, goodwill and capitalized software development impairment costs, severance and restructuring costs, and stock-based compensation expense and includes capitalized software development costs.
We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to Spok's financial condition and results of operations. We use these non-GAAP measures for financial, operational, and budgetary decision-making purposes, to understand and evaluate our core operating performance and trends, and to generate future operating plans. We believe that these non-GAAP financial measures permit us to more thoroughly analyze key financial metrics used to make operational decisions and allow us to assess our core operating results. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other software companies who present similar non-GAAP financial measures. We adjust for certain items because we do not regard these costs as reflective of normal costs related to the ongoing operation of the business in the ordinary course. In general, these items possess one or more of the following characteristics: non-cash expenses, factors outside of our control, items that are non-operational in nature, and unusual items not expected to occur in the normal course of business.
We do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures, which are included in this press release, and not to rely on any single financial measure to evaluate our business.


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Exhibit 99.1
NEWS RELEASE
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Safe Harbor Statement under the Private Securities Litigation Reform Act
Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, risks related to Spok's new strategic business plan, including its ability to maximize revenue and cash generation from its established businesses and return capital to shareholders, risks related to the COVID-19 pandemic and its effect on our business and the economy, other economic conditions such as recessionary economic cycles, higher interest rates, inflation and higher levels of unemployment, declining demand for paging products and services, continued demand for our software products and services, our dependence on the U.S. healthcare industry, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, particularly third-party consulting services and research and development costs, future capital needs, competitive pricing pressures, competition from traditional paging services, other wireless communications services and other software providers, many of which are substantially larger and have much greater financial and human capital resources, changes in customer purchasing priorities or capital expenditures, government regulation of our products and services and the healthcare and health insurance industries, reliance upon third-party providers for certain equipment and services, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services, the effects of changes in accounting policies or practices, our ability to realize the benefits associated with our deferred tax assets, future impairments of our long-lived assets, amortizable intangible assets and goodwill, the effects of our limited-duration shareholder rights plan, and the outcome of Spok's strategic alternatives review, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.



Tables to Follow
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SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
For the three months endedFor the year ended
12/31/202112/31/202012/31/202112/31/2020
Revenue:
Wireless$19,203 $20,300 $78,826 $83,593 
Software15,341 17,180 63,327 64,587 
Total revenue34,544 37,480 142,153 148,180 
Operating expenses:
Cost of revenue (exclusive of items shown separately below)(b)
8,278 8,631 32,574 31,355 
Research and development4,958 4,166 17,920 15,828 
Technology operations7,469 7,371 29,247 29,843 
Selling and marketing5,123 5,004 20,168 19,467 
General and administrative(b)
11,170 9,248 43,853 40,289 
Depreciation, amortization and accretion2,694 2,503 10,446 9,056 
Goodwill and capitalized software development impairment15,663 25,007 15,663 25,007 
Total operating expenses55,355 61,930 169,871 170,845 
% of total revenue160.2 %165.2 %119.5 %115.3 %
Operating loss(20,811)(24,450)(27,718)(22,665)
% of total revenue(60.2)%(65.2)%(19.5)%(15.3)%
Interest income56 51 320 687 
Other income54 95 66 208 
Loss before income taxes(20,701)(24,304)(27,332)(21,770)
Benefit from (provision for) income taxes4,032 (22,306)5,152 (22,455)
Net loss$(16,669)$(46,610)$(22,180)$(44,225)
Basic and diluted net loss per common share$(0.86)$(2.44)$(1.14)$(2.32)
Basic weighted average common shares outstanding19,483,004 19,088,329 19,404,477 19,028,918 
Cash dividends declared per common share0.125 0.125 0.500 0.500 
Key statistics:
Units in service847 885 847 885 
Average revenue per unit (ARPU)$7.26 $7.30 $7.30 $7.30 
Bookings$14,793 $16,528 $59,543 $68,994 
Backlog$43,361 $50,504 $43,361 $50,504 
(a) Slight variations in totals are due to rounding.
(b) The Company made reclassifications of $3.3 million and $2.8 million from General and administrative expense to the Cost of revenue expense category for the years ended December 31, 2021, and 2020, respectively.



SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
For the three months ended
12/31/20219/30/20216/30/20213/31/202112/31/20209/30/20206/30/20203/31/2020
Revenue:
Wireless$19,203 $19,644 $19,859 $20,120 $20,300 $20,828 $21,078 $21,386 
Software15,341 16,207 15,864 15,916 17,180 16,865 14,661 15,881 
Total revenue34,544 35,851 35,723 36,036 37,480 37,693 35,739 37,267 
Operating expenses:
Cost of revenue (exclusive of items shown separately below) (b)
8,278 8,312 7,876 8,108 8,631 7,347 6,492 8,884 
Research and development4,958 4,178 4,278 4,506 4,166 3,459 2,754 5,449 
Technology operations7,469 7,439 7,087 7,252 7,371 7,357 7,212 7,904 
Selling and marketing5,123 5,165 4,980 4,900 5,004 4,272 3,831 6,361 
General and administrative (b)
11,170 11,746 10,654 10,283 9,248 10,191 10,219 10,631 
Depreciation, amortization and accretion2,694 2,568 2,457 2,727 2,503 2,335 2,072 2,146 
Goodwill and capitalized software development impairment15,663 — — — 25,007 — — — 
Total operating expenses55,355 39,408 37,332 37,776 61,930 34,961 32,580 41,375 
% of total revenue160.2 %109.9 %104.5 %104.8 %165.2 %92.8 %91.2 %111.0 %
Operating (loss) income(20,811)(3,557)(1,609)(1,740)(24,450)2,732 3,159 (4,108)
% of total revenue(60.2)%(9.9)%(4.5)%(4.8)%(65.2)%7.2 %8.8 %(11.0)%
Interest income56 141 61 61 51 127 146 363 
Other income (expense)54 10 29 (27)95 151 101 (137)
(Loss) income before income taxes(20,701)(3,406)(1,519)(1,706)(24,304)3,010 3,406 (3,882)
Benefit from (provision for) income taxes4,032 912 800 (591)(22,306)155 353 (657)
Net (loss) income$(16,669)$(2,494)$(719)$(2,297)$(46,610)$3,165 $3,759 $(4,539)
Basic net (loss) income per common share$(0.86)$(0.13)$(0.04)$(0.12)$(2.44)$0.17 $0.20 $(0.24)
Diluted net (loss) income per common share(0.86)(0.13)(0.04)(0.12)(2.44)0.16 0.20 (0.24)
Basic weighted average common shares outstanding19,483,004 19,464,893 19,395,364 19,272,786 19,088,329 19,051,502 19,016,853 18,958,716 
Diluted weighted average common shares outstanding19,483,004 19,464,893 19,395,364 19,272,786 19,088,329 19,208,452 19,115,148 18,958,716 
Key statistics:
Units in service847 853 869 874 885 898 915 926 
Average revenue per unit (ARPU)$7.26 $7.29 $7.32 $7.34 $7.30 $7.34 $7.24 $7.31 
Bookings$14,793 $17,116 $13,037 $14,597 $16,528 $21,414 $15,411 $15,639 
Backlog$43,361 $45,584 $45,632 $48,849 $50,504 $51,708 $48,441 $49,052 
(a) Slight variations in totals are due to rounding.
(b) The Company made reclassifications from General and administrative expense to the Cost of revenue expense category of $0.8 million for the first and second quarters of 2021, $0.9 million for the third and fourth quarters of 2021, $0.6 million for the first and second quarters of 2020, and $0.8 million for the third and fourth quarters of 2020.


SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
12/31/202112/31/2020
ASSETS(Unaudited)
Current assets:
Cash and cash equivalents$44,583 $48,729 
Short-term investments14,999 29,995 
Accounts receivable, net26,908 29,934 
Prepaid expenses6,641 8,958 
Other current assets922 1,269 
Total current assets94,053 118,885 
Non-current assets:
Property and equipment, net6,746 7,815 
Operating lease right-of-use assets15,821 14,016 
Capitalized software development, net— 10,179 
Goodwill99,175 99,175 
Intangible assets, net— 417 
Deferred income tax assets, net31,653 25,826 
Other non-current assets706 978 
Total non-current assets154,101 158,406 
Total assets$248,154 $277,291 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$5,292 $6,685 
Accrued compensation and benefits13,948 14,103 
Deferred revenue25,608 27,686 
Operating lease liabilities5,405 5,264 
Other current liabilities4,745 3,702 
Total current liabilities54,998 57,440 
Non-current liabilities:
Asset retirement obligations6,355 7,289 
Operating lease liabilities11,883 9,456 
Other non-current liabilities1,227 2,493 
Total non-current liabilities19,465 19,238 
Total liabilities74,463 76,678 
Commitments and contingencies
Stockholders' equity:
Preferred stock$— $— 
Common stock2 2 
Additional paid-in capital97,291 91,780 
Accumulated other comprehensive loss(1,588)(1,452)
Retained earnings77,986 110,283 
Total stockholders' equity173,691 200,613 
Total liabilities and stockholders' equity$248,154 $277,291 
(a) Slight variations in totals are due to rounding.



SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)
(Unaudited and in thousands)
For the year ended
12/31/202112/31/2020
Operating activities:
Net loss$(22,180)$(44,225)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, amortization and accretion10,446 9,056 
Goodwill and capitalized software development impairment15,663 25,007 
Valuation allowance— 22,108 
Deferred income tax (benefit) expense(5,483)438 
Stock-based compensation7,239 5,508 
Provisions for credit losses, service credits and other1,162 1,212 
Changes in assets and liabilities:
Accounts receivable1,833 (1,588)
Prepaid expenses and other assets2,594 1,445 
Net operating lease liabilities763 10 
Accounts payable, accrued liabilities and other(679)4,017 
Deferred revenue(3,390)3,175 
Net cash provided by operating activities7,968 26,163 
Investing activities:
Purchases of property and equipment(4,393)(3,455)
Capitalized software development(10,842)(11,252)
Purchase of short-term investments(44,990)(59,864)
Maturity of short-term investments60,000 60,000 
Net cash used in investing activities(225)(14,571)
Financing activities:
Cash distributions to stockholders(10,025)(9,771)
Proceeds from issuance of common stock under the Employee Stock Purchase Plan132 301 
Purchase of common stock for tax withholding on vested equity awards(1,860)(903)
Net cash used in financing activities(11,753)(10,373)
Effect of exchange rate on cash and cash equivalents(136)149 
Net (decrease) increase in cash and cash equivalents(4,146)1,368 
Cash and cash equivalents, beginning of period48,729 47,361 
Cash and cash equivalents, end of period$44,583 $48,729 
Supplemental disclosure:
Income taxes (refunds received) paid$(126)$1 
(a) Slight variations in totals are due to rounding.



SPOK HOLDINGS, INC.
CONSOLIDATED REVENUE
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
For the three months ended
12/31/20219/30/20216/30/20213/31/202112/31/20209/30/20206/30/20203/31/2020
Revenue
Paging$18,513 $18,844 $19,135 $19,353 $19,513 $19,961 $19,990 $20,451 
Non-paging$690 $800 $724 $767 $787 $867 $1,088 $935 
Total wireless revenue$19,203 $19,644 $19,859 $20,120 $20,300 $20,828 $21,078 $21,386 
License$1,495 $1,674 $818 $1,507 $1,486 $1,988 $749 $955 
Services$3,783 $4,159 $4,865 $4,354 $4,778 $4,772 $3,812 $4,549 
Equipment$573 $596 $482 $616 $961 $554 $601 $725 
Subscription$155 $133 $90 $45 $42 $24 $— $— 
Operations revenue$6,006 $6,562 $6,255 $6,522 $7,267 $7,338 $5,162 $6,229 
Maintenance revenue$9,335 $9,645 $9,609 $9,394 $9,913 $9,527 $9,499 $9,652 
Total software revenue$15,341 $16,207 $15,864 $15,916 $17,180 $16,865 $14,661 $15,881 
Total revenue$34,544 $35,851 $35,723 $36,036 $37,480 $37,693 $35,739 $37,267 
(a) Slight variations in totals are due to rounding.


SPOK HOLDINGS, INC.
CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
For the three months ended
12/31/20219/30/20216/30/20213/31/202112/31/20209/30/20206/30/20203/31/2020
Cost of revenue(b)
Payroll and related$5,500 $5,435 $4,920 $5,369 $5,447 $4,941 $4,350 $5,785 
Cost of sales(b)
2,227 2,206 2,330 2,118 2,538 1,867 1,689 2,560 
Stock-based compensation150 250 285 322 136 148 134 119 
Other401 421 341 299 510 391 319 420 
Total cost of revenue(b)
8,278 8,312 7,876 8,108 8,631 7,347 6,492 8,884 
Research and development
Payroll and related4,329 4,291 4,333 4,475 4,358 4,147 4,115 4,761 
Outside services1,760 1,759 2,060 2,277 2,358 2,113 1,803 1,584 
Capitalized software development(2,603)(2,621)(2,698)(2,920)(3,046)(2,906)(3,596)(1,705)
Stock-based compensation234 435 305 475 246 240 243 236 
Other1,238 314 278 199 250 (135)189 573 
Total research and development4,958 4,178 4,278 4,506 4,166 3,459 2,754 5,449 
Technology operations
Payroll and related2,584 2,585 2,323 2,467 2,467 2,246 2,213 2,712 
Site rent3,104 3,122 3,143 3,196 3,313 3,467 3,399 3,398 
Telecommunications826 828 825 837 857 949 961 1,001 
Stock-based compensation53 139 131 137 48 52 47 43 
Other902 765 665 615 686 643 592 750 
Total technology operations7,469 7,439 7,087 7,252 7,371 7,357 7,212 7,904 
Selling and marketing
Payroll and related3,151 3,365 3,161 3,135 2,912 2,773 2,538 3,583 
Commissions1,153 924 1,244 1,105 1,178 1,059 852 1,212 
Stock-based compensation91 234 254 319 192 208 194 172 
Advertising and events630 527 247 161 539 151 160 784 
Other98 115 74 180 183 81 87 610 
Total selling and marketing5,123 5,165 4,980 4,900 5,004 4,272 3,831 6,361 
General and administrative(b)
Payroll and related4,040 3,911 3,564 3,818 3,373 3,476 3,355 4,134 
Stock-based compensation675 958 806 986 726 968 744 612 
Facility rent, office, and technology costs2,579 2,692 2,484 2,480 2,412 2,260 2,276 2,068 
Outside services2,392 3,078 2,219 1,825 1,584 2,148 2,043 2,036 
Taxes, licenses and permits(b)
408 211 214 214 (314)190 213 239 
Bad debt255 (29)328 106 202 178 628 43 
Other821 925 1,039 854 1,265 971 960 1,499 
Total general and administrative(b)
11,170 11,746 10,654 10,283 9,248 10,191 10,219 10,631 
Depreciation, amortization and accretion2,694 2,568 2,457 2,727 2,503 2,335 2,072 2,146 
Goodwill and capitalized software development impairment15,663 — — — 25,007 — — — 
Operating expenses$55,355 $39,408 $37,332 $37,776 $61,930 $34,961 $32,580 $41,375 
Capital expenditures$1,295 $905 $1,480 $727 $638 $934 $846 $1,063 
(a) Slight variations in totals are due to rounding.
(b) The Company made reclassifications from General and administrative expense to the Cost of revenue expense category of $0.8 million for the first and second quarters of 2021, $0.9 million for the third and fourth quarters of 2021, $0.6 million for the first and second quarters of 2020, and, $0.8 million for the third and fourth quarters of 2020.


SPOK HOLDINGS, INC.
UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN
AND AVERAGE REVENUE PER UNIT (ARPU) (a)
(Unaudited and in thousands)
For the three months ended
12/31/20219/30/20216/30/20213/31/202112/31/20209/30/20206/30/20203/31/2020
Paging units in service
Beginning units in service (000's)853 869 874 885 898 915 926 938 
Gross placements19 23 31 20 20 25 35 24 
Gross disconnects(25)(39)(36)(31)(33)(42)(46)(36)
Net change(6)(16)(5)(11)(13)(17)(11)(12)
Ending units in service847 853 869 874 885 898 915 926 
End of period units in service % of total (b)
Healthcare84.7 %84.6 %84.5 %84.1 %83.6 %83.7 %83.6 %82.6 %
Government4.8 %4.8 %4.9 %4.8 %5.3 %5.3 %5.5 %5.4 %
Large enterprise3.9 %4.1 %4.1 %4.3 %4.3 %4.3 %4.4 %5.5 %
Other(b)6.6 %6.4 %6.4 %6.8 %6.8 %6.6 %6.6 %6.5 %
Total100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %
Account size ending units in service (000's)
1 to 100 units55 57 58 59 61 63 65 67 
101 to 1,000 units154 154 155 163 167 167 165 171 
>1,000 units638 642 656 652 657 668 685 688 
Total847 853 869 874 885 898 915 926 
Account size net loss rate(c)
1 to 100 units(3.5)%(1.7)%(1.7)%(3.3)%(3.2)%(2.9)%(3.1)%(3.0)%
101 to 1,000 units— %(0.6)%(4.9)%(2.4)%— %1.5 %(4.2)%(1.0)%
>1,000 units(0.6)%(2.1)%0.6 %(0.8)%(1.6)%(2.5)%(0.4)%(1.2)%
Total(0.7)%(1.8)%(0.6)%(1.2)%(1.4)%(1.9)%(1.3)%(1.3)%
Account size ARPU
1 to 100 units$11.58 $11.67 $11.69 $11.72 $11.62 $11.80 $11.65 $12.01 
101 to 1,000 units8.30 8.38 8.35 8.33 8.35 8.37 8.24 8.34 
>1,000 units6.63 6.65 6.68 6.68 6.62 6.67 6.57 6.59 
Total$7.26 $7.29 $7.32 $7.34 $7.30 $7.34 $7.24 $7.31 
(a) Slight variations in totals are due to rounding.
(b) Other includes hospitality, resort and indirect units
(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.



SPOK HOLDINGS, INC.
RECONCILIATION OF NET LOSS TO EBITDA (a)
(Unaudited and in thousands)
For the three months endedFor the year ended
12/31/202112/31/202012/31/202112/31/2020
Net loss$(16,669)$(46,610)$(22,180)$(44,225)
Add back:
(Benefit from) provision for income taxes(4,032)22,306 (5,152)22,455 
Other income(54)(95)(66)(208)
Interest income(56)(51)(320)(687)
Operating loss(20,811)(24,450)(27,718)(22,665)
Depreciation, amortization and accretion2,694 2,503 10,446 9,056 
EBITDA$(18,117)$(21,947)$(17,272)$(13,609)
Capitalized software development costs(2,603)(3,046)(10,842)(11,252)
Stock-based compensation
1,203 1,348 7,239 5,508 
Goodwill and capitalized software development impairment15,663 25,007 15,663 25,007 
Severance and restructuring66 357 320 692 
Adjusted EBITDA$(3,788)$1,719 $(4,892)$6,346 
(a) Slight variations in totals are due to rounding.

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)
(Unaudited and in thousands)
For the three months endedFor the year ended
12/31/202112/31/202012/31/202112/31/2020
Operating expenses$55,355 $61,930 $169,871 $170,845 
Add back:
Depreciation, amortization and accretion(2,694)(2,503)(10,446)(9,056)
Goodwill and capitalized software development impairment(15,663)(25,007)(15,663)(25,007)
Capitalized software development costs2,603 3,046 10,842 11,252 
Severance and restructuring(66)(357)(320)(692)
Adjusted operating expenses$39,535 $37,109 $154,284 $147,342 
(a) Slight variations in totals are due to rounding.




SPOK HOLDINGS, INC.
2022 FINANCIAL OUTLOOK
(Unaudited and in millions)
Guidance Range
FromTo
Revenues
Wireless$71.6 $77.0 
Software54.4 62.2 
Total Revenues$126.0 $139.2 
Adjusted Operating Expenses (a)$118.8 $128.6 
Capital Expenditures$3.4 $4.2 
RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)
(Unaudited and in millions)
Guidance Range
FromTo
Operating expenses$128.7 $142.3 
Add back:
Depreciation, amortization and accretion(3.5)(3.5)
Severance and restructuring costs$(6.4)$(10.2)
Adjusted operating expenses$118.8 $128.6 
(a) Adjusted operating expenses exclude depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs.

Exhibit 99.2
NEWS RELEASE
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CONTACT:
Lisa Fortuna or Mike Cummings            
312-445-2866        
[email protected]    

Spok Announces New Strategic Business Plan

Plan Prioritizes Maximizing Free Cash Flow and Returning Capital to Shareholders

Increases Dividend by 150%, from $0.125 per quarter to $0.3125 per quarter

Authorizes Share Repurchase Program of up to $10 million

Strategic Review Process Remains Ongoing; Board Is Open to All Potential Alternatives to Maximize Value


ALEXANDRIA, VA. – February 17, 2022 –The Board of Directors (the “Board”) of Spok Holdings, Inc. (NASDAQ: SPOK) (“Spok” or the “Company”), a global leader in healthcare communications, today announced a new strategic business plan prioritizing maximizing free cash flow and returning capital to shareholders.

Highlights of New Strategic Business Plan:

•Spok will maximize revenue and cash generation from its established lines of business: the Spok Care Connect Suite including Spok Mobile, and Wireless services. The Company has an excellent track record of driving revenue from these business lines and enjoys a significant market leadership position. Spok plans to invest in a targeted manner in these important and valuable franchises to continue its long-standing relationships with the nation’s leading healthcare providers.

•The Company will discontinue Spok Go® and intends to eliminate all associated costs.

•Spok will expand upon its already-disciplined expense management by streamlining its management structure, rationalizing externals costs, reducing capital expenditures (Capex) and consolidating offices.

Prioritizing Returning Capital to Shareholders:

•Effective immediately, Spok is increasing its regular quarterly dividend by 150%, from $0.125 per share to $0.3125 per share, and intends to continue this dividend for the foreseeable future, resulting in an aggregate annual dividend of $1.25 per share. The Company will continuously evaluate its capital allocation strategy and may consider increasing its quarterly dividend in the future.

•The Board also authorized a share repurchase program of up to $10 million of the Company’s common stock. This authorization allows the Company to return additional capital to shareholders by opportunistically repurchasing the Company’s shares. Spok will continue to evaluate this as it transitions through its strategic pivot throughout 2022.

“After extensive analysis by our Board, management team and advisors, we are confident that this strategic shift will create significant value for shareholders while allowing Spok to continue to provide critical communications services to healthcare customers,” said Vincent D. Kelly, president and chief executive officer of Spok Holdings, Inc. “While
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discontinuing Spok Go was a difficult decision, ultimately the ongoing challenge of the COVID-19 pandemic has made it untenable for the platform to gain sufficient traction with customers or for our business to continue operating with our current level of costs and personnel. Importantly, we have extensive experience operating our established communication solutions and maximizing revenue and cash generation from them. We believe this is the best path forward for Spok at this time.”

Strategic Review Update

Spok’s previously announced review of strategic alternatives remains ongoing. While this process has not yet resulted in a transaction, the Board remains open to all potential alternatives to maximize value. The Board and its advisors continue to engage with potential acquirers regarding a sale of the Company, including Acacia Research Corporation regarding its offer to acquire the Company. There can be no assurance that the strategic alternatives review process will lead to a transaction or the sale of all or part of the Company.

“Spok’s Board is dedicated to maximizing value for all our shareholders,” said Royce Yudkoff, Chairman of the Spok Board. “As we made clear when launching our alternatives review, our goal is to ensure that we have a comprehensive process to permit all interested parties to participate fully and fairly and allow the Board to make an informed decision regarding actionable transactions. We remain focused on achieving an outcome that is in the best interests of all Spok shareholders.”

Dividend and Share Repurchase Program

On February 16, 2022, the Board declared a $0.3125 per share dividend payable on March 30, 2022 to shareholders of record on March 16, 2022. If declared and paid as intended, the annual aggregate dividend in 2022 would be $1.25 per share. The declaration and payment of future dividends is subject to the Board’s discretion and will depend on financial and legal requirements and other considerations.

Under the $10 million repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the Securities and Exchange Commission and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate Spok to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at Spok’s discretion.

RBC Capital Markets is serving as financial advisor and Latham & Watkins LLP is serving as legal advisor to Spok.

A conference call will be held today, February 17, 2022, at 8:30 a.m. Eastern Time to discuss Spok’s new strategic business plan as well as fourth quarter and full year 2021 results.

Telephone Conference Dial-Ins
Participant / Guest (Toll-Free):877-407-0890
Participant / Guest (International):201-389-0918

Webcast Links:
Live-Link (after the event the OnDemand version will be available under this URL as well):
https://www.webcast-eqs.com/spok02172022_en/en

* * * * * * * * *
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About Spok
Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Alexandria, Virginia, is proud to be a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on Spok Care Connect® platforms to enhance workflows for clinicians and support administrative compliance. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count and patients' lives are at stake, Spok enables smarter, faster clinical communication. For more information, visit spok.com or follow @spoktweets on Twitter.
Spok is a trademark of Spok Holdings, Inc. Spok Go and Spok Care Connect are trademarks of Spok, Inc.

Safe Harbor Statement under the Private Securities Litigation Reform Act
Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s future operating and financial performance, future dividend payments and the outcome of the Company’s strategic alternatives review, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, risks related to Spok’s new strategic business plan, including its ability to maximize revenue and cash generation from its established businesses and return capital to shareholders, risks related to the COVID-19 pandemic and its effect on our business and the economy, other economic conditions such as recessionary economic cycles, higher interest rates, inflation and higher levels of unemployment, declining demand for paging products and services, continued demand for our software products and services, our dependence on the U.S. healthcare industry, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, particularly third-party consulting services and research and development costs, future capital needs, competitive pricing pressures, competition from traditional paging services, other wireless communications services and other software providers, many of which are substantially larger and have much greater financial and human capital resources, changes in customer purchasing priorities or capital expenditures, government regulation of our products and services and the healthcare and health insurance industries, reliance upon third-party providers for certain equipment and services, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services, the effects of changes in accounting policies or practices, our ability to realize the benefits associated with our deferred tax assets, future impairments of our long-lived assets, amortizable intangible assets and goodwill, the effects of our limited-duration shareholder rights plan, and the outcome of Spok's strategic alternatives review, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.
Contact
Lisa Fortuna or Mike Cummings
+1 (312) 445-2866
[email protected]


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