0001558370-24-015720 | 10-Q | XBRL Viewer | Adagio Medical Holdings INC

Debt

9 Months Ended

Sep. 30, 2024

Note 9 - Debt

Outstanding debt as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30, 2024		December 31, 2023
	(Successor)		(Predecessor)
Convertible Securities Notes	$	13,750	$	—
October 2022 Convertible Notes measured at fair value		—		12,561
April 2023 Convertible Notes measured at fair value		—		14,757
November 2023 Convertible Notes measured at fair value		—		9,112
SVB term loan		—		1,838
Total outstanding debt	$	13,750	$	38,268

October 2022 Convertible Notes (Predecessor)

On October 27, 2022, the Legacy Adagio entered into the October 2022 Convertible Notes with investors for the issuance and sale of convertible promissory notes with an aggregate principal amount of $9.5 million at an interest rate of eight percent (8.0%) per annum.

On April 4, 2023, the October 2022 Convertible Notes, which had an original maturity date of October 27, 2023, were amended to extend the maturity date to the latest of (i) January 5, 2024, (ii) termination of agreements between the Legacy Adagio and ARYA in connection with a non-binding summary of certain proposed terms and conditions of a potential business combination, or (iii) the termination or lapse of the exclusivity period as defined in the non-binding term sheet as mentioned above. The October 2022 Convertible Notes agreement was also amended to subordinate the October 2022 Convertible Notes to the April 2023 Convertible Notes (as described below) and provide for the conversion of all principals and accrued interest in respect of all the October 2022 Convertible Notes into shares of Series E Preferred Stock of the Legacy Adagio in connection with the Business Combination.

On November 28, 2023, the October 2022 Convertible Notes agreement was further amended to subordinate the October 2022 Convertible Notes to the April 2023 Convertible Notes and the November 2023 Convertible Notes (as described below). Upon the consummation of the Business Combination, all principal and accrued interest in respect of the October 2022 Convertible Notes was converted into shares of the Legacy Adagio common stock, when multiplied by the exchange ratio applicable to the Legacy Adagio common stock in the Business Combination, entitled the holder of this note to receive a number of shares of the same class of common stock that are issued in the Private Investment in Public Equity Financing (“PIPE Financing”) equal to the then outstanding principal amount and any accrued and unpaid interest under this note, divided by 75% of the effective price of each share of common stock sold in the PIPE Financing.

On February 13, 2024, the October 2022 Convertible Notes agreement was further amended to extend the maturity date to the termination of the Business Combination Agreement, and subordinate the October 2022 Convertible Notes to the April 2023 Convertible Notes, the November 2023 Convertible Notes, and February 2024 Convertible Notes (as described below).

The total of $9.5 million principal was received by the Legacy Adagio as of December 31, 2022. As of December 31, 2023 (Predecessor), the principal amount outstanding was $9.5 million.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor), from January 1, 2024 to July 30, 2024 (Predecessor), and the three and nine months ended September 30, 2023 (Predecessor), Legacy Adagio has recognized the interest expense of $62.5 thousand, $0.4 million, $0.2 million and $0.6 million, respectively.

Upon the consummation of the Business Combination, all principal and accrued interest in respect to the October 2022 Convertible Notes were converted into 8,661,985 shares of Legacy Adagio common stock. Further, on Closing Date, the 8,661,985 Legacy Adagio common stocks were converted to 1,444,899 Company’s Common Stock based on the exchange ratio set forth in the Business Combination Agreement.

Bridge Financing Notes (Predecessor)

April 2023 Convertible Notes

On April 4, 2023, Legacy Adagio issued a $5.0 million convertible promissory note that matures on the latest of (i) January 5, 2024, (ii) termination of agreements between Legacy Adagio and ARYA in connection with a non-binding summary of the Business Combination, or (iii) the termination or lapse of the exclusivity period as defined in the non-binding term sheet as mentioned above. The April 2023 Convertible Notes accrues simple interest at eight percent (8.0%) per annum. Additionally, Legacy Adagio obtained the right to issue up to $10.0 million in additional convertible promissory notes available beginning one month after April 4, 2023 through the occurrence of an ARYA stockholder vote with regard to a transaction. During the period from April 4, 2023 to December 31, 2023, Legacy Adagio issued the additional $10.0 million.

On November 28, 2023, the April 2023 Convertible Notes were amended to align certain terms of the April 2023 Convertible Notes with the November 2023 Convertible Notes.

Upon the consummation of the Business Combination, this note was automatically converted into the type of securities that are issued in the PIPE Financing in an amount equal to the then-outstanding principal amount and any accrued and unpaid interest, divided by the effective price of the securities sold in the PIPE Financing.

As of December 31, 2023 (Predecessor), the principal amount outstanding was $15.0 million.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor), from January 1, 2024 to July 30, 2024 (Predecessor), and the three and nine months ended September 30, 2023 (Predecessor), Legacy Adagio has recognized the interest expense of $0.1 million, $0.6 million, $0.2 million and $0.3 million, respectively.

November 2023 Convertible Notes

On November 28, 2023, Legacy Adagio issued to Perceptive PIPE Investor a $2.0 million convertible promissory note that matures on the latest of (i) January 5, 2024, (ii) termination of agreements between Legacy Adagio and ARYA in connection with a non-binding summary of the Business Combination, or (iii) the termination or lapse of the exclusivity period as defined in the non-binding term sheet as mentioned above. The November 2023 Convertible Notes accrues simple interest at eight percent (8.0%) per annum. Additionally, Legacy Adagio obtained the right to issue up to $6.0 million of Delayed Draw Commitment.

In December 2023, the November 2023 Convertible Notes were amended to permit the issuance of a Delayed Draw Commitment in the principal amount of $1.0 million and $2.0 million on December 13, 2023 and December 28, 2023, respectively. The combined $3.0 million convertible promissory notes were issued pursuant to the clause and terms in the November 2023 Convertible Notes agreement.

As of December 31, 2023 (Predecessor), the principal amount outstanding was $5.0 million.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor), and from January 1, 2024 to July 30, 2024 (Predecessor), Legacy Adagio has recognized the interest expense of $50.6 thousand and $0.3 million, respectively.

May 2024 Convertible Notes

On May 21, 2024, Legacy Adagio issued to Perceptive PIPE Investor a $3.0 million convertible promissory note that matures upon the termination of the Business Combination Agreement in accordance with its terms. The May 2024 Convertible Notes accrues simple interest at eight percent (8.0%) per annum.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor) and from January 1, 2024 to July 30, 2024 (Predecessor), Legacy Adagio has recognized the interest expense of $19.7 thousand and $46.0 thousand, respectively.

June 2024 Convertible Notes

On June 25, 2024, Legacy Adagio issued to Perceptive PIPE Investor a $2.5 million convertible promissory note that matures upon the termination of the Business Combination Agreement in accordance with its terms. The June 2024 Convertible Notes accrues simple interest at eight percent (8.0%) per annum.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor) and from January 1, 2024 to July 30, 2024 (Predecessor), Legacy Adagio has recognized the interest expense of $16.4 thousand and $19.2 thousand, respectively.

July 2024 Convertible Notes

On July 23, 2024, Legacy Adagio issued a $1.0 million convertible promissory note to Perceptive PIPE Investor that matures upon the termination of the Business Combination Agreement in accordance with its terms. It accrues simple interest at eight percent (8.0%) per annum.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor), Legacy Adagio has recognized the interest expense of $1.3 thousand.

Pursuant to the Business Combination Agreement, the outstanding $29.5 million principal along with the accrued but unpaid interest of the Bridge Financing Notes, was converted in exchange for 4,372,607 shares of the Company’s Common Stock and 3,540,000 Base Warrants as part of the PIPE Financing.

February 2024 Convertible Notes (Predecessor)

On February 13, 2024, the Legacy Adagio issued to Perceptive PIPE Investor a principal of $7.0 million convertible promissory note that matures upon the termination of the Business Combination Agreement in accordance with its terms. The February 2024 Convertible Notes accrues simple interest at eight percent (8.0%) per annum.

Upon the consummation of the Business Combination, the February 2024 Convertible Notes was automatically transferred to the Company in connection with the issuance of the Convertible Securities Notes to Perceptive PIPE Investor, pursuant to, and in accordance with, the note purchase agreement and the Convertible Security Subscription Agreement (as defined below), dated February 13, 2024, by and among the Company, ARYA, Legacy Adagio and Perceptive PIPE Investor. Any interest accrued on the principal amount of the February 2024 Convertible Notes will be forfeited in connection with the transfer of the notes to the Company.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor) and from January 1, 2024 to July 30, 2024 (Predecessor), Legacy Adagio has recognized the interest expense of $46.0 thousand and $0.3 million, respectively.

On the Closing Date, the $7.0 million of February 2024 Convertible Notes were converted into $7.0 million Convertible Securities Notes and 525,000 Convert Warrants.

SVB Term Loan (Predecessor)

On February 3, 2023, Legacy Adagio entered into an agreement to obtain an initial term loan advance of $3.0 million and a right to issue a subsequent term loan advance of $2.0 million pursuant to the LSA. The loans mature on January 1, 2025 and Legacy Adagio must make monthly payments at a floating rate per annum equal to the greater of (1) seven percent (7.0%) and (2) the market prime rate plus one and one half of one percent (1.5%).

In connection with the issuance of the SVB Term Loan, Legacy Adagio issued liability - classified warrants with a fair value of $28.5 thousand to purchase 32,720 shares of common stock of Legacy Adagio (“Initial Warrants”), and a contingent right, with a fair value of $7.1 thousand, to obtain an additional 16,360 shares of the common stock (“Additional Warrants”) upon the nonoccurrence of the Interest Only Milestone. The Interest Only Milestone (“Milestone”) refers to a specific condition that is met on or before April 30, 2023. To satisfy this Milestone, Legacy Adagio must ensure that no event of default has occurred. If this condition is met, Legacy Adagio must provide SVB (i) the intent for the sale of all capital stock of Legacy Adagio, or (ii) an executed term sheet for a priced equity financing of at least $40.0 million from the sale of Legacy Adagio’s capital stock.

The initial recognition of the warrant liabilities and the contingent right resulted in a discount of $35.6 thousand to the SVB Term Loan. The discount is being amortized to interest expense over the term of the LSA.

As of December 31, 2023, the outstanding principal of SVB Term Loan was $1.9 million and the unamortized debt discount was $19.4 thousand.

For the periods from July 1, 2024 to July 30, 2024 (Predecessor), from January 1, 2024 to July 30, 2024 (Predecessor), and the three and nine months ended September 30, 2023 (Predecessor), Legacy Adagio has recognized the interest expense was $9.0 thousand, $87.3 thousand, $66.5 thousand, and $0.2 million, respectively.

Prior to the Closing, the existing SVB Term Loan of Legacy Adagio has a net balance of $1.0 million, including $1.0 million of principal and accrued interest, and an unamortized debt discount of $9.7 thousand. The unpaid principal and accrued interest were carried as assumed liabilities to the Company and paid at the Closing.

Convertible Securities Notes (Successor)

In connection with the execution of the Business Combination Agreement, Convert Investors executed the Convertible Security Subscription Agreement dated February 13, 2024, which was amended on June 20, 2024, with ListCo. In accordance with the agreement, ListCo issued on the Closing Date to the Convert Investors $20.0 million of Convertible Securities Notes and 1,500,000 Convert Warrants.

The total of $20.0 million Convertible Securities Notes will be convertible into shares of the Company’s Common Stock at a conversion price of $10.00 per share, subject to adjustment per the terms of the agreement. In the event of default, the Company may irrevocably elect in the event of default notice to permit the holder to effect alternate conversion, for which the conversion calculation and price are specified in the agreement.

The total of 1,500,000 Convert Warrants, each of which will be exercisable on a cashless basis or for one share of the Company’s Common Stock at $24.00 per share, subject to adjustment. The Convertible Securities Notes have a maturity of three years and nine months after the Closing and interest will be payable in cash or compound as additional principal outstanding which accrues on a quarterly basis.

The conversion of the February 2024 Convertible Notes was carried out on the same terms as the other Convert Investors executing the Convertible Security Subscription Agreement.

For the periods from July 31, 2024 to September 30, 2024 (Successor), the Company has recognized interest expense of $0.4 million.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Stock-Based Compensation - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	2 Months Ended	7 Months Ended	12 Months Ended
	Sep. 30, 2024	Jul. 30, 2024	Dec. 31, 2023
2022 Plan
Number of shares
Beginning balance (shares)		747,001
Forfeited (shares)		(6,592)
Options forfeited in connection with the Business Combination (shares)		0
Ending balance (shares)		740,409	747,001
Vested and expected to vest (shares)		0
Vested and exercisable (shares)		0
Weighted Average Exercise Price
Beginning balance (in dollars per share)		$ 6.17
Forfeited (in dollars per share)		4.82
Options forfeited in connection with the Business Combination (in dollars per share)		0
Ending balance (in dollars per share)		6.18	$ 6.17
Vested and expected to vest (in dollars per share)		0
Vested and exercisable (in dollars per share)		$ 0
Weighted Average Remaining Contractual Life (in years)
Weighted Average Remaining Contractual Life (in years)			7 years 5 months 12 days
Aggregate Intrinsic Value [Abstract]
Beginning balance		$ 72
Ending balance			$ 72
Stock option exercises (in shares)		0
Fair value of awards vested		$ 300
Unrecognized compensation cost		$ 400
2024 Employee Stock Purchase Plan
Number of shares
Beginning balance (shares)	0
Options forfeited in connection with the Business Combination (shares)	(7,587)
Ending balance (shares)	7,587
Vested and expected to vest (shares)	7,587
Vested and exercisable (shares)	7,587
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 0
Options forfeited in connection with the Business Combination (in dollars per share)	8.97
Ending balance (in dollars per share)	8.97
Vested and expected to vest (in dollars per share)	8.97
Vested and exercisable (in dollars per share)	$ 8.97
Aggregate Intrinsic Value [Abstract]
Beginning balance	$ 0
Options issued as part of the Business Combination	68
Ending balance	68
Vested and expected to vest	68
Vested and exercisable	$ 68

Subsequent Events

9 Months Ended

Sep. 30, 2024

Subsequent Events

Subsequent Events

Note 18 - Subsequent Events

The Company evaluates subsequent events and transactions that occurred after the condensed consolidated balance sheet date through the date that the financial statements were issued. During this period, the Company did not identify any subsequent events that would have required adjustment in the condensed consolidated financial statements.

Fair Value Measurements (Details) - USD ($) $ in Thousands	21 Months Ended
Fair Value Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Liabilities:
Common stock warrant liabilities		$ 78
Fair value measurements recurring basis
Liabilities:
Fair value asset transfer level 1 to level 2	$ 0
Level 1 \| Fair value measurements recurring basis
Assets:
Money market account	27,298	24
Level 3 \| Fair value measurements recurring basis
Liabilities:
Convertible notes payables	13,750	36,430
Level 3 \| Fair value measurements recurring basis \| PIPE Pre-funded warrants
Liabilities:
Derivative Liability	1,722
Level 3 \| Fair value measurements recurring basis \| Convert Warrants
Liabilities:
Derivative Liability	$ 743
Level 3 \| Fair value measurements recurring basis \| SVB Warrants
Liabilities:
Derivative Liability		$ 78

Inventory, net (Details) - USD ($)	1 Months Ended	2 Months Ended	3 Months Ended	7 Months Ended
Inventory, net (Details) - USD ($)	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Dec. 31, 2023
Inventory, net.
Raw materials		$ 2,547,000			$ 2,211,000
Work-in-Process		509,000			197,000
Finished goods		1,083,000			914,000
Total inventory		4,139,000			$ 3,322,000
Obsolete and expired inventory expensed	$ 41,000.0	$ 58,000.0	$ 25,000.0	$ 400,000
Inventory scrap value			$ 87,000.0

Mezzanine Equity and Stockholders' Equity (Deficit) - Convertible Preferred Stock (Details)			7 Months Ended
	Jul. 31, 2024 shares	Jun. 25, 2024 shares	Jul. 30, 2024 USD ($) shares	Sep. 30, 2024 $ / shares	Jun. 30, 2024 USD ($) shares	Dec. 31, 2023 USD ($) $ / shares shares	Sep. 30, 2023 USD ($) shares	Jun. 30, 2023 USD ($) shares	Dec. 31, 2022 USD ($) shares
Mezzanine Equity and Stockholders' Equity (Deficit)
Exchange preferred stock for pre-funded warrants (shares)			(207,902)
Number of Shares Authorized			4,939,946			4,939,946
Shares Issued			4,732,044		4,732,044	4,939,946	4,939,946	4,939,946	4,939,946
Conversion of preferred stock						4,939,946
Carrying Value \| $			$ 86,783,000		$ 86,783,000	$ 91,469,000	$ 91,469,000	$ 91,469,000	$ 91,469,000
Number of Common Stock Equivalent Shares						4,939,946
Liquidation Preference \| $						$ 91,637,000
Convertible preferred stock	4,732,044
Convertible preferred stock issued	4,732,044
Preferred stock conversion ratio	1
Legacy Adagio
Mezzanine Equity and Stockholders' Equity (Deficit)
Number of the Company's Common Stock issued	6,771,769
Legacy Adagio \| Adagio Medical Inc
Mezzanine Equity and Stockholders' Equity (Deficit)
Number of the Company's Common Stock issued	789,337
Series A Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Number of Shares Authorized						270,856
Conversion of preferred stock						270,856
Carrying Value \| $						$ 2,500,000
Conversion Price Per Share \| $ / shares				$ 9.23		$ 9.23
Number of Common Stock Equivalent Shares						270,856
Liquidation Preference \| $						$ 2,500,000
Series B Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Number of Shares Authorized						815,730
Conversion of preferred stock						815,730
Carrying Value \| $						$ 10,626,000
Conversion Price Per Share \| $ / shares				13.04		$ 13.04
Number of Common Stock Equivalent Shares						815,730
Liquidation Preference \| $						$ 10,637,000
Series C Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Number of Shares Authorized						981,596
Conversion of preferred stock						981,596
Carrying Value \| $						$ 15,988,000
Conversion Price Per Share \| $ / shares				16.30		$ 16.30
Number of Common Stock Equivalent Shares						981,596
Liquidation Preference \| $						$ 16,000,000
Series D Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Number of Shares Authorized						992,064
Conversion of preferred stock						992,064
Carrying Value \| $						$ 19,990,000
Conversion Price Per Share \| $ / shares				20.16		$ 20.16
Number of Common Stock Equivalent Shares						992,064
Liquidation Preference \| $						$ 20,000,000
Series E Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Number of preferred stocks extinguished		207,902
Number of Shares Authorized						1,879,700
Conversion of preferred stock						1,879,700
Carrying Value \| $						$ 42,365,000
Conversion Price Per Share \| $ / shares				$ 22.61		$ 22.61
Number of Common Stock Equivalent Shares						1,879,700
Liquidation Preference \| $						$ 42,500,000
Series E Preferred Stock Class \| Pre-funded Warrants
Mezzanine Equity and Stockholders' Equity (Deficit)
Exchange preferred stock for pre-funded warrants (shares)		207,902

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	1 Months Ended	2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended	12 Months Ended
	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Cash flows from operating activities:
Net income (loss)		$ 3,606		$ (21,278)	$ (27,969)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		316		646	399
Non-cash operating lease expense		22		98	119
Stock-based compensation				642	329
Provision for inventory impairment		(15)		15	21
Amortization of term loan discount				10	11
Loss on disposal of property and equipment				62	3
Change in fair value of convertible notes payable	$ 1,907	(3,255)	$ 1,051	(2,059)	4,084
Change in fair value of warrant liabilities	(177)	(4,973)	23	(191)	83
Net change in operating assets and liabilities:
Accounts receivable, net		15		(32)	(73)
Inventory, net		(130)		(773)	57
Prepaid expenses and other current assets		(1,259)		(95)	381
Accounts payable		(356)		(2,628)
Accrued liabilities		(651)		511	1,102
Accrued transaction costs				7,446	241
Other accrued liabilities		344		1,734	1,848
Operating lease liabilities		(22)		(98)	917
Other Long-Term Liabilities					(121)
Deferred taxes					7
Net cash used in operating activities		(6,358)		(15,990)	(18,561)
Cash flows from investing activities:
Purchases of property and equipment		(578)		(368)	(313)
Purchases of software					(7)
Net cash used in investing activities		(578)		(368)	(320)
Cash flows from financing activities:
Proceeds from exercise of common stock options					11
Proceeds from issuance of convertible notes payable				16,500	13,000
Proceeds from term loan					3,000
Repayment of non-convertible term loan				(867)	(714)
Net cash provided by financing activities				15,633	15,297
Effect of foreign currency translation on cash and cash equivalents		42		24	18
Net change in cash and cash equivalents		(6,894)		(701)	(3,566)
Cash and cash equivalents, at beginning of period		35,154		1,383	5,547	$ 5,547
Cash and cash equivalents, at end of period	$ 35,154	$ 28,260	$ 1,981	35,154	1,981	$ 1,383
Supplemental disclosure of cash flow information:
Cash paid for interest				85	154
Supplemental disclosure of noncash investing and financing activities:
Right-of-use assets obtained in exchange for lease liabilities				(216)
Lease liabilities recorded for operating lease right-of-use assets				216
Amount of term loan proceeds allocated to warrant liabilities					$ 36
Exchange preferred stock for pre-funded warrants				$ 4,332
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Successor	Predecessor	Predecessor	Predecessor	Predecessor
Prior to Effect of Business Combination
Cash flows from financing activities:
Cash and cash equivalents, at beginning of period		$ 682
Cash and cash equivalents, at end of period	$ 682			$ 682

Earnings Per Share (EPS)

9 Months Ended

Sep. 30, 2024

Earnings Per Share ("EPS")

Earnings Per Share ("EPS")

Note 15 – Earnings Per Share (“EPS”)

Predecessor

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. Diluted net loss per common share excludes the potential impact of the Company’s convertible preferred stock, common stock warrants, and common stock options because the Company's net losses would cause such shares to be anti-dilutive. Therefore, as the Company recorded net losses in the periods presented, basic and diluted net loss per common share are the same.


		(Predecessor)
		Period from July 1 to July 30, 2024		Period from July 1 to July 30, 2023		Period from January 1 to July 30, 2024		Nine months ending September 30, 2023
Numerator:
Net income (loss) attributable to common stockholders	$	(8,235)	$	(10,761)	$	(21,278)	$	(27,969)
Denominator:
Weighted-average shares outstanding used in computing net income (loss) per share attributable to common stockholders - basic and diluted		987,810		760,572		815,854		759,489
Net income (loss) per share attributable to common stockholders - basic and diluted	$	(8.34)	$	(14.15)	$	(26.08)	$	(36.83)

The following potentially dilutive securities were excluded from the computation of diluted net loss per share calculations for the periods presented because the impact of including them would be anti-dilutive:


	(Predecessor)
	As of July 30, 2024	As of September 30, 2023
Convertible preferred stock	4,732,044	4,939,946
Stock options	740,409	755,559
SVB Warrants	-	49,080
Total potentially dilutive securities	5,472,453	5,744,585

Successor

After the Business Combination, the Successor calculated basic EPS and diluted EPS to common stockholders in conformity with the two-class method required for companies with participating securities. The Company considered (i) the Convertible Securities Notes and (ii) the earnout shares subject to vesting conditions to be participating securities as they participate in any distributions declared by the Company. The Company’s Base Warrants and Convert Warrants are considered as non-participating securities, as the holders are not entitled to any shareholder right prior to the exercise of the Base Warrants and the Convert Warrants. As of the reporting date, none of the Base Warrants or the Convert Warrants were exercised to receive the Company’s Common Stock.

Under the two-class method, undistributed earnings allocated to these participating securities were subtracted from net income in determining net income attributable to common stockholders. Net income attributable to common stockholders was not allocated to Convertible Securities Notes as the holders of Convertible Securities Notes did not have a contractual obligation to share in income.

Further, Basic EPS under the two-class method includes the impact of the Company’s PIPE Pre-funded Warrants as the PIPE Pre-funded Warrants are exercisable for only $0.01 per share (i.e., de minimis cash consideration) without an expiration date and not subject to exercise contingencies.

The Company discloses the Diluted EPS under the if-converted method as such diluted EPS is lower than the diluted EPS calculated under the two-class method. The Earn-out shares subject to vesting conditions are not considered in the denominator for the calculation of diluted EPS as the vesting conditions for the Earn-out shares were not met during the successor reporting period.

The following table sets forth the computation of basic earnings per share attributable to common stockholders and the participating securities for the periods presented (in thousands, except share and per share data):

Basic EPS:


	July 31, 2024 to September 30, 2024 (Successor)
	Common Shares		Convertible Securities Notes		Sponsor Earnout
(amounts in thousands, except the per share information)
Numerator:
Net income allocated to each class of participating securities	$	2,522	$	878	$	206
Denominator:
Weighted-average shares outstanding		14,057,636		—		—
Shares issuable to Convertible Securities Notes		—		4,896,978		—
Sponsor Earnout		—		—		1,147,500

Net income per share attributable to each class of participating securities – Basic	$	0.18	$	0.18	$	0.18

The following table sets forth the computation of diluted earnings per share attributable to common stockholders for the periods presented (in thousands, except share and per share data):

Diluted EPS:


(amounts in thousands, except the per share information)		July 31, 2024 to September 30, 2024 (Successor)

Numerator:
Net income – Basic	$	3,606
Less: Adjustment for fair value changes to convertible securities notes		(3,255)
Net income attributable to common stockholders – Diluted	$	351

Denominator:
Weighted-average shares outstanding – Basic		14,057,636
Weighted-average effect of shares issuable to Convertible Securities Notes (if-converted method)		2,000,000
Weighted-average shares outstanding – Diluted		16,057,636

Net income per share attributable to common shares – Diluted (if-converted method)	$	0.02


		September 30, 2024 (Successor)
Base Warrants		7,528,727
Convert Warrants		1,500,000
Earn-out Shares, subject to vesting conditions		1,147,500
Stock options issued in connection with the Business Combination		7,587
Total potentially dilutive securities		10,183,814

Fair Value Measurements - Convertible promissory notes (Details) - USD ($) $ in Thousands	Feb. 13, 2024	Sep. 30, 2024	Jul. 31, 2024	Jul. 30, 2024	Jul. 23, 2024	Jun. 25, 2024	May 21, 2024	Dec. 31, 2023	Nov. 28, 2023	Apr. 04, 2023	Oct. 27, 2022	Jul. 27, 2022
Fair Value Measurements
Convertible notes payable, current								$ 36,430
October 2022 Convertible Notes
Fair Value Measurements
Principal amount								9,500			$ 9,500	$ 9,500
Interest rate											8.00%	8.00%
April 2023 Convertible Notes
Fair Value Measurements
Principal amount								15,000		$ 5,000
Interest rate										8.00%
Maximum additional debt										$ 10,000
Convertible notes payable, current			$ 15,000							$ 5,000
November 2023 Convertible Notes
Fair Value Measurements
Principal amount								$ 5,000	$ 2,000
Interest rate									8.00%
Maximum additional debt									$ 6,000
Convertible notes payable, current			8,000						$ 2,000
February 2024 Convertible Notes
Fair Value Measurements
Principal amount	$ 7,000
Interest rate	8.00%
Convertible notes payable, current	$ 7,000			$ 7,000
May 2024 Convertible Notes
Fair Value Measurements
Principal amount							$ 3,000
Interest rate							8.00%
Convertible notes payable, current			3,000				$ 3,000
June 2024 Convertible Notes
Fair Value Measurements
Principal amount						$ 2,500
Interest rate						8.00%
Convertible notes payable, current			2,500			$ 2,500
July 2024 Convertible Notes
Fair Value Measurements
Principal amount					$ 1,000
Interest rate					8.00%
Convertible notes payable, current			1,000		$ 1,000
Convertible Securities Notes
Fair Value Measurements
Principal amount	$ 20,000	$ 7,000	$ 20,000
Interest rate	13.00%		13.00%
Convertible notes payable, current	$ 7,000
Cashless exercise of warrants (in shares)	525,000

Debt (Tables)

9 Months Ended

Sep. 30, 2024

Debt

Schedule of debt

Outstanding debt as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30, 2024		December 31, 2023
	(Successor)		(Predecessor)
Convertible Securities Notes	$	13,750	$	—
October 2022 Convertible Notes measured at fair value		—		12,561
April 2023 Convertible Notes measured at fair value		—		14,757
November 2023 Convertible Notes measured at fair value		—		9,112
SVB term loan		—		1,838
Total outstanding debt	$	13,750	$	38,268

Debt - November 2023 Convertible Notes (Details) - USD ($)			1 Months Ended		7 Months Ended	9 Months Ended
	Dec. 28, 2023	Dec. 13, 2023	Jul. 30, 2024	Dec. 31, 2023	Jul. 30, 2024	Sep. 30, 2023	Nov. 28, 2023
Debt
Proceeds from issuance of convertible notes payable					$ 16,500,000	$ 13,000,000
November 2023 Convertible Notes
Debt
Principal amount				$ 5,000,000.0			$ 2,000,000.0
Interest rate							8.00%
Interest			$ 50,600		$ 300,000
Delayed Draw Commitment
Debt
Right to issue additional convertible promissory notes							$ 6,000,000.0
Proceeds from issuance of convertible notes payable	$ 2,000,000.0	$ 1,000,000.0		$ 3,000,000.0

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
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+ Details

Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Accrued Liabilities
Compensation and related expenses	$ 2,131	$ 1,566
Research and development expenses	576	1,191
Other	203	291
Total accrued liabilities	$ 2,910	$ 3,048

Commitments and Contingencies

9 Months Ended

Sep. 30, 2024

Commitments and Contingencies.

Commitments and Contingencies

Note 12 - Commitments and Contingencies

Litigation

The Company is not currently party to any legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings, if any.

Summary of Significant Accounting Policies - Segments (Details)	9 Months Ended
	Sep. 30, 2024 segment
Summary of Significant Accounting Policies
Reporting segments	1

Debt - Schedule of debt (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023	Feb. 03, 2023
Debt
Total outstanding debt	$ 13,750	$ 38,268
Convertible Securities Notes
Debt
Total outstanding debt	$ 13,750
October 2022 Convertible Notes measured at fair value
Debt
Total outstanding debt		12,561
April 2023 Convertible Notes measured at fair value
Debt
Total outstanding debt		14,757
November 2023 Convertible Notes measured at fair value
Debt
Total outstanding debt		9,112
SVB term loan
Debt
Total outstanding debt		$ 1,838	$ 1,000

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

- Definition

Amount, after deduction of unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Accrued Liabilities

9 Months Ended

Sep. 30, 2024

Accrued Liabilities

Accrued Liabilities

Note 8 - Accrued Liabilities

The following table presents details of accrued liabilities as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30,		December 31,
	2024		2023
	(Successor)		(Predecessor)
Compensation and related expenses	$	2,131	$	1,566
Research and development expenses		576		1,191
Other		203		291
Total accrued liabilities	$	2,910	$	3,048

Forward Merger - Pro forma financial information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Forward Merger
Revenue	$ 185	$ 41	$ 465	$ 222
Net income (loss)	$ (12,971)	$ (10,655)	$ (28,987)	$ (26,113)

Inventory, net (Tables)

9 Months Ended

Sep. 30, 2024

Inventory, net.

Schedule of components of inventory, net


	September 30,		December 31,
	2024		2023
	(Successor)		(Predecessor)
Raw materials	$	2,547	$	2,211
Work-in-Process		509		197
Finished goods		1,083		914
Total inventory	$	4,139	$	3,322

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2024
Summary of Significant Accounting Policies
Basis of Presentation	Basis of Presentation The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). As a result of the Business Combination, for accounting purposes, ListCo is the acquirer and Legacy Adagio is the accounting acquiree and predecessor. The financial statement presentation includes the financial statements of Legacy Adagio as “Predecessor” for the periods prior to the Closing Date (the “Predecessor Period(s)”), and of the Company as “Successor” for the periods after the Closing Date (the “Successor Period(s)”), including the consolidation of Legacy Adagio and ARYA. The Successor Period includes the Company’s results of operations and cash flows for the period from July 31, 2024 through September 30, 2024. As a result of the application of the acquisition method of accounting as of the Closing Date of the Business Combination, the accompanying consolidated financial statements include a black line division that indicates that the Predecessor and Successor reporting entities shown are presented on a different basis and are therefore, not comparable.
Unaudited Interim Financial Information	Unaudited Interim Financial Information The accompanying interim condensed consolidated balance sheet as of September 30, 2024, the condensed consolidated statements of operations and comprehensive income (loss) and the condensed consolidated statements of convertible preferred stock and stockholders' equity (deficit), for the periods from July 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor) and the three and nine months ended September 30, 2023 (Predecessor), and the condensed consolidated statements of cash flows for the periods from January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor), and the related footnote disclosures are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. GAAP and, in management’s opinion, reflect all adjustments which only include normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2024 (Successor) and its results of operations and comprehensive income (loss) for the periods from July 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and the three and nine months ended September 30, 2023 (Predecessor), and cash flows for the periods from January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor). The results for the periods from July 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), January 1, 2024 to July 30, 2024 (Predecessor) and July 31, 2024 to September 30, 2024 (Successor) are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or any other interim period.
Emerging Growth Company Status	Emerging Growth Company Status The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new standard at the time private companies adopt the new or revised standard.
Principles of Consolidation	Principles of Consolidation The condensed consolidated financial statements include the accounts of Adagio Medical Holdings, Inc., and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates and Assumptions	Use of Estimates and Assumptions The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and disclosures of contingent assets and liabilities. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates.
Segments	Segments Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates as one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments with maturities of three months or less from the date of purchase, including its money market account, to be cash equivalents. All of the Company’s cash equivalents have liquid markets. Cash deposits held in accounts at each United States financial institution are insured up to $0.25 million by the Federal Deposit Insurance Corporation (“FDIC”). Cash deposits held in accounts at each European Union financial institution are insured up to €0.1 million by the Deposit Guarantee Scheme. The Company maintains its cash in bank deposit accounts that, at times, may exceed the stated insured limits. Any loss incurred or lack of access to uninsured funds could have a significant adverse impact on the Company's financial condition, results of operations and cash flows. Management does not expect any losses on such accounts.
Concentrations of Credit Risk and Off-Balance Sheet Risk	Concentrations of Credit Risk and Off-Balance Sheet Risk Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents. The Company deposits its cash and cash equivalents with major financial institutions; however, at times, deposits may exceed the amount of insurance provided. The Company has not experienced any losses on its deposits since inception.
Revenue Recognition	Revenue Recognition The Company generates product revenue primarily from the sale of cryoablation catheters, stylets, esophageal warming balloons, and other accessories (collectively, the “Consumables”) used with the Company’s cryoablation consoles (“Consoles”). The Company sells its products directly to hospitals and medical centers. To a lesser extent, the Company also generates lease revenue from the implied rental of Consoles loaned to customers at no charge. The Company accounts for revenue earned from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company recognizes revenue from sales to customers applying the following five steps: •Step 1: Identify the contract with the customer. •Step 2: Identify the performance obligations in the contract. •Step 3: Determine the transaction price. •Step 4: Allocate the transaction price to the performance obligations in the contract. •Step 5: Recognize revenue when, or as, the company satisfies a performance obligation. The Company’s customer contracts generally have performance obligations that contain deliverables consisting of the Consumables and may also include Consoles loaned to customers. The Company evaluates each promise within a multiple-performance obligation arrangement to determine whether it represents a distinct performance obligation. The primary performance obligations in the Company’s customer arrangements from which it derives revenue is the sale of the Consumables. When the Company loans the Console to the customer, it retains title to the Console at all times and does not require minimum purchase commitments from the customer related to any Consumables. In such cases, the Company invoices the customer for the Consumables based on customer orders received. Over time, the Company expects to recover the cost of the loaned Console through the customer’s continued purchasing and use of additional Consumables. For these reasons, the Company has determined that part of the arrangement consideration for the Consumables is an implied rental payment for use of the Console. Therefore, the Company allocates the arrangement consideration between the lease components (i.e., the Console) and non-lease components (i.e., the Consumables) based on the relative estimated standalone selling price of each distinct performance obligation consistent with ASC 842, Leases and ASC 606. Revenue allocated to the lease components was not material for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor) and the nine months ended September 30, 2023 (Predecessor). Revenue from sales to customers of the Consumables is classified as revenue in the Company's condensed consolidated statements of operations and comprehensive income (loss). The delivery of the Consumables are performance obligations satisfied at a point in time, when the control of the goods is transferred to the customer (i.e., FOB Shipping Point). Revenue is recognized when control is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for the product. Other Revenue Considerations Revenue is reported net of sales tax. The Company has made the accounting policy election not to recognize a separate performance obligation for the shipment of products to the customer but to account for it as fulfillment cost. The Company’s contracts primarily include fixed consideration. The Company only includes estimated variable amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Customers are generally required to pay within 30 days. Any incremental costs to obtain contracts are recorded as selling, general and administrative expense as incurred due to the short duration of the Company’s contracts. The Company does not assess whether promised goods or services are performance obligations if they are deemed immaterial in the context of the contract with the customer. Additionally, the Company does not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less. For the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor), revenue was generated only from European markets.
Inventory	Inventory Inventory consists of raw materials, work-in-process, and finished products and is valued at the lower of cost or net realizable value. The method by which that amounts are removed from the inventory is first-in first-out (“FIFO”). Cost may include materials, labor, and manufacturing overhead. The carrying value of inventory is reviewed for potential impairment whenever indicators suggest that the cost of inventory exceeds the carrying value and management adjusts the inventory to its net realizable value. The Company also periodically evaluates inventory for estimated losses from excess quantities and obsolescence and writes down the cost of inventory to net realizable value at the time such determinations are made. Net realizable value is determined using the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. Inventory used in research and development activities is expensed when incurred.
Property and Equipment	Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets, generally three to five years, or, in the case of leasehold improvements, over the remaining life of the lease term. Specifically, Consoles had a five-year useful life as of December 31, 2023, and effective on January 1, 2024, the useful life of Consoles was changed to three years to better reflect the estimated periods during which these Consoles will remain in service. The impact of the change in the estimated useful life of Consoles is not material to the Predecessor Periods or Successor Periods, nor to the future remaining life of the Consoles. Property and equipment include equipment that is loaned to customers and located at customer premises. The Company retains ownership of the equipment held for evaluation by customers and has the right to remove the equipment if it is not being utilized according to expectations.
Intangible Assets	Intangible Assets Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. In determining the estimated useful lives of definite-lived intangibles, the Company considers the nature, competitive position, life cycle position and expected future operating cash flows of the acquired asset, as well as its commitment to support these assets through continued investment and legal infringement protection. Indefinite-lived intangible assets consist of In-Process Research and Development (“IPR&D”). Intangible assets with indefinite lives are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. No impairment charges were recorded in the period from July 31, 2024 to September 30, 2024 (Successor). Legacy Adagio does not have material intangible assets.
Goodwill	Goodwill In accordance with ASC 350, Intangibles – Goodwill and Other, the Company tests goodwill for impairment at the reporting unit level. The Company has one reporting unit for the goodwill impairment testing purposes. Goodwill is tested for impairment on an annual basis in the fourth quarter, or more frequently if events or changes in circumstances indicate the carrying value of goodwill may not be recoverable (a “triggering event”). On the occurrence of a triggering event, an entity has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary. If it is more likely than not that goodwill is impaired, the fair value of the reporting unit (the Company) is compared with its carrying value. An impairment charge is recognized for the amount by which the carrying amount exceeds the fair value, provided, the loss recognized cannot exceed the total amount of goodwill. No goodwill impairment charges were recorded in the period from July 31, 2024 to September 30, 2024 (Successor). Legacy Adagio does not have goodwill.
Concentrations	Concentrations The Company had three suppliers each exceed 10.0% of total accounts payable as of September 30, 2024 (Successor), representing 74.5% of accounts payable. As of December 31, 2023 (Predecessor), Legacy Adagio has three suppliers each exceed 10.0% of total accounts payable, representing 71.6% of accounts payable. The Company’s five and ten largest suppliers accounted for approximately 59.8% and 80.8%, respectively, of the Company’s expenditures for the periods from January 1, 2024 to July 30, 2024 (Predecessor) and July 31, 2024 to September 30, 2024 (Successor). Legacy Adagio’s five and ten largest suppliers accounted for approximately 39.4% and 50.5%, respectively, of Legacy Adagio’s expenditures for the nine months ended September 30, 2023 (Predecessor).
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets The Company reviews long-lived assets, including property and equipment and finite-lived intangible assets, for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss is recognized when the asset’s carrying value exceeds the total undiscounted cash flows expected from its use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. For the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 2023 (Predecessor), the Company determined that there was no impairment of long-lived assets.
Foreign Currency Translation and Transactions	Foreign Currency Translation and Transactions The assets, liabilities, and results of operations of Adagio Medical GmbH are recorded using the Euro as the designated functional currency, which is the currency of the primary economic environment in which Adagio Medical GmbH operates. Consequently, transactions in currencies other than Euro are measured and recorded in Euro. Upon consolidation with the Company, its assets and liabilities are translated to U.S. Dollars at currency exchange rates as of the condensed consolidated balance sheet date and its revenues and expenses are translated at the weighted-average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating this entity’s financial statements are reported in accumulated other comprehensive income (loss) in the condensed consolidated balance sheets and foreign currency translation adjustment in the condensed consolidated statements of operations and comprehensive income (loss).
Leases	Leases The Company accounts for its lease property under ASC 842. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the condensed consolidated balance sheets as both a right-of-use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate, which is the rate for collateralized borrowings based on the current economic environment, current borrowings, value of leases, currency in which the lease obligation is satisfied, rate sensitivity, lease term and materiality. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred. The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment. The Company uses the implicit rate in the lease agreement, when readily available, or its incremental borrowing rate as the basis to calculate the present value of future lease payments at lease commencement. The incremental borrowing rate represents the rate the Company would have to pay to borrow funds on a collateralize basis over a similar term and in a similar economic environment. In calculating the right-of-use asset and lease liability, the Company elected to combine lease and non-lease components for its real estate leases. The Company adopted the policy election to exclude short-term leases having initial terms of twelve months from the initial recognition provisions of ASC 842. Refer to Note 11- Operating Leases for additional details. The Company's implied rental agreements for its consoles qualify as operating leases and as such, revenue is recognized in accordance with ASC 842, Leases and ASC 606, Revenue from Contracts with Customers. Revenue allocated to the lease components were not significant for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor).
Cost of Revenue	Cost of Revenue Cost of revenue includes raw materials, direct labor, manufacturing overhead, shipping and receiving costs and other less significant indirect costs related to the production of the Company’s products. Cost of revenue also includes the depreciation expense of Consoles loaned to the customers.
Research and Development	Research and Development Research and development expenses consist primarily of salaries, consulting fees, and employee-related costs (including stock-based compensation) for personnel directly engaged in research and development activities, clinical trial expenses, equipment costs, material costs, allocated rent and facilities costs, and depreciation. Research and development expenses relating to possible future products are expensed as incurred. The Company also accrues and expenses costs for activities associated with clinical trials performed by third parties as incurred.
Selling, General and Administrative	Selling, General and Administrative Selling, general and administrative expenses consist primarily of salaries, and employee-related costs (including stock-based compensation) for personnel in executive, finance and other administrative functions, allocated rent and facilities costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services, marketing costs and insurance costs. The Company expenses all selling, general, and administrative costs as incurred. The incurred transaction costs are recorded in selling, general, and administrative costs.
Accrued Transaction Costs (Predecessor)	Accrued Transaction Costs (Predecessor) In connection with the Business Combination, Legacy Adagio accrued transaction costs, consisting primarily of legal, accounting and other professional fees, which were incurred and expensed, but not yet paid. The accrued expenses as of December 31, 2023 (Predecessor) are recorded in accrued transaction costs on the condensed consolidated balance sheets.
Fair Value Measurements	Fair Value Measurements Fair value measurements are based on the premise that fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the following three-tier fair value hierarchy is used in determining the inputs for measuring fair value: •Level 1-Quoted prices in active markets for identical assets or liabilities. •Level 2-Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace. •Level 3-Unobservable inputs which are supported by little or no market activity and consist of financial instruments valued using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation. Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange. The fair value of the convertible notes payable and warrant liabilities may be impacted by certain unobservable inputs, most significantly with regard to discount rates, expected volatility and historical and projected performance. Significant changes to these inputs in isolation could result in a significantly different fair value measurement.
Fair Value Option for Convertible Notes	Fair Value Option for Convertible Notes As permitted under ASC 825, Financial Instruments (“ASC 825”), Legacy Adagio elected the fair value option to account for the convertible promissory notes issued in October 2022 (the “October 2022 Convertible Notes”), April 2023 (the “April 2023 Convertible Notes”), November 2023 (the “November 2023 Convertible Notes”), February 2024 (the “February 2024 Convertible Notes”, “2024 Bridge Financing Notes”), May 2024 (the “May 2024 Convertible Notes”), June 2024 (the “June 2024 Convertible Notes”), and July 2024 (the “July 2024 Convertible Notes”) (collectively, “Legacy Adagio Convertible Notes”), and the Company elected the fair value option to account for the Convertible Securities Notes (as defined below), in order to measure those liabilities at amounts that more accurately reflect the current economic environment in which the Legacy Adagio and the Company operated. The convertible promissory notes mentioned above were recorded at fair value at issuance and subsequently were remeasured to fair value at the end of each reporting period. The change in fair value of the convertible promissory notes, excluding amounts related to interest, is recorded in “Convertible notes fair value adjustment”, while amounts related to interest are recorded as interest expense in the consolidated statements of operations and comprehensive income (loss). As a result of applying the fair value option, direct costs and fees related to the issuance of the convertible promissory notes were expensed as incurred (i.e., not recognized as deferred costs). Refer to Note 4- Fair Value Measurements for further detail.
Warrants	Warrants The Company has Convert Warrants (as defined below) issued along with the Convertible Securities Notes, and PIPE Pre-funded Warrants (as defined below) issued in PIPE Financing (as defined below), which are classified as liabilities. The Company also has PIPE Base Warrants (as defined below) issued in PIPE Financing, which is classified as equity. Legacy Adagio has certain common stock warrants (“SVB Warrants”) issued along with the SVB Term Loan (as defined below) and pre-funded warrants to purchase Series E preferred stock (“Series E Pre-funded Warrants”), which were both classified as liabilities. The Company and Legacy Adagio determine the classification of warrants based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments and meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own shares of common stock, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter until settlement. Changes in the estimated fair value of the liability-classified warrants are recognized in warrant liabilities fair value adjustment in the condensed consolidated statements of operations and comprehensive income (loss). The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the condensed consolidated balance sheet date. See Note 10- Warrants for additional information related to the warrants.
Term Loan (Predecessor)	Term Loan (Predecessor) The Company accounts for the Predecessor term loan at residual value on the date of issuance. The expected life of the term loan is the contractual term ending on the maturity date. The Company classifies the term loan as current liabilities within twelve months of the maturity date or when otherwise due. Interest expense is recognized in the condensed consolidated statements of operations and comprehensive income (loss) over the contractual term of the loan. See Note 9- Debt for additional information related to the term loan.
Convertible Preferred Stock (Predecessor)	Convertible Preferred Stock (Predecessor) The Company records the Legacy Adagio convertible preferred stock at fair value on the dates of issuance, net of issuance costs. Upon the occurrence of certain events that are outside the Legacy Adagio’s control, including a deemed liquidation event, holders of the convertible preferred stock can cause redemption for cash. Each share of preferred stock would automatically be converted into shares of Legacy Adagio common stock at the then effective conversion rate immediately upon the earlier of (i) the election of the holders of a majority of the outstanding shares of preferred stock, voting as a separate class on an as-converted to common stock basis, or (ii) the closing of the sale of the Legacy Adagio’s common stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended, with aggregate offering proceeds to Legacy Adagio (before deduction for underwriters’ discounts and expenses relating to the issuance) of at least $75.0 million and a public offering price per share equal to at least $67.83 (subject to adjustments for stock dividends, splits, combinations and similar events). As the Legacy Adagio preferred stock is considered to be contingently redeemable, the Legacy Adagio preferred stock has been classified outside of permanent equity.
Stock-Based Compensation	Stock-Based Compensation The Company recognizes compensation expense for all stock-based awards issued to employees and non-employees based on the estimated grant-date fair value, which is recognized as expense on a straight-line basis over the requisite service period. The Company has elected to recognize forfeitures as they occur. The fair value of stock options is determined using the Black-Scholes option-pricing model. The determination of fair value for stock-based awards on the date of grant using an option-pricing model requires management to make certain assumptions including expected volatility, expected term, risk-free interest rate and expected dividends in addition to the Company’s common stock valuation. Refer to Note 14- Stock-Based Compensation. Due to the absence of an active market for Legacy Adagio common stock, the Company utilized methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series: Valuation of Privately Held Company Equity Securities Issued as Compensation to estimate the fair value of Legacy Adagio common stock. In determining the exercise prices for options granted, the Company considered the fair value of the common stock as of the grant date. The fair value of the common stock is determined based upon a variety of factors, including the Company’s financial position, historical performance and operating results, the Company’s stage of development, the progress of the Company’s research and development programs, the prices at which the Company sold its convertible preferred stock, the superior rights, preferences and privileges of the Company’s convertible preferred stock relative to its common stock, external market conditions affecting the medical technologies industry, the lack of marketability of the Legacy Adagio common stock, prospects of a transaction and market performance of peer companies. Significant changes to the key assumptions underlying the factors used could result in different fair values of Legacy Adagio at each valuation date.
Income Taxes	Income Taxes Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Deferred tax assets and liabilities are determined based on the difference between the condensed consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse and include Net Operating Loss (“NOL”) carryforwards and Research and Development (“R&D”) tax credit carryforwards. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. ASU 2019-12, Simplifying the Accounting for Income Taxes was adopted in the first quarter of 2021 and the Company has recorded franchise taxes not based on income outside of income tax expense. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest and penalties on its condensed consolidated balance sheets and has not recognized interest and/or penalties in the condensed consolidated statements of operations and comprehensive income (loss) for the periods from January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 30, 2023 (Predecessor), respectively. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits. Refer to Note 16- Income Taxes for additional details.

Forward Merger

9 Months Ended

Sep. 30, 2024

Forward Merger

Forward Merger

Note 3 – Forward Merger

On February 13, 2024, ARYA, ListCo, ARYA Merger Sub, and Company Merger Sub, entered into a Business Combination Agreement, which was amended by the Consent and Amendment No. 1 to the Business Combination Agreement, dated as of June 25, 2024.

Prior to the annual general meeting, holders of 2,707,555 shares of ARYA’s redeemable Class A ordinary shares exercised their right to redeem such shares for cash at a redemption price of approximately $11.56 per share, for an aggregate redemption amount of approximately $31.3 million.

Description of the Transaction

Upon the consummation of Business Combination,

Each issued and outstanding Class A ordinary share of ARYA, par value $0.0001 per share, were automatically cancelled, extinguished and converted into one share of common stock, par value $0.0001 per share, of the Company (“Company’s Common Stock”).

Each issued and outstanding Class B ordinary share of ARYA, par value $0.0001 per share, are automatically cancelled, extinguished and converted into the right to receive one share of the Company’s Common Stock, other than (i) 1,000,000 Class B ordinary shares that are forfeited by the Sponsor, and issued to the PIPE Investors (as defined below), including the Perceptive PIPE Investor (as defined below); (ii) 1,147,500 shares of the Company’s Common Stock issuable to the Sponsor are subject to share trigger price vesting and will vest if, prior to the tenth anniversary of the Closing, the post-closing share price of the Company equals or exceeds $24.00 per share for any 20 trading days within any 30 trading day period (the “Share Trigger Price Vesting”).

Each warrant of Legacy Adagio (other than the Series E Pre-funded Warrants) was terminated in accordance with the terms of the applicable warrant agreement.

All issued and outstanding convertible promissory notes of Legacy Adagio (excluding the Bridge Financing Notes and the 2024 Bridge Financing Notes, as defined below), including any accrued and unpaid interest thereon, are automatically and fully converted into shares of Legacy Adagio common stock in accordance with the terms of such convertible promissory notes, and such convertible promissory notes are cancelled, satisfied, extinguished, discharged and retired in connection with such conversion.

Each share of Legacy Adagio preferred stock, par value $0.001 per share, that is issued and outstanding are automatically converted into shares of Legacy Adagio common stock on a one-to-one basis.

All issued and outstanding shares of Legacy Adagio common stock including Series E Pre-funded Warrants that had been issued and outstanding are automatically cancelled and extinguished and converted into shares of the Company’s Common Stock based on the exchange ratio set forth in the Business Combination Agreement.

Each issued, outstanding and unexercised option to purchase Legacy Adagio common stock (“Legacy Adagio Option”) had been vested prior to the Closing with an aggregate value that exceeds the aggregate exercise price of such Legacy Adagio Option (each an “In-the-Money Adagio Options”) are cancelled and extinguished in exchange for options to purchase shares of the Company’s Common Stock, and each issued and outstanding Legacy Adagio equity award (other than an In-the-Money Adagio Options) are automatically cancelled and extinguished for no consideration, and each holder thereof will cease to have any rights with respect thereto.

$7.0 million of 2024 Bridge Financing Notes is converted into Convertible Securities Notes and Convert Warrants (as defined below).

In connection with the execution of the Business Combination Agreement, ListCo and ARYA entered into Subscription Agreements (the “Initial Subscription Agreements”), with Perceptive Life Sciences Master Fund, Ltd, a Cayman Islands exempted company (the “Perceptive PIPE Investor”) and certain other investors (the “Initial Other PIPE Investors”, and together with the Perceptive PIPE Investor, the “Initial PIPE Investors”). In June 2024, ListCo and ARYA entered into additional Subscription Agreements (the “June Subscription Agreements” and, together with the Initial Subscription Agreements, the “Subscription Agreements”) with certain additional investors, (the “June PIPE Investors”, and together with the Initial Other PIPE Investors, the “Other PIPE Investors”, and the Other PIPE Investors, together with the Perceptive PIPE Investor, the “PIPE Investors”).

Pursuant to the subscription agreements, the PIPE Investors have committed financing valued at $64.5 million (the “PIPE Financing”).

The PIPE Financing included:

(i)Commitments by certain Other PIPE Investors to purchase $2.5 million in Class A shares of ARYA in the open market and not to redeem such shares before the Closing, resulting in the issuance of 355,457 shares of Company’s Common Stock and 299,902 warrants exercisable for shares of the Company’s Common Stock (the “Base Warrants”).

(ii)Commitments by certain Other PIPE Investors that were shareholders of ARYA to not to redeem 247,700 Class A shares of ARYA, resulting in the issuance of 405,772 shares of Company’s Common Stock and 343,756 Base Warrants.

(iii)Agreements to purchase 1,036,666 shares of Company’s Common Stock, 1,440,000 Base Warrants, and 670,000 PIPE Pre-funded Warrants for a cash investment of $12 million in the Company.

(iv)Contribution of total $29.5 million in April 2023 Convertible Notes, November 2023 Convertible Notes, May 2024 Convertible Notes, June 2024 Convertible Notes, and July 2024 convertible Notes (collectively, “Bridge Financing Notes”), and accrued interest of $1.7 million by the Perceptive PIPE Investor.

(v)An additional cash investment of $15.9 million by the Perceptive PIPE Investor.

In return for the investment specified in (iv) and (v) above, the Perceptive PIPE Investor received 6,622,959 shares of Company’s Common Stock and 5,445,069 Base Warrants.

Further, in connection with the execution of the Business Combination Agreement, certain investors (“Convert Investors”) executed a securities purchase agreement, dated February 13, 2024, with ListCo (the “Convertible Security Subscription Agreement”), pursuant to which ListCo issued on the Closing Date to the Convert Investors $20.0 million of 13% senior secured convertible notes (the “Convertible Securities Notes”), which will be convertible into shares of the Company’s Common Stock at a conversion price of $10.00 per share, subject to adjustment, and 1,500,000 warrants (the “Convert Warrants”), each Convert Warrant being exercisable on a cashless basis or for cash at a price of $24.00 per share, subject to adjustment. Such $20.0 million of financing in the form of Convertible Securities Notes includes the conversion of the 2024 Bridge Financing Notes into Convertible Securities Notes and Convert Warrants at Closing, as further described in Note 9- Debt.

Acquisition Method of Accounting

The Business Combination has been accounted for as a forward-merger in accordance with U.S. GAAP. Under this method of accounting, ListCo has been treated as the “accounting acquirer” and Legacy Adagio as the “accounting acquiree” for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination has been accounted for using the acquisition method of accounting. The acquisition method of accounting is based on ASC 805 and uses the fair value concepts defined in ASC 820. ASC 805 requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date, with limited exceptions per ASC 805-20-30-12 through 30-23. As such, under the acquisition method of accounting, ListCo’s assets and liabilities retain their carrying amounts, and the assets and liabilities of Legacy Adagio, including any intangible assets recognized in connection with the Business Combination, are recorded at their fair values as of the acquisition date, except as otherwise required. The excess of the purchase price over the estimated fair values of net assets acquired is recorded as goodwill.

Under the acquisition method of accounting, ListCo was considered to be the accounting acquirer based on the terms of the Business Combination. Upon consummation of the Business Combination, the cash on hand resulted in the equity at risk being considered insufficient for Legacy Adagio to finance its activities without additional subordinated financial support. Therefore, Legacy Adagio was considered a Variable Interest Entity (“VIE”) and the primary beneficiary of Legacy Adagio was treated as the accounting acquirer.

ListCo is the primary beneficiary of Legacy Adagio. ListCo will hold 100% of the voting rights of Legacy Adagio and will control the Board of Directors of Legacy Adagio. Therefore, ListCo will have the sole power to control the significant activities that will impact Legacy Adagio’s economic performance. ListCo’s equity interest in Legacy Adagio will result in the right to receive benefits and the obligation to absorb the losses of Legacy Adagio that could be significant to ListCo.

The following is a summary of the purchase price calculation (unaudited, in thousands except share and per share data):


Number of the Company’s Common Stock issued		6,771,769
Number of replacement stock options granted to Legacy Adagio’s option holders by the Company		7,587
Total shares and stock options		6,779,356
Multiplied by the Company’s Common Stock price at the Closing	$	6.64
Total	$	45,015

Number of PIPE Base Warrants issued in lieu of settling Bridge Financing Notes		3,540,000
Multiplied by estimated value of PIPE Base Warrants at the Closing	$	2.41
Estimated fair value of PIPE Base Warrants issued in lieu of settling Bridge Financing Notes	$	8,531
Total purchase price	$	53,546

The allocation of the purchase price was as follows (unaudited, in thousands):


Assets Acquired:
Cash	$	681
Accounts receivable, net		102
Inventories, net		4,077
Prepaid expenses		308
Other current assets		195
Property and equipment, net		1,133
Intangible assets, net		26,200
Goodwill		44,291
Right-of-use asset, net		247
Other assets		18
Tota assets acquired	$	77,252

Liabilities Assumed:
Accounts payable	$	10,103
Accrued liabilities		3,556
Operating lease liabilities, current		138
Convertible notes payable, long-term		5,951
Warrant liabilities		1,049
Operating lease liabilities, long-term		109
Deferred tax liabilities		2,800
Total liabilities assumed	$	23,706

Net total	$	53,546

Goodwill represents the excess of the total purchase consideration over the fair value of the underlying net assets and captures the value attributable to future economic benefits arising from future technology development beyond the existing pipeline of identified IPR&D projects.

The acquired intangible assets consist of developed technology and IPR&D, which were valued at $26.2 million at the Closing using the cost approach. This approach considers an asset’s replacement cost (direct and indirect) adjusted, where applicable, for obsolescence to estimate the replacement cost of the asset’s current service potential (i.e., remaining useful life and cash-flow generating capacity). Obsolescence for an acquired intangible asset may include functional (technological) obsolescence and economic (external) obsolescence. The Company has determined the estimated useful life of 5 years for developed technology based on consideration of the economic benefit of the asset. Refer to Note 7- Goodwill and Intangible Assets for details.

In connection with the Business Combination, the transactions that occurred concurrently with the Closing Date of the Business Combination were reflected “on the line”. “On the line” describes those transactions triggered by the consummation of the Business Combination that are not recognized in the consolidated financial statements of the Predecessor nor the Successor as they are not directly attributable to either period but instead were contingent on the Business Combination.

The number of shares of common stock issued and amounts recorded on the line within stockholders’ equity (deficit) are reflected below to arrive at the opening consolidated balance sheet of the Successor.


						Accumulated
	Number of Shares	Common Stock		APIC		Deficit
ListCo closing equity as of July 30, 2024	—	—	$	2,729	$	(2,734)
Accumulated deficit carried over from ARYA	—	—		—		(14,089)
Contribution of cash proceeds in PIPE Financing	3,287,018	—		23,433		—
Conversion of ARYA convertible promissory Notes	355,100	—		3,551		—
Conversion of ARYA Class A ordinary shares and Class B ordinary shares	2,089,000	—		—		—
Conversion of Class A ordinary shares subject to redemption	123,520	—		1,361		—
Shares issued for acquisition of Legacy Adagio	6,771,769	1		53,546		—
Additional shares issued and reclassification of Class A ordinary shares subject to non-redemption agreements and open market subscription agreements	761,229	—		5,166		—
Successor’s opening equity as of July 31, 2024 (Successor)	13,387,636	1	$	89,786	$	(16,823)

In conversion of the ARYA’s equity outstanding prior to the Closing Date, for each issued and outstanding Class B ordinary share of ARYA at par value $0.0001 per share, a total of 1,147,500 shares (“Earn-out Shares”) of the Company’s Common Stock are issuable to the Sponsor, which are subject to vesting based on a share price trigger. These shares will vest if, within ten years of the Closing, the share price of the Company’s Common Stock reaches or exceeds $24.00 per share for at least 20 trading days within a 30-day period. As of the reporting date, the vesting of these shares was not considered probable.

Pro Forma Financial Information (Unaudited)

The following unaudited pro forma financial information summarizes the results of operations for the Company as though the Business Combination had occurred on January 1, 2023 and has been derived from the historical consolidated financial statements of the Company’s Predecessor Periods and the Successor Period. The Successor and Predecessor Periods for the periods three months ended September 30, 2024; three months ended September 30, 2023; nine months ended September 30, 2024 and nine months ended September 30, 2023 have been combined. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of results of operations that would have been achieved had the acquisition taken place on the date indicated, or the future consolidated results of operations of the Company.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	185	$	41	$	465	$	222
Net loss		(12,971)		(10,655)		(28,987)		(26,113)

The unaudited pro forma financial information for the three and nine months ended September 30, 2024 and 2023 combines the historical results of Adagio Medical, Inc., ARYA, and ListCo for the three and nine months ended September 30, 2024 and 2023, assuming that the companies were combined as of January 1, 2023.

The unaudited pro forma results reflect the adjustments for recording the step-up amortization adjustments for the fair value of intangible assets acquired, reversal of change in fair value of Legacy Adagio Convertible Notes and warrants, reversal of interest on Legacy Adagio Convertible Notes, reversal of interest on Legacy Adagio’s SVB Term Loan, and recording interest on Convertible Securities Notes.

Mezzanine Equity and Stockholders' Equity (Deficit) - Voting Rights, Conversion Rights and Protective Provisions (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2024 USD ($) item $ / shares shares	Dec. 31, 2023 $ / shares
Mezzanine Equity and Stockholders' Equity (Deficit)
Minimum shares of common stock converted from preferred stock \| shares	1,000,000
Number of directors elected by holders of preferred stock \| item	4
Number of directors elected by holders of common stock \| item	1
Aggregate gross proceeds \| $	$ 75.0
Public offering price per share	$ 67.83
Threshold number of preferred stock outstanding \| shares	1,000,000
Threshold percentage of voting by preferred stockholders	70.00%
Threshold common stock convertible by Series E convertible preferred stock \| shares	500,000
Series A Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Initial conversion price	$ 9.23	$ 9.23
Conversion price after adjustment	9.23
Series B Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Initial conversion price	13.04	13.04
Conversion price after adjustment	13.04
Series C Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Initial conversion price	16.30	16.30
Conversion price after adjustment	16.30
Series D Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Initial conversion price	20.16	20.16
Conversion price after adjustment	20.16
Series E Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Initial conversion price	22.61	$ 22.61
Conversion price after adjustment	$ 22.61

Summary of Significant Accounting Policies - Goodwill (Details)	2 Months Ended
	Sep. 30, 2024 USD ($)
Summary of Significant Accounting Policies
Impairment of goodwill	$ 0

Property and Equipment (Details) - USD ($)	1 Months Ended	2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
Property and Equipment (Details) - USD ($)	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Property and Equipment
Total property, plant, and equipment		$ 4,181,000				$ 3,264,000
Less: accumulated depreciation		(2,609,000)				(1,777,000)
Property and equipment, net		1,572,000				1,487,000
Depreciation expense	$ 56,000.0	200,000	$ 100,000	$ 700,000	$ 400,000
Consoles
Property and Equipment
Total property, plant, and equipment		2,567,000				1,565,000
Other machinery and equipment
Property and Equipment
Total property, plant, and equipment		709,000				772,000
Leasehold improvements
Property and Equipment
Total property, plant, and equipment		306,000				305,000
Tools and molds
Property and Equipment
Total property, plant, and equipment		257,000				221,000
Computer equipment
Property and Equipment
Total property, plant, and equipment		188,000				193,000
Demo equipment
Property and Equipment
Total property, plant, and equipment		66,000				66,000
Furniture and fixtures
Property and Equipment
Total property, plant, and equipment		49,000				49,000
Construction in process
Property and Equipment
Total property, plant, and equipment						54,000
Vehicles
Property and Equipment
Total property, plant, and equipment		$ 39,000				$ 39,000

Operating Leases (Tables)

9 Months Ended

Sep. 30, 2024

Operating Leases

Schedule of quantitative information of operating leases


		Nine months ended September 30,
		2024				2023
		Predecessor		Successor		Predecessor
In thousands, unaudited		January 1 to July 30		July 31 to September 30		January 1 to September 30
Operating cash flows paid for operating leases	$	108	$	25	$	133
Weighted average remaining lease term (years)		1.7		1.6		1.7
Weighted average discount rate		8%		8%		8%

Schedule of future minimum payments under the non-cancelable operating leases

The following table presents the future minimum payments under the non-cancelable operating leases as of September 30, 2024 (in thousands):


Three months ending December 31, 2024	$	39
Year ending December 31, 2025		154
Year ending December 31, 2026		48
Total undiscounted future cash flows		241
Less: imputed interest		(14)
Total operating lease liability	$	227

Summary of Significant Accounting Policies - Property and Equipment (Details)	Sep. 30, 2024	Dec. 31, 2023
Maximum
Property and Equipment
Useful life	5 years
Minimum
Property and Equipment
Useful life	3 years
Consoles
Property and Equipment
Useful life	3 years	5 years

Forward Merger (Tables)

9 Months Ended

Sep. 30, 2024

Forward Merger

Summary of the purchase price calculation

The following is a summary of the purchase price calculation (unaudited, in thousands except share and per share data):


Number of the Company’s Common Stock issued		6,771,769
Number of replacement stock options granted to Legacy Adagio’s option holders by the Company		7,587
Total shares and stock options		6,779,356
Multiplied by the Company’s Common Stock price at the Closing	$	6.64
Total	$	45,015

Number of PIPE Base Warrants issued in lieu of settling Bridge Financing Notes		3,540,000
Multiplied by estimated value of PIPE Base Warrants at the Closing	$	2.41
Estimated fair value of PIPE Base Warrants issued in lieu of settling Bridge Financing Notes	$	8,531
Total purchase price	$	53,546

Schedule of allocation of purchase price

The allocation of the purchase price was as follows (unaudited, in thousands):


Assets Acquired:
Cash	$	681
Accounts receivable, net		102
Inventories, net		4,077
Prepaid expenses		308
Other current assets		195
Property and equipment, net		1,133
Intangible assets, net		26,200
Goodwill		44,291
Right-of-use asset, net		247
Other assets		18
Tota assets acquired	$	77,252

Liabilities Assumed:
Accounts payable	$	10,103
Accrued liabilities		3,556
Operating lease liabilities, current		138
Convertible notes payable, long-term		5,951
Warrant liabilities		1,049
Operating lease liabilities, long-term		109
Deferred tax liabilities		2,800
Total liabilities assumed	$	23,706

Net total	$	53,546

Schedule of number of shares of common stock issued and amounts recorded on the line within stockholders' deficit are reflected below to arrive at the opening consolidated balance sheet of the Successor


						Accumulated
	Number of Shares	Common Stock		APIC		Deficit
ListCo closing equity as of July 30, 2024	—	—	$	2,729	$	(2,734)
Accumulated deficit carried over from ARYA	—	—		—		(14,089)
Contribution of cash proceeds in PIPE Financing	3,287,018	—		23,433		—
Conversion of ARYA convertible promissory Notes	355,100	—		3,551		—
Conversion of ARYA Class A ordinary shares and Class B ordinary shares	2,089,000	—		—		—
Conversion of Class A ordinary shares subject to redemption	123,520	—		1,361		—
Shares issued for acquisition of Legacy Adagio	6,771,769	1		53,546		—
Additional shares issued and reclassification of Class A ordinary shares subject to non-redemption agreements and open market subscription agreements	761,229	—		5,166		—
Successor’s opening equity as of July 31, 2024 (Successor)	13,387,636	1	$	89,786	$	(16,823)

Schedule of pro forma financial information


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenue	$	185	$	41	$	465	$	222
Net loss		(12,971)		(10,655)		(28,987)		(26,113)

Property and Equipment

9 Months Ended

Sep. 30, 2024

Property and Equipment

Property and Equipment

Note 6 - Property and Equipment

The Company’s property and equipment, net, as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,		December-24
	2024		2023
	(Successor)		(Predecessor)
Consoles	$	2,567	$	1,565
Other machinery and equipment		709		772
Leasehold improvements		306		305
Tools and molds		257		221
Computer equipment		188		193
Demo equipment		66		66
Furniture and fixtures		49		49
Construction in process		—		54
Vehicles		39		39
Total property, plant, and equipment		4,181		3,264
Less: accumulated depreciation		(2,609)		(1,777)
Property and equipment, net	$	1,572	$	1,487

Depreciation expense was $0.7 million, $0.2 million and $0.4 million for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 30, 2023 (Predecessor), respectively.

Depreciation expense was $56.0 thousand, $0.2 million and $0.1 million for the periods from July 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the three months ended September 30, 2023 (Predecessor), respectively.

Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2024

Property and Equipment

Schedule of components of property and equipment, net

The Company’s property and equipment, net, as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,		December-24
	2024		2023
	(Successor)		(Predecessor)
Consoles	$	2,567	$	1,565
Other machinery and equipment		709		772
Leasehold improvements		306		305
Tools and molds		257		221
Computer equipment		188		193
Demo equipment		66		66
Furniture and fixtures		49		49
Construction in process		—		54
Vehicles		39		39
Total property, plant, and equipment		4,181		3,264
Less: accumulated depreciation		(2,609)		(1,777)
Property and equipment, net	$	1,572	$	1,487

Forward Merger (Details) $ / shares in Units, $ in Millions	Jul. 25, 2024 USD ($) $ / shares shares
Forward Merger
Number of Class A ordinary shares redeemed \| shares	2,707,555
Redemption price \| $ / shares	$ 11.56
Redemption value \| $	$ 31.3

Fair Value Measurements - Pre-funded Warrant Liabilities (Details) $ / shares in Units, $ in Thousands			1 Months Ended	2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
	Jul. 31, 2024 USD ($) $ / shares shares	Jun. 25, 2024 $ / shares shares	Jul. 30, 2024 USD ($)	Sep. 30, 2024 USD ($) $ / shares	Sep. 30, 2023 USD ($)	Jul. 30, 2024 USD ($)	Sep. 30, 2024 $ / shares shares	Sep. 30, 2023 USD ($)	Jun. 30, 2024 USD ($)	Feb. 13, 2024 $ / shares
Warrants
Warrant liabilities fair value adjustment \| $			$ (177)	$ (4,973)	$ 23	$ (191)		$ 83
Series E Preferred Stock
Warrants
Warrant liabilities fair value adjustment \| $			$ 100
Pre-funded Warrants
Warrants
Exercise price \| $ / shares		$ 0.001		$ 0.01			$ 0.01
Number of pre-funded warrants issued \| shares		207,902					670,000
Pre-funded Warrants \| Series E Preferred Stock
Warrants
Exercise price \| $ / shares		$ 0.001
Conversion factor									1.08
Series E Pre-funded Warrants
Warrants
Warrant liabilities \| $	$ 200								$ 300
PIPE Pre-funded warrants
Warrants
Exercise price \| $ / shares	$ 0.01			0.01			$ 0.01
Number of pre-funded warrants issued \| shares	670,000						670,000
Convert Warrants
Warrants
Exercise price \| $ / shares	$ 24.0			$ 24.00			$ 24.00			$ 24.00
Number of pre-funded warrants issued \| shares	1,500,000						1,500,000
Warrants issuance \| $	$ 20,000

Income Taxes

9 Months Ended

Sep. 30, 2024

Income Taxes

Income Taxes

Note 16 - Income Taxes

The Company accounts for income taxes in accordance with ASC 740. Under the provisions of ASC 740, management is required to evaluate whether a valuation allowance should be established against its deferred tax assets. The Company currently has a full valuation allowance against our deferred tax assets. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact management’s view with regard to future realization of deferred tax assets. For the periods from January 1, 2024 to July 30, 2024 (Predecessor) and July 31, 2024 to September 30, 2024 (Successor), there was no material change from fiscal year ended December 31, 2023 (Predecessor) in the amount of the Company's deferred tax assets that are not considered to be more likely than not to be realized in future years.

For the periods from January 1, 2024 to July 30, 2024 (Predecessor) and July 31, 2024 to September 30, 2024 (Successor), the effective tax rate for the Company’s operations was 0.0%. The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, losses from the German subsidiary that is subject to different effective tax rates, stock-based compensation, fair value adjustments for convertible notes and warrant liabilities, and a change in the valuation allowance that offset the tax benefit on the current period pre-tax loss.

For the nine months ended September 30, 2023 (Predecessor), the effective tax rate for the Company’s operations was 0.0%.The effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, losses from the German subsidiary that is subject to different effective tax rates, stock-based compensation and a change in the valuation allowance that offset the tax benefit on the current period pre-tax loss.

The Company is subject to U.S. federal income tax as well as income tax of foreign and state tax jurisdictions. The tax years 2019-2023 remain open to examination by the major taxing jurisdictions to which the Company is subject, except the Internal Revenue Service for which the tax years 2020-2023 remain open.

- Definition

The entire disclosure for income tax.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 231
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482663/740-10-55-231

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12C
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12C

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 12B
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-12B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 270
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477891/740-270-50-1

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SAB Topic 6.I.5.Q1)
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-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-13

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/740/tableOfContent

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 14
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-14

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 21
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-21

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482685/740-10-50-17

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479360/740-10-S99-2

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482603/740-30-50-2

+ Details

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	Sep. 30, 2024	Jul. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Condensed Consolidated Balance Sheets
Convertible preferred stock, par value (in dollars per share)				$ 0.001
Convertible preferred stock, shares authorized		4,939,946		4,939,946
Convertible preferred stock, shares issued		4,732,044	4,732,044	4,939,946	4,939,946	4,939,946	4,939,946
Convertible preferred stock, shares outstanding				4,939,946
Convertible preferred stock, liquidation preference value				$ 91,637,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.001		$ 0.001
Common stock, shares authorized	210,000,000	6,594,946		6,594,946
Common stock, shares issued	14,535,136			786,510
Common stock, shares outstanding	14,535,136			779,908

Forward Merger - Allocation of the purchase price (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Jul. 31, 2024	Dec. 31, 2023
Assets Acquired:
Goodwill	$ 44,291		$ 0
Liabilities Assumed:
Developed technology, Useful Life (years)	5 years
Legacy Adagio
Assets Acquired:
Cash		$ 681
Accounts receivable, net		102
Inventories, net		4,077
Prepaid expenses		308
Other current assets		195
Property and equipment, net		1,133
Intangible assets, net		26,200
Goodwill		44,291
Right-of-use asset, net		247
Other assets		18
Total assets acquired		77,252
Liabilities Assumed:
Accounts payable		10,103
Accrued liabilities		3,556
Operating lease liabilities, current		138
Convertible notes payable, long-term		5,951
Warrant liabilities		1,049
Operating lease liabilities, long-term		109
Deferred tax liabilities		2,800
Total liabilities assumed		23,706
Net total		$ 53,546
Developed technology, Useful Life (years)		5 years

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) - USD ($) $ in Thousands	1 Months Ended	2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)
Revenue	$ 53	$ 132	$ 41	$ 333	$ 222
Cost of revenue and operating expenses:
Cost of revenue	157	414	253	1,381	972
Research and development	1,251	1,217	4,418	7,585	13,625
Selling, general, and administrative	4,851	2,926	4,451	13,047	8,234
Total cost of revenue and operating expenses	6,259	4,557	9,122	22,013	22,831
Loss from operations	(6,206)	(4,425)	(9,081)	(21,680)	(22,609)
Other income (expense):
Convertible notes fair value adjustment	(1,907)	3,255	(1,051)	2,059	(4,084)
Warrant liabilities fair value adjustment	177	4,973	(23)	191	(83)
Interest expense	(304)	(435)	(485)	(1,818)	(1,082)
Interest income		166	2	3	2
Other (expense) income, net	5	72	(123)	(33)	(113)
Total other income (expense), net	(2,029)	8,031	(1,680)	402	(5,360)
Net income (loss)	(8,235)	3,606	(10,761)	(21,278)	(27,969)
Other comprehensive income (loss):
Foreign currency translation adjustment	(2)	(9)	4	3	(1)
Comprehensive income (loss)	$ (8,237)	$ 3,597	$ (10,757)	$ (21,275)	$ (27,970)
Basic net income (loss) per share (Note 15) (in dollars per share)	$ (8.34)	$ 0.18	$ (14.15)	$ (26.08)	$ (36.83)
Diluted net income (loss) per share (Note 15) (in dollars per share)	$ (8.34)	$ 0.02	$ (14.15)	$ (26.08)	$ (36.83)
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Successor	Predecessor	Predecessor	Predecessor

Summary of Significant Accounting Policies - Convertible Preferred Stock & Income Taxes (Details) - USD ($)		1 Months Ended	2 Months Ended	6 Months Ended	9 Months Ended
	Jul. 31, 2024	Jul. 30, 2024	Sep. 30, 2024	Jun. 30, 2024	Sep. 30, 2024	Sep. 30, 2023
Summary of Significant Accounting Policies
Aggregate gross proceeds					$ 75,000,000.0
Public offering price per share					$ 67.83
Interest and penalties accrued	$ 0	$ 0	$ 0	$ 0		$ 0
Income Tax Penalties and Interest Expense	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Unrecognized tax benefits, income tax penalties and interest expense					$ 0

Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets

Schedule of indefinite lived intangible assets

The Company’s intangible assets, net consists of the following (in thousands):


	September 30, 2024
	(Successor)
	Useful Life (years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

IPR&D	Indefinite	$	22,100	$	—	$	22,100
Developed technology	5.0		4,100		(139)		3,961
Total		$	26,200	$	(139)	$	26,061

Schedule of finite lived intangible assets

The Company’s intangible assets, net consists of the following (in thousands):


	September 30, 2024
	(Successor)
	Useful Life (years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

IPR&D	Indefinite	$	22,100	$	—	$	22,100
Developed technology	5.0		4,100		(139)		3,961
Total		$	26,200	$	(139)	$	26,061

Goodwill and Intangible Assets (Details) - USD ($)	2 Months Ended
Goodwill and Intangible Assets (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets
Goodwill	$ 44,291,000	$ 0
Intangible assets	26,061,000	$ 0
Impairment of indefinite live lived intangible assets	0
Impairment of finite lived intangible assets	0
Impairment of goodwill	0
Finite lived intangible assets, expected amortization year one	300,000
Finite lived intangible assets, expected amortization year two to five years	800,000
Finite lived intangible assets, expected amortization after year five	$ 500,000

- Definition

Amount, after accumulated impairment loss, of asset representing future economic benefit arising from other asset acquired in business combination or from joint venture formation or both, that is not individually identified and separately recognized.

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+ Details

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2024

Stock-Based Compensation

Schedule of stock option activity


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise Price		Contractual	Value
	Shares	Per Share		Life (years)	(in thousands)
Outstanding, December 31, 2023 (Predecessor)	747,001	$	6.17	7.45	$	72
Forfeited	(6,592)		4.82	—		—
Options forfeited in connection with the Business Combination	—		—	—
Outstanding, July 30, 2024 (Predecessor)	740,409	$	6.18	—	$	—
Vested and expected to vest, July 30, 2024 (Predecessor)	—	$	—	—	$	—
Vested and exercisable, July 30, 2024 (Predecessor)	—	$	—	—	$	—


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise Price		Contractual	Value
	Shares	Per Share		Life (years)	(in thousands)
Outstanding, July 31, 2024 (Successor)	—	$	—	—	$	—
Options issued as part of the Business Combination	7,587		8.97	—		68
Outstanding, September 30, 2024 (Successor)	7,587	$	8.97	—	$	68
Options vested, September 30, 2024 (Successor)	7,587	$	8.97	—	$	68
Options vested and exercisable, September 30, 2024 (Successor)	7,587	$	8.97	—	$	68

Schedule of stock based compensation expense

The following table summarizes the total stock-based compensation expense for the stock options expense recorded in the unaudited condensed consolidated statements of operations and comprehensive income/(loss) for the periods from January 1, 2024 to July 30, 2024 (Predecessor), July 1 to July 30 (Predecessor), and the three and nine months ended September 30, 2023 (Predecessor) (in thousands):




	2024				2023
	July 1 to July 30		January 1 to July 30		Three months ended September 30		Nine months ended September 30
Selling, general, and administration	$	335	$	527	$	66	$	241
Research and development		86		115		60		88
Total stock-based compensation expense	$	421	$	642	$	126	$	329

Related Party Transactions (Details)		1 Months Ended	2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
Related Party Transactions (Details)	Feb. 13, 2024 USD ($) shares	Jul. 30, 2024 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Jul. 30, 2024 USD ($)	Sep. 30, 2024 USD ($) item	Sep. 30, 2023 USD ($)	Jul. 31, 2024 USD ($)	Dec. 31, 2023 USD ($)	Oct. 27, 2022 USD ($)	Jul. 27, 2022 USD ($)
October 2022 Convertible Notes
Related Party Transactions
Principal amount									$ 9,500,000	$ 9,500,000	$ 9,500,000
Convertible Securities Notes
Related Party Transactions
Principal amount	$ 20,000,000.0		$ 7,000,000.0			$ 7,000,000.0		$ 20,000,000.0
Amount of convertible notes issued	$ 7,000,000.0
Related Party \| Fjord \| Shared Services Agreement
Related Party Transactions
Amount of transaction		$ 100,000	$ 200,000	$ 400,000	$ 900,000		$ 1,000,000.0
Related Party \| Fjord \| Sub-lease of office and manufacturing space
Related Party Transactions
Amount of transaction				$ 25,500	$ 25,500		$ 76,400
Office and manufacturing space \| item						4,992
Related Party \| Fjordinvest \| October 2022 Convertible Notes
Related Party Transactions
Principal amount										$ 500,000
PIPE Investor
Related Party Transactions
Conversion of ARYA convertible promissory Notes (in shares) \| shares	4,372,607
Warrants issued upon conversion of debt \| shares	3,540,000
Issuance of common stock \| shares	2,250,352
Number of warrants issued \| shares	1,905,069
Additional cash investment	$ 15,900,000							$ 15,900,000

Debt - June 2024 Convertible Notes (Details) - June 2024 Convertible Notes - USD ($)	1 Months Ended	7 Months Ended
	Jul. 30, 2024	Jul. 30, 2024	Jun. 25, 2024
Debt
Principal amount			$ 2,500,000
Interest rate			8.00%
Interest	$ 16,400	$ 19,200

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Debt - Convertible Securities Notes (Successor) (Details) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended	9 Months Ended
	Jul. 31, 2024	Feb. 13, 2024	Sep. 30, 2024	Sep. 30, 2024
Convert Warrants
Debt
Principal amount			$ 20.0	$ 20.0
Number of pre-funded warrants issued	1,500,000			1,500,000
Exercise price	$ 24.0	$ 24.00	$ 24.00	$ 24.00
Convertible Securities Notes
Debt
Principal amount	$ 20.0	$ 20.0	$ 7.0	$ 7.0
Number of pre-funded warrants issued		1,500,000
Conversion price		$ 10.00
Shares called by per each warrant		1,500,000
Debt term		1 year 5 months 13 days
Interest			$ 0.4
Convertible Securities Notes \| Convert Warrants
Debt
Principal amount		$ 20.0
Conversion price		$ 10.00
Exercise price		$ 24.00

Forward Merger - Purchase price (Details) - Legacy Adagio $ / shares in Units, $ in Thousands	Jul. 31, 2024 USD ($) $ / shares shares
Forward Merger
Voting rights acquired	100.00%
Number of the Company's Common Stock issued	6,771,769
Number of replacement stock options granted to Legacy Adagio's option holders by the Company	7,587
Total shares and stock options	6,779,356
Multiplied by the Company's Common Stock price at the Closing \| $ / shares	$ 6.64
Total \| $	$ 45,015
Number of PIPE Base Warrants issued in lieu of settling Bridge Financing Notes	3,540,000
Multiplied by estimated value of PIPE Base Warrants at the Closing \| $ / shares	$ 2.41
Estimated fair value of PIPE Base Warrants issued in lieu of settling Bridge Financing Notes \| $	$ 8,531
Total purchase price \| $	$ 53,546

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2024	Nov. 12, 2024
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Securities Act File Number	001-42199
Entity Registrant Name	ADAGIO MEDICAL HOLDINGS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	99-1151466
Entity Address, State or Province	CA
Entity Address, Address Line One	26051 Merit Circle
Entity Address, Address Line Two	Suite 102
Entity Address, City or Town	Laguna Hills
Entity Address, Postal Zip Code	92653
City Area Code	949
Local Phone Number	348-1188
Title of 12(b) Security	Common Stock, par value $0.0001per share
Trading Symbol	ADGM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		14,535,136
Entity Central Index Key	0002006986
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

Stock-Based Compensation

9 Months Ended

Sep. 30, 2024

Stock-Based Compensation

Stock-Based Compensation

Note 14 - Stock-Based Compensation

Predecessor Periods

2012 Stock Incentive Plan

In January 2011, Legacy Adagio’s Board approved the 2012 Stock Incentive Plan (the “2012 Plan”), which permitted grants of Incentive Stock Options (“ISOs”) and Non-statutory Stock Options (“NSOs”) to employees, directors and consultants. The maximum number of shares that can be granted under the 2012 Plan cannot exceed 1,255,000 shares. The 2012 Plan had a maximum 10-year term and as such, terminated in January 2022.

2022 Stock Incentive Plan

In April 2022, the Legacy Adagio’s Board approved, in conjunction with the termination of the 2012 Plan, the 2022 Stock Incentive Plan (the “2022 Plan”), permitting ISOs and NSOs to employees, directors and consultants. The maximum number of shares granted under the 2022 Plan cannot exceed 203,855 plus any shares subject to stock options granted under the 2012 Plan that expired or were otherwise terminated without having been exercised in full, were forfeited, or were repurchased by the Company. The 2022 Plan is intended as the successor to and continuation of the 2012 Plan (thereafter both the 2012 and 2022 Plans are referred to as the “Stock Incentive Plan”).

The Stock Incentive Plan provides a means whereby participants may purchase shares of common stock pursuant to ISOs or NSOs and such persons may be granted shares of common stock for consideration consisting of cash and/or past services rendered to or on behalf of Legacy Adagio. ISOs may only be granted to employees. NSOs and stock purchase rights may be granted to employees and consultants. Generally, options awards only have service conditions that need to be met for the awards to vest, with the exception of grants to two non-employees that had performance obligations that were deemed to be immaterial.

The stock options generally vest over four years and have a ten-year contractual term. The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. As Legacy Adagio lacks company-specific historical and implied volatility information required for valuation, Legacy Adagio estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Due to the lack of historical exercise history, the expected life term of ISOs that were granted after 2013 was determined using the “simplified method” provided by the Securities and Exchange Commission in Staff Accounting Bulletins Number 107 and 110. The expected life term of NSOs is determined either by using the “simplified method,” or by calculating the time to expiry from the grant date. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant for time periods approximately equal to the expected term of the award. Expected dividend yield is zero as Legacy Adagio has never paid nor does it expect to pay any cash dividend in the near future.

The following table summarizes stock option activity during the periods from January 1, 2024 to July 30, 2024 (Predecessor):


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise Price		Contractual	Value
	Shares	Per Share		Life (years)	(in thousands)
Outstanding, December 31, 2023 (Predecessor)	747,001	$	6.17	7.45	$	72
Forfeited	(6,592)		4.82	—		—
Options forfeited in connection with the Business Combination	—		—	—
Outstanding, July 30, 2024 (Predecessor)	740,409	$	6.18	—	$	—
Vested and expected to vest, July 30, 2024 (Predecessor)	—	$	—	—	$	—
Vested and exercisable, July 30, 2024 (Predecessor)	—	$	—	—	$	—

There were no stock options exercised during the periods from January 1, 2024 to July 30, 2024 (Predecessor). Certain stock option grants under the Stock Incentive Plan allow the recipient to exercise the options prior to the options becoming fully vested. Under the Stock Incentive Plan, the Company retains the right to repurchase common shares that have been issued upon early exercise of options at the original issue price. Cash received for the early exercise of unvested stock options is initially recorded as a liability. At each reporting date, the vested shares are released to equity.

The fair value of awards vested was $0.3 million during the periods from January 1, 2024 to July 30, 2024 (Predecessor). As of July 30, 2024 prior to the Closing (Predecessor), the total unrecognized compensation cost of $0.4 million was accelerated at the Closing, which was recognized and expensed in accordance with the terms of the 2012 Stock Incentive Plan and the 2022 Stock Incentive Plan.

Upon the consummation of the Business Combination, 45,544 In-the-Money Adagio Options were canceled and extinguished in exchange for 7,587 options to purchase the Company’s Common Stock.

Stock-Based Compensation Expense




	2024				2023
	July 1 to July 30		January 1 to July 30		Three months ended September 30		Nine months ended September 30
Selling, general, and administration	$	335	$	527	$	66	$	241
Research and development		86		115		60		88
Total stock-based compensation expense	$	421	$	642	$	126	$	329

Successor Periods

2024 Equity Incentive Plan

The Board of Directors of the Company adopted the 2024 Equity Incentive Plan on July 26, 2024. The purpose of the plan is to promote the success and enhance the value of the Company by linking the individual interests of the members of the Board, Employees, and Consultants to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The 2024 Equity Incentive Plan authorizes the issuance of up to 4,472,593 shares of the Company’s Common Stock, plus an annual increase on the first day of each year beginning in 2025 and ending in (and including) 2034 equal to the lesser of (A) five percent (5%) of the shares of Common Stock outstanding on a fully diluted basis on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of Company’s Common Stock as determined by the Board or the compensation committee thereof. The Company may grant an option, a stock appreciation right, a restricted stock award, a restricted stock unit award, a performance stock award, a performance stock unit award, or other stock- or cash-based award, or a dividend equivalent award, which may be awarded or granted under the Plan. The awards can be issued to any person who is an employee, a consultant, or a non-employee director.

The Company has not granted any awards under this plan as of September 30, 2024.

2024 Key Employee Equity Incentive Plan

The Board of Directors of the Company adopted the 2024 Key Employee Equity Incentive Plan on July 26, 2024. The purpose of the Plan is to promote the success and enhance the value of the Company by linking the individual interests of key employees of the Company to those of Company stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The 2024 Key Employee Equity Incentive Plan authorizes the issuance of up to 3,354,444 shares of the Company’s Common Stock. The Company may grant option, a stock appreciation right, a restricted stock award, a restricted stock unit award, a performance stock award, a performance stock unit award, other stock- or cash-based award, or a dividend equivalent award, which may be awarded or granted under the plan. The awards can only be issued to certain individuals as identified in the plan who are an employee, a consultant, or a non-employee director.

The Company has not granted any awards under this plan as of September 30, 2024.

2024 Employee Stock Purchase Plan

The Board of Directors of the Company adopted the 2024 Equity Incentive Plan on July 26, 2024. The 2024 Employee Stock Purchase Plan provides a means by which eligible employees of the Company and certain designated related corporations may be given an opportunity to purchase shares of the Company’s Common Stock. The plan permits the Company to grant a series of purchase rights to eligible employees under an Employee Stock Purchase Plan. The 2024 Employee Stock Purchase Plan authorizes the issuance of up to 441,293 shares of the Company’s Common Stock, plus an annual increase on the first day of each year beginning in 2025 and ending in (and including) 2034 equal to one percent (1%) of the share of common stock outstanding on a fully diluted basis on the last day of the immediately preceding fiscal year, provided that the Board or its compensation committee may reduce the amount of the increase in any particular year.

The Company has not granted any purchase rights under this plan as of September 30, 2024.

The following table summarizes stock option activity during the periods from July 31, 2024 to September 30, 2024 (Successor):


				Weighted
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
		Exercise Price		Contractual	Value
	Shares	Per Share		Life (years)	(in thousands)
Outstanding, July 31, 2024 (Successor)	—	$	—	—	$	—
Options issued as part of the Business Combination	7,587		8.97	—		68
Outstanding, September 30, 2024 (Successor)	7,587	$	8.97	—	$	68
Options vested, September 30, 2024 (Successor)	7,587	$	8.97	—	$	68
Options vested and exercisable, September 30, 2024 (Successor)	7,587	$	8.97	—	$	68

As discussed above, the Company has not granted any options under the 2024 Equity Incentive Plan, the 2024 Key Employee Equity Incentive Plan and the 2024 Employee Stock Purchase Plan.

Debt - July 2024 Convertible Notes (Details) - USD ($)			1 Months Ended
Debt - July 2024 Convertible Notes (Details) - USD ($)	Jul. 23, 2024	Feb. 13, 2024	Jul. 30, 2024	Sep. 30, 2024	Jul. 31, 2024
Debt
Debt conversion	4,372,607
Debt amount	$ 29,500,000
Convert Warrants
Debt
Principal amount				$ 20,000,000.0
Exercise price		$ 24.00		$ 24.00	$ 24.0
Warrants issued upon conversion of debt		1,500,000
Base Warrants
Debt
Exercise price				$ 2.41
Warrants issued upon conversion of debt	3,540,000
July 2024 Convertible Notes
Debt
Principal amount	$ 1,000,000.0
Interest rate	8.00%
Interest			$ 1,300

Warrants

9 Months Ended

Sep. 30, 2024

Warrants

Warrants

Note 10 - Warrants

SVB Warrants (Predecessor)

On February 3, 2023, in conjunction with the LSA, the Legacy Adagio issued Initial Warrants to purchase 32,720 shares of common stock of the Company, and a contingent right to obtain an additional 16,360 shares of the common stock upon the non-occurrence of the Interest Only Milestone as mentioned above. The Additional Warrants are subject to the same terms as the Initial Warrants (collectively “SVB Warrants”).

The exercise price of the SVB Warrants is $7.97 per share. The warrants are fully exercisable and will expire on February 3, 2033.

The SVB Warrants were terminated prior to the consummation of the Business Combination as the fair market value of Legacy Adagio common stock is lower than the exercise price of the SVB Warrants before the Closing.

Series E Pre-funded Warrants (Predecessor)

On June 25, 2024, in conjunction with the Series E Preferred Stock exchange agreement (refer to Note 13-Mezzanine Equity and Stockholders’ Equity (Deficit)), Legacy Adagio issued to a certain investor 207,902 shares of pre-funded warrants to purchase 207,902 shares of Series E Preferred Stock, in exchange of the investor’s existing holding of 207,902 shares of Series E Preferred Stock.

The exercise price of the pre-funded warrants is $0.001 per share. The pre-funded warrants are exercisable, at the option of the holder, on any day on or after the issuance date, in whole or in part. As an alternative to immediate cash payment, the investor may elect to exercise the pre-funded warrant through a cashless exercise.

Upon the consummation of the Business Combination, the 207,902 Series E Pre-funded Warrants were converted in exchange for 34,680 shares of the Company’s Common Stock.

Convert Warrants (Successor)

As mentioned in Note 9- Debt, the Company issued $20.0 million of Convertible Securities Notes and 1,500,000 Convert Warrants at the Closing. Each of the Convert Warrants is exercisable on a cashless basis or for one share of the Company’s Common Stock at an exercise price of $24.00 per share, subject to adjustment. The Convert Warrants expire on the seventh anniversary from the issuance date.

PIPE Pre-funded Warrants (Successor)

The Company issued 670,000 PIPE Pre-funded Warrants, along with 681,111 shares of the Company’s Common Shares and 1,140,000 Base Warrants to certain Other PIPE Investor in exchange for cash proceeds of $9.5 million in PIPE Financing.

As set forth in the agreement of the PIPE Pre-Funded Warrants, the PIPE Pre-Funded Warrants are exercisable on a cashless basis or on a gross basis for one share of the Company’s Common Stock at an exercise price of $0.01 per share, subject to adjustments. The Company may be required to cash settle the PIPE Pre-funded Warrants when it fails to timely deliver shares to the holder who exercises the PIPE Pre-funded Warrants or upon the occurrence of a fundamental transaction. The PIPE Pre-funded Warrants expires when it is exercised in full.

PIPE Base Warrants (Successor)

On the Closing Date, the Company issued 3,540,000 Base Warrants along with 4,372,607 shares of the Company’s Common Shares to settle the outstanding principal and accrued interest of the Bridge Financing Notes.

The Company also issued 3,345,069 Base Warrants along with 3,287,018 shares of the Company’s Common Stock and 670,000 PIPE Pre-Funded Warrants to PIPE Investors for cash proceeds received in PIPE Financing.

Further, in connection with the non-redemption agreements entered with certain Other PIPE Investors holding 468,941 shares of ARYA’s Class A ordinary shares, the Company issued 643,658 units of Base Warrants along with 761,229 shares of the Company’s Common stock in exchange for the non-redeemable 468,941 shares of ARYA’s Class A ordinary shares.

The Base Warrants can be exercised to the Company’s Common Stock at any time during the period from the issuance date to the expiration date which is the fifth anniversary from the date of issuance. The warrants can be exercised on a gross or net basis at an exercise price of $10 per share.

The Base Warrants were fair valued at $2.41 per unit on the date of issuance based on the assumptions including (i) the value of the Company’s Common Stock is $6.64 per share; (ii) a risk-free rate at 3.93%; (iii) zero dividend yield; (iv) the common stock volatility at 84.0% and a volatility haircut of 10%; (v) the remaining term is five years.

According to the ASC 815, it is determined that the Base Warrants associated with the PIPE Financing are indexed to the Company’s Common Stock under and are accounted for as equity, which is initially measured at fair value. The Base Warrants are classified as equity in the financial statements because they meet the ASC 815-40 indexation guidance. Specifically, 1) the Base Warrants can be exercised at any time during the exercise period without contingencies; 2) the Base Warrants can be settled in a fixed number of shares upon exercise with any adjustments, such as antidilution and alternative issuance adjustments, consistent with ASC 815 guidance, which does not preclude equity classification. Additionally, the Company has sufficient authorized shares available to settle the Base Warrants, and all the adjustments are in the control of the Company, further supporting the equity classification.

Related Party Transactions

9 Months Ended

Sep. 30, 2024

Related Party Transactions

Related Party Transactions

Note 17 - Related Party Transactions

Shared Services Agreement

During the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), from July 1, 2024 to July 30, 2024 (Predecessor), and the three and nine months ended September 30, 2023 (Predecessor), the Company incurred $0.9 million, $0.2 million, $0.1 million, $0.4 million and $1.0 million, respectively, for finance and accounting services and other general and administrative support services (“Shared Services Agreement”) to Fjord Ventures (“Fjord”), a company owned and operated by the Company’s CEO. The transactions are recorded as selling, general and administrative expenses on the condensed consolidated statements of operations and comprehensive income (loss).

Laguna Hills Sublease (Predecessor)

In addition to the Shared Services Agreement, Legacy Adagio also sub-leases approximately 4,992 square feet of office and manufacturing space in Laguna Hills, California from Fjord. On March 31, 2024, the sub-lease with Fjord is expired.

During the periods from January 1, 2024 to July 30, 2024 (Predecessor), and the three and nine months ended September 30, 2023, Legacy Adagio incurred $25.5 thousand, $25.5 thousand, $76.4 thousand of lease expense, respectively, under the sub-lease agreement.

Refer to Note 11-Operating Leases for further detail.

October 2022 Convertible Notes (Predecessor)

On October 27, 2022, Legacy Adagio issued a $0.5 million convertible promissory note to Fjordinvest, LLC (“Fjordinvest”), a company owned and operated by the Legacy Adagio’s CEO. On April 4, 2023, November 28, 2023 and February 13, 2024, the October 2022 Convertible Notes were amended. Refer to Note 9-Debt for additional information regarding the October 2022 Convertible Notes.

Convertible Securities Notes (Successor)

In connection with the Business Combination and the Convertible Securities Notes agreement, the Company issued a $7.0 million Convertible Securities Notes to Perceptive PIPE Investor, the controlling party of the Company, in exchange for Perceptive PIPE Investor’s investment in Legacy Adagio in the form of the February 2024 Convertible Notes. Refer to Note 9-Debt for additional information regarding the Convertible Securities Notes.

PIPE Financing (Successor)

In connection with the Business Combination and the PIPE Financing, the Company issued 4,372,607 shares of the Company’s Common Stock and 3,540,000 Base Warrants to Perceptive PIPE Investor, the controlling party of the Company, in exchange for Perceptive PIPE Investor’s investment in Legacy Adagio in the form of Bridge Financing Notes. Refer to Note 9- Debt for additional information regarding the Convertible Securities Notes.

Further, in connection with the PIPE Financing, the Company issued 2,250,352 shares of the Company’s Common Stock and 1,905,069 Base Warrants to Perceptive PIPE Investor, the controlling party of the Company, in exchange for Perceptive PIPE Investor’s additional cash investment of approximately $15.9 million in the Company.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480990/946-20-50-6

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 235
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147477968/946-235-50-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(g)(3))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(c))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 220
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.6-07(2)(e))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147479134/946-220-S99-1

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-Name Accounting Standards Codification
-Publisher FASB
-URI https://asc.fasb.org/850/tableOfContent

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-6

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 850
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483326/850-10-50-1

+ Details

Mezzanine Equity and Stockholders' Equity (Deficit) - Authorized Shares (Details) - $ / shares	Sep. 30, 2024	Jul. 30, 2024	Dec. 31, 2023
Mezzanine Equity and Stockholders' Equity (Deficit)
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.001	$ 0.001
Convertible preferred stock, par value (in dollars per share)			$ 0.001
Shares authorized		11,534,892
Common stock, shares authorized	210,000,000	6,594,946	6,594,946
Convertible preferred stock, shares authorized		4,939,946	4,939,946

Fair Value Measurements - Assumptions for convertible promissory notes (Details)	Sep. 30, 2024 $ / shares Y	Jul. 31, 2024 $ / shares Y	Dec. 31, 2023 Y
Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input	0.254	0.258
Discount rate \| October 2022 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.368
Discount rate \| April 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.306
Discount rate \| November 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.306
Expected Term (years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input	3.58	3.75
Expected Term (years) \| Convert Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants measurement inputs	6.83	7.0
Expected Term (years) \| October 2022 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.33
Expected Term (years) \| April 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.33
Expected Term (years) \| November 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.33
Risk-Free interest rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input	0.0355	0.0401
Risk-Free interest rate \| Convert Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants measurement inputs	0.0363	0.0396
Risk-Free interest rate \| October 2022 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.054
Risk-Free interest rate \| April 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.054
Risk-Free interest rate \| November 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			0.054
Volatility
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input	0.80	0.60
Volatility \| Convert Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants measurement inputs	0.625	0.550
Volatility \| October 2022 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			1.10
Volatility \| April 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			1.10
Volatility \| November 2023 Convertible Notes
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input			1.10
Expected dividend yield \| Convert Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants measurement inputs	0	0
Share price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Promissory notes measurement input \| $ / shares	2.58	6.64
Share price \| Convert Warrants
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Warrants measurement inputs \| $ / shares	2.58	6.64

Debt - October 2022 Convertible Notes (Details) - USD ($)				1 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended		12 Months Ended
	Nov. 28, 2024	Jul. 23, 2024	Oct. 31, 2022	Jul. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2022	Dec. 31, 2023	Oct. 27, 2022	Jul. 27, 2022
Debt
Proceeds from issuance of convertible notes payable						$ 16,500,000		$ 13,000,000
Debt conversion		4,372,607
October 2022 Convertible Notes
Debt
Principal amount										$ 9,500,000	$ 9,500,000	$ 9,500,000
Interest rate											8.00%	8.00%
Percentage of effective price of common stock sold to trigger conversion	75.00%
Proceeds from issuance of convertible notes payable									$ 9,500,000
Interest				$ 62,500	$ 200,000		$ 400,000	$ 600,000
Conversion of shares			8,661,985
Shares converted			8,661,985
Debt conversion			1,444,899

Description of Organization and Business Operations

9 Months Ended

Sep. 30, 2024

Description of Organization and Business Operations

Description of Organization and Business Operations

Note 1 - Description of Organization and Business Operations

Our Company

Adagio Medical Holding, Inc. (formerly known as Aja Holdco, Inc.) and its wholly-owned subsidiaries (collectively, the “Company”, the “Successor”) is a medical technology company focused on the development and commercialization of ablation technologies for the treatment of cardiac arrhythmias, including atrial fibrillation, atrial flutter, and ventricular tachycardia. The Company’s technologies center on ultra-low temperature cryoablation (“ULTC”) and pulsed field cryoablation (“PFCA”), designed to produce durable, contiguous, transmural lesions anywhere in the heart using the Company’s proprietary consoles, catheters, and stylets. Legacy Adagio (as defined below) received CE Marking in Europe for its iCLAS™ Cryoablation System and VT Cryoablation System in June 2020 and March 2024, respectively, and has commercially launched in the EU. The Company has not launched commercially in the U.S. but is working towards obtaining the necessary regulatory approvals to do so. The Company is headquartered in Laguna Hills, California.

On July 31, 2024 (the “Closing Date”), ARYA Sciences Acquisition Corp IV, a Cayman Islands exempted company (“ARYA”), Aja Holdco, Inc. (“ListCo”), a Delaware corporation and wholly-owned subsidiary of ARYA, Aja Merger Sub 1, a Cayman Islands exempted company and wholly-owned subsidiary of ListCo (“ARYA Merger Sub”), Aja Merger Sub 2, Inc., a Delaware corporation and wholly-owned subsidiary of ListCo (“Company Merger Sub”), and Adagio Medical, Inc., a Delaware corporation (“Legacy Adagio”, the “Predecessor”), consummated the business combination (the “Business Combination”) pursuant to the terms of the Business Combination Agreement, dated February 13, 2024, by and among the foregoing parties, as amended by the Consent and Amendment No. 1 to Business Combination Agreement, dated as of June 25, 2024, by and between ARYA and Adagio (the “Business Combination Agreement”).

Pursuant to the Business Combination Agreement, on the Closing Date, (i) ARYA Merger Sub merged with and into ARYA (the “ARYA Merger”) and Company Merger Sub merged with and into Legacy Adagio (the “Adagio Merger” and, together with the ARYA Merger, the “Mergers”), with ARYA and Legacy Adagio surviving the Mergers and, after giving effect to such Mergers, each of ARYA and Legacy Adagio becoming a wholly owned subsidiary of ListCo (the time that the ARYA Merger becomes effective being referred to as the “ARYA Merger Effective Time,” the time that the Adagio Merger becomes effective being referred to as the “Adagio Merger Effective Time,” the time after which both Mergers become effective being referred to as the “Closing,” and the date on which the Closing occurs being referred to as the “Closing Date”), (ii) ListCo filed with the Secretary of State of the State of Delaware an amended and restated certificate of incorporation of ListCo, and the board of directors of ListCo approved and adopt amended and restated bylaws of ListCo, and (iii) ListCo changed its name to Adagio Medical Holdings, Inc.

Refer to Note 3- Forward Merger for details of the Business Combination.

The Company’s Common Stock (as defined below) began trading on August 1, 2024, under the symbol ADGM on the Nasdaq Capital Market (NASDAQ: ADGM).

Liquidity and Going Concern

The accompanying condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. The Company has limited revenue and has experienced recurring operating losses and negative cash flows from operations since its inception and anticipates that it will continue to do so for at least the next several years.

As of September 30, 2024, the Successor reported cash and cash equivalents of $28.3 million, and an accumulated deficit of $13.2 million. For the period from July 31, 2024 to September 30, 2024 (Successor), from January 1, 2024 to July 30, 2024 (Predecessor), and the nine months ended September 30, 2023 (Predecessor), net income (loss) was $3.6 million, $(21.3) million, and $(28.0) million, respectively. The net cash used in operating activities was $6.4 million, $16.0 million, and $18.6 million, respectively.

Management does not believe the Company's current cash and cash equivalents are sufficient to fund operations for at least the next 12 months from the issuance date of the condensed consolidated financial statements. Management believes that this raises substantial doubt about the Company’s ability to continue as a going concern.

Management intends to mitigate the conditions and events that raise substantial doubt about its ability to continue as a going concern entity by (i) negotiate other cash equity or debt financing in the short-term, (ii) continue to pursue the necessary regulatory approvals to launch commercially in the U.S. market, and (iii) execute cost-cutting measures to manage cash burn. However, there can be no assurances that the current plans will generate any liquidity to the Company or be available on terms acceptable to the Company.

If the Company is unable to maintain sufficient financial resources, its business, financial condition, and results of operations will be materially and adversely affected. The Company may be required to delay, limit, reduce or terminate its product discovery and development activities or future commercialization efforts. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of liabilities in the normal course of business.

Strategic Realignment of Resources and Corporate Restructuring

On December 1, 2023, Legacy Adagio approved a strategic realignment of resources and corporate restructuring (the “RIF”) designed to reallocate capital, conformant to its business focus for the next two years.

As part of the RIF, Legacy Adagio initiated a reduction in its workforce of 20 employees, representing approximately 19% of Legacy Adagio’s employees, which was completed on December 15, 2023. Legacy Adagio made no payment for severance or related benefit costs. Legacy Adagio made no payment of retention bonuses.

Operating Leases (Details) - USD ($)		1 Months Ended	2 Months Ended		3 Months Ended	6 Months Ended	7 Months Ended	9 Months Ended
Operating Leases (Details) - USD ($)	Jul. 31, 2024	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jun. 30, 2024	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2023
Operating Leases
Option to extend the lease term								true
Operating lease renewal term			3 years	3 years				3 years
Quantitative information of operating leases
Operating cash flows paid for operating leases				$ 25,000			$ 108,000		$ 133,000
Weighted average remaining lease term (years)		1 year 8 months 12 days	1 year 7 months 6 days	1 year 7 months 6 days	1 year 8 months 12 days		1 year 8 months 12 days	1 year 7 months 6 days	1 year 8 months 12 days
Weighted average discount rate		8.00%	8.00%	8.00%	8.00%		8.00%	8.00%	8.00%
Operating lease cost		$ 17,000.0		$ 33,000.0	$ 57,000.0		$ 100,000		$ 200,000
Variable lease cost	$ 0	$ 0	$ 0			$ 0			$ 0

Forward Merger - Transaction (Details) $ / shares in Units, $ in Millions	Jul. 31, 2024 USD ($) D $ / shares shares	Jul. 23, 2024 shares	Feb. 13, 2024 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Jul. 30, 2024 $ / shares	Dec. 31, 2023 $ / shares shares
Forward Merger
Common stock par value \| $ / shares				$ 0.0001	$ 0.001	$ 0.001
Preferred stock, par value \| $ / shares	$ 0.001			$ 0.0001
Preferred stock conversion ratio	1
PIPE Financing \| $	$ 64.5
Number of shares issued in exchange of commitment to purchase Class A shares of ARYA in the open market and not to redeem	355,457
Number of shares issued in exchange of non-redemption of shares	405,772
Common Stock reserved for future issuance under the 2024 Equity Incentive Plan	1,036,666			21,205,970		5,713,959
Cash investment \| $	$ 12.0
Convertible Securities Notes
Forward Merger
Principal amount \| $	$ 20.0		$ 20.0	$ 7.0
Interest rate	13.00%		13.00%
Conversion price \| $ / shares			$ 10.00
Base Warrants
Forward Merger
Number of warrants issued in exchange of non-redemption of shares	343,756
Warrants reserved for future issuance	1,440,000
Warrants issued upon conversion of debt		3,540,000
Exercise price \| $ / shares				$ 2.41
PIPE Pre-funded warrants
Forward Merger
Warrants reserved for future issuance	670,000
Exercise price \| $ / shares	$ 0.01			$ 0.01
Convert Warrants
Forward Merger
Principal amount \| $				$ 20.0
Warrants issued upon conversion of debt			1,500,000
Exercise price \| $ / shares	$ 24.0		$ 24.00	$ 24.00
Convert Warrants \| Convertible Securities Notes
Forward Merger
Principal amount \| $			$ 20.0
Conversion price \| $ / shares			$ 10.00
Exercise price \| $ / shares			$ 24.00
Sponsor \| Base Warrants
Forward Merger
Number of warrants issued in exchange of commitment to purchase Class A shares of ARYA in the open market and not to redeem	299,902
PIPE Investor
Forward Merger
Investment in the form of debt \| $	$ 29.5
Accrued interest \| $	1.7
Additional cash investment \| $	$ 15.9		$ 15.9
Number of shares issued in exchange of convertible debt and additional cash investment	6,622,959
Warrants issued upon conversion of debt			3,540,000
PIPE Investor \| Base Warrants
Forward Merger
Number of warrants issued in exchange of convertible debt and additional cash investment	5,445,069
Class A ordinary share
Forward Merger
Common stock par value \| $ / shares	$ 0.0001
Class B ordinary share
Forward Merger
Common stock par value \| $ / shares	$ 0.0001
Class A Arya Shares
Forward Merger
Value of common stock reserved for future issuance \| $	$ 2.5
Number of shares subjected to redemption	247,700
Class A Arya Shares \| Base Warrants
Forward Merger
Exercise price \| $ / shares				$ 10
ARYA Sciences Acquisition Corp IV \| Sponsor
Forward Merger
Number of common stock shares issuable that are subjected to vesting	1,147,500
Share trigger price for vesting \| $ / shares	$ 24.00
Threshold number of trading days to exceed or maintain trigger price for vesting of shares \| D	20
Threshold number of consecutive trading days to exceed or maintain trigger price for vesting of shares \| D	30
Threshold vesting period	10 years
ARYA Sciences Acquisition Corp IV \| Class A ordinary share
Forward Merger
Common stock par value \| $ / shares	$ 0.0001
Number of share for each share	1
ARYA Sciences Acquisition Corp IV \| Class B ordinary share
Forward Merger
Common stock par value \| $ / shares	$ 0.0001
Number of share for each share	1
ARYA Sciences Acquisition Corp IV \| Class B ordinary share \| Sponsor
Forward Merger
Number of shares forfeited	1,000,000

Fair Value Measurements - Level 3 Reconciliation of Convertible promissory notes (Details) - USD ($) $ in Thousands	2 Months Ended	7 Months Ended	12 Months Ended
	Sep. 30, 2024	Jul. 30, 2024	Dec. 31, 2023
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	$ 17,005
Fair value measurement adjustments	(3,255)
Balance (end of period)	13,750	$ 17,005
Convert Warrants
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	2,996
Fair value measurement adjustments	(2,253)
Balance (end of period)	743	2,996
PIPE Pre-funded warrants
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	4,442
Fair value measurement adjustments	(2,720)
Balance (end of period)	1,722	4,442
October 2022 Convertible Notes
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	8,257	12,561	$ 9,500
Fair value measurement adjustments		(4,304)	3,061
Balance (end of period)		8,257	12,561
April 2023 Convertible Notes
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	18,135	14,757
Additions			15,000
Fair value measurement adjustments		3,378	(243)
Balance (end of period)		18,135	14,757
November 2023 Convertible Notes
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	9,739	9,112
Additions		3,000	5,000
Fair value measurement adjustments		(2,373)	4,112
Balance (end of period)		9,739	$ 9,112
February 2024 Convertible Notes
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	6,744
Additions		7,000
Fair value measurement adjustments		(256)
Balance (end of period)		6,744
May 2024 Convertible Notes
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	3,685
Additions		3,000
Fair value measurement adjustments		685
Balance (end of period)		3,685
June 2024 Convertible Notes
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	3,077
Additions		2,500
Fair value measurement adjustments		577
Balance (end of period)		3,077
July 2024 Convertible Notes
Level 3 Reconciliation of Convertible promissory notes
Balance (beginning of period)	$ 1,233
Additions		1,000
Fair value measurement adjustments		233
Balance (end of period)		$ 1,233

Summary of Significant Accounting Policies - Concentrations (Details) - Supplier concentration risk - item		1 Months Ended	2 Months Ended	6 Months Ended	9 Months Ended	12 Months Ended
	Jul. 31, 2024	Jul. 30, 2024	Sep. 30, 2024	Jun. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Accounts payable \| Three suppliers
Concentrations
Concentration risk percentage			74.50%			71.60%
Number of suppliers			3			3
Expenditure \| Five suppliers
Concentrations
Concentration risk percentage	59.80%	59.80%	59.80%	59.80%	39.40%
Number of suppliers	5	5	5	5	5
Expenditure \| Ten suppliers
Concentrations
Concentration risk percentage	80.80%	80.80%	80.80%	80.80%	50.50%
Number of suppliers	10	10	10	10	10

Mezzanine Equity and Stockholders' Equity (Deficit) (Tables)

9 Months Ended

Sep. 30, 2024

Mezzanine Equity and Stockholders' Equity (Deficit)

Schedule of issuance of preferred stock

The following table summarizes information related to issuance of the Company’s preferred stock as of December 31, 2023 (Predecessor) (in thousands, except share data):


Preferred Stock Class	Number of Shares Authorized	Shares Issued and Outstanding		Carrying Value (1)		Conversion Price Per Share	Number of Common Stock Equivalent Shares		Liquidation Preference
Series A	270,856	270,856	$	2,500	$	9.23	270,856	$	2,500
Series B	815,730	815,730		10,626		13.04	815,730		10,637
Series C	981,596	981,596		15,988		16.30	981,596		16,000
Series D	992,064	992,064		19,990		20.16	992,064		20,000
Series E	1,879,700	1,879,700		42,365		22.61	1,879,700		42,500
	4,939,946	4,939,946	$	91,469			4,939,946	$	91,637

(1)The carrying value reflects the gross proceeds received from the sale of the preferred stock less issuance costs.

Schedule of summarizes the number of shares of common stock outstanding


		Number of Shares
Contribution from PIPE Financing for cash		3,287,018
Conversion of ARYA convertible promissory notes		355,100
Conversion of ARYA Class A ordinary shares and Class B ordinary shares		2,089,000
Conversion of Class A ordinary shares subject to redemption		123,520
Shares issued in purchase consideration		6,771,769
Additional shares issued and reclassification of Class A ordinary shares subject to non-redemption agreements and open market subscription agreements		761,229
Total		13,387,636

Schedule of Company's reserved common stock for further issuance


	September 30, 2024	December 31, 2023
	(Successor)	(Predecessor)
Conversion of preferred stock	—	4,939,946
Stock options issued and outstanding under the 2012 and 2022 Plan	—	747,001
Common shares available for future grant under the 2012 and 2022 Plan	—	27,012
Base Warrants	7,528,727	—
PIPE Pre-funded Warrants	670,000	—
Convertible Securities Notes	3,231,327	—
Convert Warrants	1,500,000	—
Company’s Common Stock issuable upon the exercise of outstanding options Legacy Adagio’s equity plans that were assumed in the Business Combination	7,587	—
Common Stock reserved for future issuance under the 2024 Equity Incentive Plan	4,472,592	—
Common Stock reserved for future issuance under the 2024 Key Employee Equity Incentive Plan	3,354,444	—
Common Stock reserved for future issuance under the 2024 Employee Stock Purchase Plan	441,293	—
Common stock reserved for future issuance	21,205,970	5,713,959

Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2024

Accrued Liabilities

Schedule of accrued liabilities

The following table presents details of accrued liabilities as of September 30, 2024 and December 31, 2023 (in thousands):


	September 30,		December 31,
	2024		2023
	(Successor)		(Predecessor)
Compensation and related expenses	$	2,131	$	1,566
Research and development expenses		576		1,191
Other		203		291
Total accrued liabilities	$	2,910	$	3,048

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	1 Months Ended	2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended	12 Months Ended
	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Jul. 31, 2024	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents		$ 28,260				$ 1,383
Accounts receivable, net		90				71
Inventory, net		4,139				3,322
Prepaid expenses		2,328				232
Other current assets		213				177
Total current assets		35,030				5,185
Property and equipment, net		1,572				1,487
Right-of-use assets, net		226				130
Intangible Assets, net		26,061				0
Goodwill		44,291				0
Other assets		16				23
Total assets		107,196				6,825
Current liabilities:
Accounts payable		4,419				3,830
Accrued liabilities		2,910				3,048
Operating lease liabilities, current		142				79
Convertible notes payable, current						36,430
Warrant liabilities						78
Term loan, current						1,695
Accrued transaction costs						444
Other accrued liabilities		448				1,572
Total current liabilities		7,919				47,176
Operating lease liabilities, long-term		85				52
Convertible notes payable, non-current		13,750
Warrant liabilities		2,465
Deferred tax liabilities, net		2,800
Term loan, long-term						143
Other long-term liabilities		3,616				8
Total liabilities		30,635				47,379
Commitments and contingencies (Note 12)
Legacy Adagio's Convertible preferred stock, $0.001 par value; 4,939,946 shares authorized as of December 31, 2023; 4,939,946 shares issued and outstanding as of December 31, 2023, with aggregate liquidation preference of $91,637 as of December 31, 2023	$ 86,783		$ 91,469	$ 86,783	$ 91,469	91,469		$ 86,783	$ 91,469	$ 91,469
Stockholders' equity (deficit):
Common stock, $0.0001 par value; 210,000,000 shares authorized as of September 30, 2024; 14,535,136 shares issued and outstanding as of September 30, 2024		1				1
Additional paid-in capital		89,786				1,608
Accumulated other comprehensive income		(9)				17
Accumulated deficit		(13,217)				(133,649)
Total stockholders' equity (deficit)	$ (148,315)	76,561	$ (123,507)	$ (148,315)	$ (123,507)	(132,023)	$ 72,964	$ (140,506)	$ (112,876)	$ (95,877)
Total liabilities, convertible preferred stock, and stockholders' equity (deficit)		$ 107,196				$ 6,825
Financial Designation, Predecessor and Successor [Fixed List]	Predecessor	Successor	Predecessor	Predecessor	Predecessor	Predecessor

Summary of Significant Accounting Policies - Intangible Assets (Details)	2 Months Ended
	Sep. 30, 2024 USD ($)
Summary of Significant Accounting Policies
Impairment of indefinite live lived intangible assets	$ 0

Earnings Per Share (EPS) - Potentially dilutive securities were excluded from the computation of diluted net loss per share calculations (Details) - shares	2 Months Ended	7 Months Ended	9 Months Ended
	Sep. 30, 2024	Jul. 30, 2024	Sep. 30, 2023
Net Loss Per Common Share
Total	10,183,814
Adagio Medical Inc
Net Loss Per Common Share
Total		5,472,453	5,744,585
Base Warrants
Net Loss Per Common Share
Total	7,528,727
Convert Warrants [Member]
Net Loss Per Common Share
Total	1,500,000
Earn Out Shares [Member]
Net Loss Per Common Share
Total	1,147,500
Convertible preferred stock \| Adagio Medical Inc
Net Loss Per Common Share
Total		4,732,044	4,939,946
Employee Stock Option
Net Loss Per Common Share
Total	7,587
Employee Stock Option \| Adagio Medical Inc
Net Loss Per Common Share
Total		740,409	755,559
Common stock warrants \| Adagio Medical Inc
Net Loss Per Common Share
Total			49,080

Earnings Per Share (EPS) (Tables)

9 Months Ended

Sep. 30, 2024

Schedule of computation of basic and diluted net loss per share attributable to common stockholders

Basic EPS:


	July 31, 2024 to September 30, 2024 (Successor)
	Common Shares		Convertible Securities Notes		Sponsor Earnout
(amounts in thousands, except the per share information)
Numerator:
Net income allocated to each class of participating securities	$	2,522	$	878	$	206
Denominator:
Weighted-average shares outstanding		14,057,636		—		—
Shares issuable to Convertible Securities Notes		—		4,896,978		—
Sponsor Earnout		—		—		1,147,500

Net income per share attributable to each class of participating securities – Basic	$	0.18	$	0.18	$	0.18

The following table sets forth the computation of diluted earnings per share attributable to common stockholders for the periods presented (in thousands, except share and per share data):

Diluted EPS:


(amounts in thousands, except the per share information)		July 31, 2024 to September 30, 2024 (Successor)

Numerator:
Net income – Basic	$	3,606
Less: Adjustment for fair value changes to convertible securities notes		(3,255)
Net income attributable to common stockholders – Diluted	$	351

Denominator:
Weighted-average shares outstanding – Basic		14,057,636
Weighted-average effect of shares issuable to Convertible Securities Notes (if-converted method)		2,000,000
Weighted-average shares outstanding – Diluted		16,057,636

Net income per share attributable to common shares – Diluted (if-converted method)	$	0.02

Schedule of potentially dilutive securities were excluded from the computation of diluted net loss per share


		September 30, 2024 (Successor)
Base Warrants		7,528,727
Convert Warrants		1,500,000
Earn-out Shares, subject to vesting conditions		1,147,500
Stock options issued in connection with the Business Combination		7,587
Total potentially dilutive securities		10,183,814

Adagio Medical Inc

Schedule of computation of basic and diluted net loss per share attributable to common stockholders


		(Predecessor)
		Period from July 1 to July 30, 2024		Period from July 1 to July 30, 2023		Period from January 1 to July 30, 2024		Nine months ending September 30, 2023
Numerator:
Net income (loss) attributable to common stockholders	$	(8,235)	$	(10,761)	$	(21,278)	$	(27,969)
Denominator:
Weighted-average shares outstanding used in computing net income (loss) per share attributable to common stockholders - basic and diluted		987,810		760,572		815,854		759,489
Net income (loss) per share attributable to common stockholders - basic and diluted	$	(8.34)	$	(14.15)	$	(26.08)	$	(36.83)

Schedule of potentially dilutive securities were excluded from the computation of diluted net loss per share


	(Predecessor)
	As of July 30, 2024	As of September 30, 2023
Convertible preferred stock	4,732,044	4,939,946
Stock options	740,409	755,559
SVB Warrants	-	49,080
Total potentially dilutive securities	5,472,453	5,744,585

Mezzanine Equity and Stockholders' Equity (Deficit) - Preferred Stock-Dividends (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Mezzanine Equity and Stockholders' Equity (Deficit)
Preferred stock dividends (in percent)	8.00%
Common stock, dividends declared		$ 0
Series A Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Original issue price	$ 9.23
Series B Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Original issue price	13.04
Series C Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Original issue price	16.30
Series D Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Original issue price	20.16
Series E Preferred Stock Class
Mezzanine Equity and Stockholders' Equity (Deficit)
Original issue price	$ 22.61

Debt - April 2023 Convertible Notes (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
	Jul. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Apr. 04, 2023
Debt
Proceeds from issuance of convertible notes payable			$ 16,500			$ 13,000
April 2023 Convertible Notes
Debt
Principal amount					$ 15,000		$ 5,000
Interest rate							8.00%
Right to issue additional convertible promissory notes							$ 10,000
Proceeds from issuance of convertible notes payable					$ 10,000
Interest	$ 100	$ 200		$ 600		$ 300

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Earnings Per Share (EPS) - Basic and diluted net loss per share (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
	Jul. 30, 2024	Jul. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023	Jul. 31, 2024
Net loss attributable to common stockholders			$ 3,606			$ (27,969)
Net loss attributable to common stockholders	$ (8,235)	$ (10,761)	$ 351		$ (21,278)	$ (27,969)
Weighted-average shares outstanding used in computing net loss per share attributable to common stockholders - basic (in shares)			14,057,636			759,489
Weighted-average shares outstanding used in computing net loss per share attributable to common stockholders - diluted (in shares)	987,810	760,572	16,057,636		815,854	759,489
Net loss per share attributable to common stockholders - basic (in dollars per share)	$ (8.34)		$ 0.18	$ (14.15)	$ (26.08)	$ (36.83)
Net loss per share attributable to common stockholders - diluted (in dollars per share)	$ (8.34)	$ (14.15)	$ 0.02	$ (14.15)	$ (26.08)	$ (36.83)
Common Stock [Member]
Net loss attributable to common stockholders			$ 2,522
Weighted-average shares outstanding used in computing net loss per share attributable to common stockholders - basic (in shares)			14,057,636
Net loss per share attributable to common stockholders - basic (in dollars per share)			$ 0.18
Convertible preferred stock
Net loss attributable to common stockholders			$ 878
Issuable shares			4,896,978
Net loss per share attributable to common stockholders - basic (in dollars per share)			$ 0.18
Earn Out Shares [Member]
Net loss attributable to common stockholders			$ 206
Issuable shares			1,147,500
Net loss per share attributable to common stockholders - basic (in dollars per share)			$ 0.18
PIPE Pre-funded Warrants [Member]
Exercise price			$ 0.01				$ 0.01
Adagio Medical Inc
Net loss attributable to common stockholders	$ (8,235)	$ (10,761)			$ (21,278)
Weighted-average shares outstanding used in computing net loss per share attributable to common stockholders - basic (in shares)	987,810	760,572			815,854
Net loss per share attributable to common stockholders - basic (in dollars per share)	$ (8.34)	$ (14.15)			$ (26.08)

Summary of Significant Accounting Policies - Impairment of Long-Lived Assets (Details) - USD ($)		1 Months Ended	2 Months Ended	6 Months Ended
	Jul. 31, 2024	Jul. 30, 2024	Sep. 30, 2024	Jun. 30, 2024
Summary of Significant Accounting Policies
Impairment of long-lived assets	$ 0	$ 0	$ 0	$ 0

Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2024

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Note 7 – Goodwill and Intangible Assets

The Company’s intangible assets, net consists of the following (in thousands):


	September 30, 2024
	(Successor)
	Useful Life (years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

IPR&D	Indefinite	$	22,100	$	—	$	22,100
Developed technology	5.0		4,100		(139)		3,961
Total		$	26,200	$	(139)	$	26,061

Amortization of intangible assets is anticipated to be approximately $0.3 million in 2024, $0.8 million for each of the years from 2025 through 2028, and $0.5 million in 2029.

As of September 30, 2024 (Successor), the Company has goodwill of $44.3 million.

Based on the Company’s qualitative analysis, no intangible assets impairment or goodwill impairment charges were recorded in the period from July 31, 2024 to September 30, 2024 (Successor). There was no goodwill or intangible assets as of December 31, 2023 (Predecessor).

Mezzanine Equity and Stockholders' Equity (Deficit) - Company's reserved common stock (Details) - shares	Sep. 30, 2024	Jul. 31, 2024	Dec. 31, 2023
Mezzanine Equity and Stockholders' Equity (Deficit)
Convertible preferred stock, shares outstanding			4,939,946
Company's Common Stock issuable upon the exercise of outstanding options Legacy Adagio's equity plans that were assumed in the Business Combination	7,587
Common Stock reserved for future issuance under the 2024 Equity Incentive Plan	21,205,970	1,036,666	5,713,959
Common stock reserved for future issuance	21,205,970	1,036,666	5,713,959
Convertible Securities Notes
Mezzanine Equity and Stockholders' Equity (Deficit)
Convertible Securities Notes	3,231,327
Base Warrants
Mezzanine Equity and Stockholders' Equity (Deficit)
Warrants	7,528,727
PIPE Pre-funded warrants
Mezzanine Equity and Stockholders' Equity (Deficit)
Warrants	670,000
Convert Warrants
Mezzanine Equity and Stockholders' Equity (Deficit)
Warrants	1,500,000
Stock Incentive Plan 2012 and 2022 Plan
Mezzanine Equity and Stockholders' Equity (Deficit)
Stock options issued and outstanding under the 2012 and 2022 Plan			747,001
Common shares available for future grant under the 2012 and 2022 Plan			27,012
2024 Equity incentive plan
Mezzanine Equity and Stockholders' Equity (Deficit)
Common Stock reserved for future issuance under the 2024 Equity Incentive Plan	4,472,592
Common stock reserved for future issuance	4,472,592
2024 Key employee equity incentive plan
Mezzanine Equity and Stockholders' Equity (Deficit)
Common Stock reserved for future issuance under the 2024 Equity Incentive Plan	3,354,444
Common stock reserved for future issuance	3,354,444
2024 Employee Stock Purchase Plan
Mezzanine Equity and Stockholders' Equity (Deficit)
Stock options issued and outstanding under the 2012 and 2022 Plan	7,587	0
Common Stock reserved for future issuance under the 2024 Equity Incentive Plan	441,293
Common stock reserved for future issuance	441,293

Mezzanine Equity and Stockholders' Equity (Deficit) - Number of shares outstanding (Details) - shares	Jul. 31, 2024	Sep. 30, 2024	Dec. 31, 2023
Mezzanine Equity and Stockholders' Equity (Deficit)
Total		14,535,136	779,908
Common Stock
Mezzanine Equity and Stockholders' Equity (Deficit)
Shares issued during period (in shares)	3,287,018
Conversion of ARYA convertible promissory Notes (in shares)	355,100
Conversion of ARYA Class A ordinary shares and Class B ordinary shares (in shares)	2,089,000
Conversion of Class A ordinary shares subject to redemption	123,520
Shares issued for acquisition of Legacy Adagio	6,771,769
Additional shares issued and reclassification of Class A ordinary shares subject to non-redemption agreements and open market subscription agreements	761,229
Total	13,387,636
Common Stock \| PIPE Investor
Mezzanine Equity and Stockholders' Equity (Deficit)
Shares issued during period (in shares)	3,287,018

Forward Merger - Number of shares of common stock issued and amounts (Details) - USD ($) $ in Thousands		9 Months Ended
	Jul. 31, 2024	Sep. 30, 2024
Forward Merger
ListCo closing equity as of July 30, 2024 (in Shares)		779,908
Successor's opening equity as of July 31, 2024 (Successor) (in shares)		14,535,136
Common Stock
Forward Merger
Contribution from PIPE Financing for cash	3,287,018
Conversion of ARYA convertible promissory Notes (in shares)	355,100
Conversion of ARYA Class A ordinary shares and Class B ordinary shares (in shares)	2,089,000
Conversion of Class A ordinary shares subject to redemption (in shares)	123,520
Shares issued for acquisition of Legacy Adagio	6,771,769
Shares issued for acquisition of Legacy Adagio	$ 1
Additional shares issued and reclassification of Class A ordinary shares subject to non-redemption agreements and open market subscription agreements (in shares)	761,229
Successor's opening equity as of July 31, 2024 (Successor) (in shares)	13,387,636
Ending Balance	$ 1
Additional Paid-in Capital
Forward Merger
Beginning Balance	2,729
Contribution of cash proceeds in PIPE Financing	23,433
Conversion of ARYA convertible promissory Notes	3,551
Conversion of Class A ordinary shares subject to redemption	1,361
Shares issued for acquisition of Legacy Adagio	53,546
Additional shares issued and reclassification of Class A ordinary shares subject to non-redemption agreements and open market subscription agreements	5,166
Ending Balance	89,786
Accumulated Deficit
Forward Merger
Beginning Balance	(2,734)
Accumulated deficit carried over from ARYA	(14,089)
Ending Balance	$ (16,823)

Fair Value Measurements - Level 3 Reconciliation of Common stock warrant liabilities (Details) $ in Thousands	2 Months Ended
	Sep. 30, 2024 USD ($)
Level 3 Reconciliation of Common stock warrant liabilities
Balance (beginning of period)	$ 17,005
Fair value measurement adjustments	(3,255)
Balance (end of period)	13,750
PIPE Pre-funded warrants
Level 3 Reconciliation of Common stock warrant liabilities
Balance (beginning of period)	4,442
Fair value measurement adjustments	(2,720)
Balance (end of period)	1,722
Convert Warrants
Level 3 Reconciliation of Common stock warrant liabilities
Balance (beginning of period)	2,996
Fair value measurement adjustments	(2,253)
Balance (end of period)	$ 743

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

Description of Organization and Business Operations - Liquidity and Going Concern (Details) - USD ($) $ in Thousands	1 Months Ended	2 Months Ended		3 Months Ended	7 Months Ended	9 Months Ended
	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Description of Organization and Business Operations
Cash and cash equivalents		$ 28,260	$ 28,260				$ 1,383
Accumulated deficit		(13,217)	(13,217)				$ (133,649)
Net income (loss)	$ (8,235)	$ 3,606	3,606	$ (10,761)	$ (21,278)	$ (27,969)
Net cash used in operating activities			$ (6,358)		$ (15,990)	$ (18,561)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-6

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 250
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 9
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483443/250-10-50-9

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 805
-SubTopic 60
-Name Accounting Standards Codification
-Section 65
-Paragraph 1
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147476176/805-60-65-1

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
-SubTopic 323
-Name Accounting Standards Codification
-Section 65
-Paragraph 2
-Subparagraph (g)(3)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478666/740-323-65-2

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Topic 220
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 2
-Subparagraph (SX 210.5-03(20))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147483621/220-10-S99-2

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(g)(1)(ii))
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147480678/235-10-S99-1

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 323
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147481687/323-10-50-3

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 825
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 28
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+ Details

- Definition

Amount of accumulated undistributed earnings (deficit).

+ References + Details

Earnings Per Share (EPS) - Diluted EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended		2 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
	Jul. 30, 2024	Jul. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023
Numerator:
Net Income (Loss) Available to Common Stockholders, Basic			$ 3,606			$ (27,969)
Less; Adjustment for fair value changes to convertible securities notes			(3,255)
Net income attributable to common stockholders - Diluted	$ (8,235)	$ (10,761)	$ 351		$ (21,278)	$ (27,969)
Denominator;
Weighted Average Number of Shares Outstanding, Basic			14,057,636			759,489
Weighted-average effect of shares issuable to Convertible Securities Notes (if-converted method)			2,000,000
Weighted-average shares outstanding - Diluted	987,810	760,572	16,057,636		815,854	759,489
Net loss per share attributable to common stockholders - diluted (in dollars per share)	$ (8.34)	$ (14.15)	$ 0.02	$ (14.15)	$ (26.08)	$ (36.83)

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

+ References

+ Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities; of income (loss) available to common shareholders.

+ References

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+ Details

- Definition

Amount, after deduction of tax, noncontrolling interests, dividends on preferred stock and participating securities, and addition from assumption of issuance of common shares for dilutive potential common shares; of income (loss) available to common shareholders.

+ References + Details

Description of Organization and Business Operations - Strategic Realignment of Resources and Corporate Restructuring (Details)	Dec. 01, 2023 USD ($) employee
Description of Organization and Business Operations
Number of employees \| employee	20
Percentage of employees	19.00%
Severance or related benefit costs	$ 0
Retention bonuses	$ 0

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2024

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).

As a result of the Business Combination, for accounting purposes, ListCo is the acquirer and Legacy Adagio is the accounting acquiree and predecessor. The financial statement presentation includes the financial statements of Legacy Adagio as “Predecessor” for the periods prior to the Closing Date (the “Predecessor Period(s)”), and of the Company as “Successor” for the periods after the Closing Date (the “Successor Period(s)”), including the consolidation of Legacy Adagio and ARYA. The Successor Period includes the Company’s results of operations and cash flows for the period from July 31, 2024 through September 30, 2024.

As a result of the application of the acquisition method of accounting as of the Closing Date of the Business Combination, the accompanying consolidated financial statements include a black line division that indicates that the Predecessor and Successor reporting entities shown are presented on a different basis and are therefore, not comparable.

Unaudited Interim Financial Information

The accompanying interim condensed consolidated balance sheet as of September 30, 2024, the condensed consolidated statements of operations and comprehensive income (loss) and the condensed consolidated statements of convertible preferred stock and stockholders' equity (deficit), for the periods from July 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor) and the three and nine months ended September 30, 2023 (Predecessor), and the condensed consolidated statements of cash flows for the periods from January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor), and the related footnote disclosures are unaudited.

These unaudited interim financial statements have been prepared in accordance with U.S. GAAP and, in management’s opinion, reflect all adjustments which only include normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of September 30, 2024 (Successor) and its results of operations and comprehensive income (loss) for the periods from July 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and the three and nine months ended September 30, 2023 (Predecessor), and cash flows for the periods from January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor).

The results for the periods from July 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), January 1, 2024 to July 30, 2024 (Predecessor) and July 31, 2024 to September 30, 2024 (Successor) are not necessarily indicative of the results to be expected for the year ending December 31, 2024, or any other interim period.

Emerging Growth Company Status

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (the “Securities Act”), as modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”).

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new standard at the time private companies adopt the new or revised standard.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Adagio Medical Holdings, Inc., and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates and Assumptions

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and disclosures of contingent assets and liabilities. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of revenue and expenses that are not readily apparent from other sources. Actual results could differ from those estimates.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates as one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less from the date of purchase, including its money market account, to be cash equivalents. All of the Company’s cash equivalents have liquid markets. Cash deposits held in accounts at each United States financial institution are insured up to $0.25 million by the Federal Deposit Insurance Corporation (“FDIC”). Cash deposits held in accounts at each European Union financial institution are insured up to €0.1 million by the Deposit Guarantee Scheme. The Company maintains its cash in bank deposit accounts that, at times, may exceed the stated insured limits. Any loss incurred or lack of access to uninsured funds could have a significant adverse impact on the Company's financial condition, results of operations and cash flows. Management does not expect any losses on such accounts.

Concentrations of Credit Risk and Off-Balance Sheet Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents. The Company deposits its cash and cash equivalents with major financial institutions; however, at times, deposits may exceed the amount of insurance provided. The Company has not experienced any losses on its deposits since inception.

Revenue Recognition

The Company generates product revenue primarily from the sale of cryoablation catheters, stylets, esophageal warming balloons, and other accessories (collectively, the “Consumables”) used with the Company’s cryoablation consoles (“Consoles”). The Company sells its products directly to hospitals and medical centers. To a lesser extent, the Company also generates lease revenue from the implied rental of Consoles loaned to customers at no charge.

The Company accounts for revenue earned from contracts with customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The Company recognizes revenue from sales to customers applying the following five steps:

•Step 1: Identify the contract with the customer.

•Step 2: Identify the performance obligations in the contract.

•Step 3: Determine the transaction price.

•Step 4: Allocate the transaction price to the performance obligations in the contract.

•Step 5: Recognize revenue when, or as, the company satisfies a performance obligation.

The Company’s customer contracts generally have performance obligations that contain deliverables consisting of the Consumables and may also include Consoles loaned to customers. The Company evaluates each promise within a multiple-performance obligation arrangement to determine whether it represents a distinct performance obligation. The primary performance obligations in the Company’s customer arrangements from which it derives revenue is the sale of the Consumables.

When the Company loans the Console to the customer, it retains title to the Console at all times and does not require minimum purchase commitments from the customer related to any Consumables. In such cases, the Company invoices the customer for the Consumables based on customer orders received. Over time, the Company expects to recover the cost of the loaned Console through the customer’s continued purchasing and use of additional Consumables. For these reasons, the Company has determined that part of the arrangement consideration for the Consumables is an implied rental payment for use of the Console. Therefore, the Company allocates the arrangement consideration between the lease components (i.e., the Console) and non-lease components (i.e., the Consumables) based on the relative estimated standalone selling price of each distinct performance obligation consistent with ASC 842, Leases and ASC 606. Revenue allocated to the lease components was not material for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor) and the nine months ended September 30, 2023 (Predecessor).

Revenue from sales to customers of the Consumables is classified as revenue in the Company's condensed consolidated statements of operations and comprehensive income (loss). The delivery of the Consumables are performance obligations satisfied at a point in time, when the control of the goods is transferred to the customer (i.e., FOB Shipping Point). Revenue is recognized when control is transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for the product.

Other Revenue Considerations

Revenue is reported net of sales tax. The Company has made the accounting policy election not to recognize a separate performance obligation for the shipment of products to the customer but to account for it as fulfillment cost.

The Company’s contracts primarily include fixed consideration. The Company only includes estimated variable amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Customers are generally required to pay within 30 days.

Any incremental costs to obtain contracts are recorded as selling, general and administrative expense as incurred due to the short duration of the Company’s contracts.

The Company does not assess whether promised goods or services are performance obligations if they are deemed immaterial in the context of the contract with the customer. Additionally, the Company does not assess whether a contract has a significant financing component if the expectation at contract inception is that the period between payment by the customer and the transfer of the promised goods or services to the customer will be one year or less.

For the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor), revenue was generated only from European markets.

Inventory

Inventory consists of raw materials, work-in-process, and finished products and is valued at the lower of cost or net realizable value. The method by which that amounts are removed from the inventory is first-in first-out (“FIFO”). Cost may include materials, labor, and manufacturing overhead. The carrying value of inventory is reviewed for potential impairment whenever indicators suggest that the cost of inventory exceeds the carrying value and management adjusts the inventory to its net realizable value. The Company also periodically evaluates inventory for estimated losses from excess quantities and obsolescence and writes down the cost of inventory to net realizable value at the time such determinations are made. Net realizable value is determined using the estimated selling price, in the ordinary course of business, less estimated costs to complete and dispose. Inventory used in research and development activities is expensed when incurred.

Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation. Depreciation and amortization are provided using the straight-line method over the estimated useful lives of the related assets, generally three to five years, or, in the case of leasehold improvements, over the remaining life of the lease term. Specifically, Consoles had a five-year useful life as of December 31, 2023, and effective on January 1, 2024, the useful life of Consoles was changed to three years to better reflect the estimated periods during which these Consoles will remain in service. The impact of the change in the estimated useful life of Consoles is not material to the Predecessor Periods or Successor Periods, nor to the future remaining life of the Consoles.

Property and equipment include equipment that is loaned to customers and located at customer premises. The Company retains ownership of the equipment held for evaluation by customers and has the right to remove the equipment if it is not being utilized according to expectations.

Intangible Assets

Intangible assets with finite useful lives are amortized on a straight-line basis over their estimated useful lives. In determining the estimated useful lives of definite-lived intangibles, the Company considers the nature, competitive position, life cycle position and expected future operating cash flows of the acquired asset, as well as its commitment to support these assets through continued investment and legal infringement protection.

Indefinite-lived intangible assets consist of In-Process Research and Development (“IPR&D”). Intangible assets with indefinite lives are tested for impairment if impairment indicators arise and, at a minimum, annually. However, an entity is permitted to first assess qualitative factors to determine if a quantitative impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely than not that an indefinite-lived intangible asset’s fair value is less than its carrying amount. Otherwise, no further impairment testing is required. The indefinite-lived intangible asset impairment test consists of a one-step analysis that compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. No impairment charges were recorded in the period from July 31, 2024 to September 30, 2024 (Successor).

Legacy Adagio does not have material intangible assets.

Goodwill

In accordance with ASC 350, Intangibles – Goodwill and Other, the Company tests goodwill for impairment at the reporting unit level. The Company has one reporting unit for the goodwill impairment testing purposes. Goodwill is tested for impairment on an annual basis in the fourth quarter, or more frequently if events or changes in circumstances indicate the carrying value of goodwill may not be recoverable (a “triggering event”). On the occurrence of a triggering event, an entity has the option to first assess qualitative factors to determine whether a quantitative impairment test is necessary. If it is more likely than not that goodwill is impaired, the fair value of the reporting unit (the Company) is compared with its carrying value. An impairment charge is recognized for the amount by which the carrying amount exceeds the fair value, provided, the loss recognized cannot exceed the total amount of goodwill. No goodwill impairment charges were recorded in the period from July 31, 2024 to September 30, 2024 (Successor).

Legacy Adagio does not have goodwill.

Concentrations

The Company had three suppliers each exceed 10.0% of total accounts payable as of September 30, 2024 (Successor), representing 74.5% of accounts payable. As of December 31, 2023 (Predecessor), Legacy Adagio has three suppliers each exceed 10.0% of total accounts payable, representing 71.6% of accounts payable.

The Company’s five and ten largest suppliers accounted for approximately 59.8% and 80.8%, respectively, of the Company’s expenditures for the periods from January 1, 2024 to July 30, 2024 (Predecessor) and July 31, 2024 to September 30, 2024 (Successor). Legacy Adagio’s five and ten largest suppliers accounted for approximately 39.4% and 50.5%, respectively, of Legacy Adagio’s expenditures for the nine months ended September 30, 2023 (Predecessor).

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property and equipment and finite-lived intangible assets, for impairment annually or whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss is recognized when the asset’s carrying value exceeds the total undiscounted cash flows expected from its use and eventual disposition. The amount of the impairment loss is determined as the excess of the carrying value of the asset over its fair value. For the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 2023 (Predecessor), the Company determined that there was no impairment of long-lived assets.

Foreign Currency Translation and Transactions

The assets, liabilities, and results of operations of Adagio Medical GmbH are recorded using the Euro as the designated functional currency, which is the currency of the primary economic environment in which Adagio Medical GmbH operates. Consequently, transactions in currencies other than Euro are measured and recorded in Euro. Upon consolidation with the Company, its assets and liabilities are translated to U.S. Dollars at currency exchange rates as of the condensed consolidated balance sheet date and its revenues and expenses are translated at the weighted-average currency exchange rates during the applicable reporting periods. Translation adjustments resulting from the process of translating this entity’s financial statements are reported in accumulated other comprehensive income (loss) in the condensed consolidated balance sheets and foreign currency translation adjustment in the condensed consolidated statements of operations and comprehensive income (loss).

Leases

The Company accounts for its lease property under ASC 842. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases, and are recorded on the condensed consolidated balance sheets as both a right-of-use asset and a lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate, which is the rate for collateralized borrowings based on the current economic environment, current borrowings, value of leases, currency in which the lease obligation is satisfied, rate sensitivity, lease term and materiality. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use asset results in straight-line rent expense over the lease term. Variable lease expenses are recorded when incurred.

The Company determines whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment.

The Company uses the implicit rate in the lease agreement, when readily available, or its incremental borrowing rate as the basis to calculate the present value of future lease payments at lease commencement. The incremental borrowing rate represents the rate the Company would have to pay to borrow funds on a collateralize basis over a similar term and in a similar economic environment.

In calculating the right-of-use asset and lease liability, the Company elected to combine lease and non-lease components for its real estate leases. The Company adopted the policy election to exclude short-term leases having initial terms of twelve months from the initial recognition provisions of ASC 842. Refer to Note 11- Operating Leases for additional details.

The Company's implied rental agreements for its consoles qualify as operating leases and as such, revenue is recognized in accordance with ASC 842, Leases and ASC 606, Revenue from Contracts with Customers. Revenue allocated to the lease components were not significant for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and nine months ended September 30, 2023 (Predecessor).

Cost of Revenue

Cost of revenue includes raw materials, direct labor, manufacturing overhead, shipping and receiving costs and other less significant indirect costs related to the production of the Company’s products.

Cost of revenue also includes the depreciation expense of Consoles loaned to the customers.

Research and Development

Research and development expenses consist primarily of salaries, consulting fees, and employee-related costs (including stock-based compensation) for personnel directly engaged in research and development activities, clinical trial expenses, equipment costs, material costs, allocated rent and facilities costs, and depreciation. Research and development expenses relating to possible future products are expensed as incurred. The Company also accrues and expenses costs for activities associated with clinical trials performed by third parties as incurred.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of salaries, and employee-related costs (including stock-based compensation) for personnel in executive, finance and other administrative functions, allocated rent and facilities costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting and consulting services, marketing costs and insurance costs. The Company expenses all selling, general, and administrative costs as incurred. The incurred transaction costs are recorded in selling, general, and administrative costs.

Accrued Transaction Costs (Predecessor)

In connection with the Business Combination, Legacy Adagio accrued transaction costs, consisting primarily of legal, accounting and other professional fees, which were incurred and expensed, but not yet paid. The accrued expenses as of December 31, 2023 (Predecessor) are recorded in accrued transaction costs on the condensed consolidated balance sheets.

Fair Value Measurements

Fair value measurements are based on the premise that fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the following three-tier fair value hierarchy is used in determining the inputs for measuring fair value:

•Level 1-Quoted prices in active markets for identical assets or liabilities.

•Level 2-Observable inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.

•Level 3-Unobservable inputs which are supported by little or no market activity and consist of financial instruments valued using pricing models, discounted cash flow methodologies or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange. The fair value of the convertible notes payable and warrant liabilities may be impacted by certain unobservable inputs, most significantly with regard to discount rates, expected volatility and historical and projected performance. Significant changes to these inputs in isolation could result in a significantly different fair value measurement.

Fair Value Option for Convertible Notes

As permitted under ASC 825, Financial Instruments (“ASC 825”), Legacy Adagio elected the fair value option to account for the convertible promissory notes issued in October 2022 (the “October 2022 Convertible Notes”), April 2023 (the “April 2023 Convertible Notes”), November 2023 (the “November 2023 Convertible Notes”), February 2024 (the “February 2024 Convertible Notes”, “2024 Bridge Financing Notes”), May 2024 (the “May 2024 Convertible Notes”), June 2024 (the “June 2024 Convertible Notes”), and July 2024 (the “July 2024 Convertible Notes”) (collectively, “Legacy Adagio Convertible Notes”), and the Company elected the fair value option to account for the Convertible Securities Notes (as defined below), in order to measure those liabilities at amounts that more accurately reflect the current economic environment in which the Legacy Adagio and the Company operated.

The convertible promissory notes mentioned above were recorded at fair value at issuance and subsequently were remeasured to fair value at the end of each reporting period. The change in fair value of the convertible promissory notes, excluding amounts related to interest, is recorded in “Convertible notes fair value adjustment”, while amounts related to interest are recorded as interest expense in the consolidated statements of operations and comprehensive income (loss).

As a result of applying the fair value option, direct costs and fees related to the issuance of the convertible promissory notes were expensed as incurred (i.e., not recognized as deferred costs). Refer to Note 4- Fair Value Measurements for further detail.

Warrants

The Company has Convert Warrants (as defined below) issued along with the Convertible Securities Notes, and PIPE Pre-funded Warrants (as defined below) issued in PIPE Financing (as defined below), which are classified as liabilities. The Company also has PIPE Base Warrants (as defined below) issued in PIPE Financing, which is classified as equity. Legacy Adagio has certain common stock warrants (“SVB Warrants”) issued along with the SVB Term Loan (as defined below) and pre-funded warrants to purchase Series E preferred stock (“Series E Pre-funded Warrants”), which were both classified as liabilities.

The Company and Legacy Adagio determine the classification of warrants based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments and meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own shares of common stock, among other conditions for equity classification. This assessment is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter until settlement. Changes in the estimated fair value of the liability-classified warrants are recognized in warrant liabilities fair value adjustment in the condensed consolidated statements of operations and comprehensive income (loss).

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within twelve months of the condensed consolidated balance sheet date.

See Note 10- Warrants for additional information related to the warrants.

Term Loan (Predecessor)

The Company accounts for the Predecessor term loan at residual value on the date of issuance. The expected life of the term loan is the contractual term ending on the maturity date. The Company classifies the term loan as current liabilities within twelve months of the maturity date or when otherwise due. Interest expense is recognized in the condensed consolidated statements of operations and comprehensive income (loss) over the contractual term of the loan. See Note 9- Debt for additional information related to the term loan.

Convertible Preferred Stock (Predecessor)

The Company records the Legacy Adagio convertible preferred stock at fair value on the dates of issuance, net of issuance costs. Upon the occurrence of certain events that are outside the Legacy Adagio’s control, including a deemed liquidation event, holders of the convertible preferred stock can cause redemption for cash. Each share of preferred stock would automatically be converted into shares of Legacy Adagio common stock at the then effective conversion rate immediately upon the earlier of (i) the election of the holders of a majority of the outstanding shares of preferred stock, voting as a separate class on an as-converted to common stock basis, or (ii) the closing of the sale of the Legacy Adagio’s common stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended, with aggregate offering proceeds to Legacy Adagio (before deduction for underwriters’ discounts and expenses relating to the issuance) of at least $75.0 million and a public offering price per share equal to at least $67.83 (subject to adjustments for stock dividends, splits, combinations and similar events).

As the Legacy Adagio preferred stock is considered to be contingently redeemable, the Legacy Adagio preferred stock has been classified outside of permanent equity.

Stock-Based Compensation

The Company recognizes compensation expense for all stock-based awards issued to employees and non-employees based on the estimated grant-date fair value, which is recognized as expense on a straight-line basis over the requisite service period. The Company has elected to recognize forfeitures as they occur. The fair value of stock options is determined using the Black-Scholes option-pricing model. The determination of fair value for stock-based awards on the date of grant using an option-pricing model requires management to make certain assumptions including expected volatility, expected term, risk-free interest rate and expected dividends in addition to the Company’s common stock valuation. Refer to Note 14- Stock-Based Compensation.

Due to the absence of an active market for Legacy Adagio common stock, the Company utilized methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series: Valuation of Privately Held Company Equity Securities Issued as Compensation to estimate the fair value of Legacy Adagio common stock. In determining the exercise prices for options granted, the Company considered the fair value of the common stock as of the grant date. The fair value of the common stock is determined based upon a variety of factors, including the Company’s financial position, historical performance and operating results, the Company’s stage of development, the progress of the Company’s research and development programs, the prices at which the Company sold its convertible preferred stock, the superior rights, preferences and privileges of the Company’s convertible preferred stock relative to its common stock, external market conditions affecting the medical technologies industry, the lack of marketability of the Legacy Adagio common stock, prospects of a transaction and market performance of peer companies. Significant changes to the key assumptions underlying the factors used could result in different fair values of Legacy Adagio at each valuation date.

Income Taxes

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the condensed consolidated financial statements. Deferred tax assets and liabilities are determined based on the difference between the condensed consolidated financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse and include Net Operating Loss (“NOL”) carryforwards and Research and Development (“R&D”) tax credit carryforwards. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

ASU 2019-12, Simplifying the Accounting for Income Taxes was adopted in the first quarter of 2021 and the Company has recorded franchise taxes not based on income outside of income tax expense. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest and penalties on its condensed consolidated balance sheets and has not recognized interest and/or penalties in the condensed consolidated statements of operations and comprehensive income (loss) for the periods from January 1, 2024 to July 30, 2024 (Predecessor), July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 30, 2023 (Predecessor), respectively.

To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits. Refer to Note 16- Income Taxes for additional details.

Debt - February 2024 Convertible Notes (Details) - USD ($)			1 Months Ended	7 Months Ended
	Jul. 23, 2024	Feb. 29, 2024	Jul. 30, 2024	Jul. 30, 2024	Feb. 13, 2024
Debt
Debt amount	$ 29,500,000
February 2024 Convertible Notes
Debt
Principal amount					$ 7,000,000.0
Amount of convertible notes issued		$ 7,000,000.0
Warrants issued upon conversion of debt		525,000
Interest rate					8.00%
Interest			$ 46,000.0	$ 300,000

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Goodwill and Intangible Assets - Intangible assets, net (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Goodwill and Intangible Assets
IPR&D	$ 22,100
Developed technology, Gross Carrying Amount	4,100
Developed technology, Net Carrying Amount	3,961
Gross Carrying Amount	26,200
Accumulated Amortization	(139)
Net Carrying Amount	$ 26,061	$ 0
Developed technology, Useful Life (years)	5 years

Warrants (Details) $ / shares in Units, $ in Millions				7 Months Ended	9 Months Ended
Warrants (Details) $ / shares in Units, $ in Millions	Jul. 31, 2024 USD ($) $ / shares Y shares	Jun. 25, 2024 $ / shares shares	Feb. 13, 2024 USD ($) $ / shares shares	Jul. 30, 2024 shares	Sep. 30, 2024 USD ($) $ / shares Y shares	Dec. 31, 2023 shares	Feb. 03, 2023 shares
Warrants
Exchange preferred stock for pre-funded warrants (shares)				(207,902)
Share issued during period, warrants exercised					34,680
Number of shares issued in exchange of non-redeemable shares					761,229
Common stock, shares outstanding					14,535,136	779,908
Convertible Securities Notes
Warrants
Number of pre-funded warrants issued			1,500,000
Debt instrument, face amount \| $	$ 20.0		$ 20.0		$ 7.0
Class A Arya Shares
Warrants
Number of warrants issued in exchange of non-redeemable shares					468,941
SVB Warrants
Warrants
Exercise price \| $ / shares					$ 7.97
Initial warrants
Warrants
Shares issued							32,720
Additional warrants
Warrants
Shares issued							16,360
Pre-funded Warrants
Warrants
Number of pre-funded warrants issued		207,902			670,000
Exercise price \| $ / shares		$ 0.001			$ 0.01
Shares issued during period (in shares)					681,111
Pre-funded Warrants \| Other PIPE Investor
Warrants
Number of pre-funded warrants issued					1,140,000
Issuance or sale of equity \| $					$ 9.5
Pre-funded Warrants \| Series E Preferred Stock
Warrants
Shares issued		207,902
Exchange preferred stock for pre-funded warrants (shares)		207,902
Exercise price \| $ / shares		$ 0.001
PIPE Pre-funded warrants
Warrants
Number of pre-funded warrants issued	670,000				670,000
Exercise price \| $ / shares	$ 0.01				$ 0.01
Shares issued during period (in shares)					3,287,018
PIPE Pre-funded warrants \| Measurement Input, Volatility Haircut
Warrants
Warrants measurement inputs					10
PIPE Pre-funded warrants \| Expected Term (years)
Warrants
Warrants measurement inputs					5
PIPE Pre-funded warrants \| Risk-Free interest rate
Warrants
Warrants measurement inputs					3.93
PIPE Pre-funded warrants \| Share price
Warrants
Warrants measurement inputs \| $ / shares					6.64
PIPE Pre-funded warrants \| Expected dividend yield
Warrants
Warrants measurement inputs					0
PIPE Pre-funded warrants \| Volatility
Warrants
Warrants measurement inputs					84.0
Series E Pre-funded Warrants
Warrants
Class of warrant or right, exchanged in shares					207,902
Convert Warrants
Warrants
Number of pre-funded warrants issued	1,500,000				1,500,000
Exercise price \| $ / shares	$ 24.0		$ 24.00		$ 24.00
Debt instrument, face amount \| $					$ 20.0
Convert Warrants \| Expected Term (years)
Warrants
Warrants measurement inputs \| Y	7.0				6.83
Convert Warrants \| Risk-Free interest rate
Warrants
Warrants measurement inputs	0.0396				0.0363
Convert Warrants \| Share price
Warrants
Warrants measurement inputs \| $ / shares	6.64				2.58
Convert Warrants \| Expected dividend yield
Warrants
Warrants measurement inputs	0				0
Convert Warrants \| Volatility
Warrants
Warrants measurement inputs	0.550				0.625
Convert Warrants \| Convertible Securities Notes
Warrants
Exercise price \| $ / shares			$ 24.00
Debt instrument, face amount \| $			$ 20.0
Base Warrants
Warrants
Number of pre-funded warrants issued					3,345,069
Exercise price \| $ / shares					$ 2.41
Number of shares issued in exchange of non-redeemable shares					643,658
Base Warrants \| Bridge Financing
Warrants
Number of pre-funded warrants issued					3,540,000
Shares issued during period (in shares)					4,372,607
Base Warrants \| Class A Arya Shares
Warrants
Exercise price \| $ / shares					$ 10

Debt - May 2024 Convertible Notes (Details) - May 2024 Convertible Notes - USD ($)	1 Months Ended	7 Months Ended
	Jul. 30, 2024	Jul. 30, 2024	May 21, 2024
Debt
Principal amount			$ 3,000,000.0
Interest rate			8.00%
Interest	$ 19,700	$ 46,000.0

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Stock-Based Compensation - Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	1 Months Ended		7 Months Ended
	Jul. 30, 2024	Jul. 30, 2023	Jul. 30, 2024	Jul. 30, 2023
Stock-Based Compensation
Total stock-based compensation	$ 421	$ 126	$ 642	$ 329
Selling, general and administrative
Stock-Based Compensation
Total stock-based compensation	335	66	527	241
Research and development
Stock-Based Compensation
Total stock-based compensation	$ 86	$ 60	$ 115	$ 88

Stock-Based Compensation (Details)		1 Months Ended		7 Months Ended	9 Months Ended
Stock-Based Compensation (Details)	Jul. 26, 2024 shares	Apr. 30, 2022 item shares	Jan. 31, 2011 shares	Jul. 30, 2024 shares	Sep. 30, 2024 shares
Stock-Based Compensation
Share issued during period, warrants exercised					34,680
2012 Plan
Stock-Based Compensation
Maximum number of shares that can be granted			1,255,000
Maximum term			10 years
2022 Plan
Stock-Based Compensation
Maximum number of shares that can be granted		203,855
Number of non employees whose performance obligation were deemed to be immaterial \| item		2
Expected dividend yield		0.00%
Class of warrant or right, exchanged in shares				45,544
2022 Plan \| Employee Stock Option
Stock-Based Compensation
Maximum term		10 years
Vesting period		4 years
2024 Equity incentive plan
Stock-Based Compensation
Maximum number of shares that can be granted	4,472,593
Percentage increase to the number of shares authorized	5.00%
2024 Key employee equity incentive plan
Stock-Based Compensation
Maximum number of shares that can be granted	3,354,444
2024 Employee Stock Purchase Plan
Stock-Based Compensation
Maximum number of shares that can be granted	441,293
Percentage increase to the number of shares authorized	1.00%
Number of replacement stock options granted to Legacy Adagio's option holders by the Company	0
Share issued during period, warrants exercised				7,587

Mezzanine Equity and Stockholders' Equity (Deficit) - Common Stock (Details)	1 Months Ended	9 Months Ended
	Sep. 30, 2024 $ / shares shares	Sep. 30, 2024 $ / shares shares	Jul. 31, 2024 $ / shares shares	Jul. 30, 2024 $ / shares shares	Dec. 31, 2023 Vote $ / shares shares
Votes per share of common stock \| Vote					1
Conversion of preferred stock					4,939,946
Common stock reserved for future issuance	21,205,970	21,205,970	1,036,666		5,713,959
Common Stock, Shares Authorized	210,000,000	210,000,000		6,594,946	6,594,946
Common stock, par value (in dollars per share) \| $ / shares	$ 0.0001	$ 0.0001		$ 0.001	$ 0.001
Common stock, shares issued	14,535,136	14,535,136			786,510
Common stock, shares outstanding	14,535,136	14,535,136			779,908
Issuance of earn-out shares (in shares)		1,147,500
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, par value \| $ / shares	$ 0.0001	$ 0.0001	$ 0.001
Common stock trigger price \| $ / shares			$ 24.00
Sponsor Earnout
Issuance of earn-out shares (in shares)	1,147,500

Pay vs Performance Disclosure - USD ($) $ in Thousands	1 Months Ended	2 Months Ended		3 Months Ended	7 Months Ended	9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Jul. 30, 2024	Sep. 30, 2024	Sep. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (8,235)	$ 3,606	$ 3,606	$ (10,761)	$ (21,278)	$ (27,969)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

Debt - SVB Term Loan (Details) - USD ($)		1 Months Ended	3 Months Ended	7 Months Ended	9 Months Ended
Debt - SVB Term Loan (Details) - USD ($)	Feb. 03, 2023	Jul. 30, 2024	Sep. 30, 2023	Jul. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Dec. 31, 2023
Debt
Total outstanding debt						$ 13,750,000	$ 38,268,000
Silicon Valley Bank Term Loan
Debt
Principal amount	$ 2,000,000.0
Interest rate	7.00%
Variable interest rate	1.50%
Debt Instrument, Variable Interest Rate, Type [Extensible Enumeration]	us-gaap:PrimeRateMember
Warrant liabilities	$ 35,600,000
Unamortized debt discount	9,700,000
Minimum required equity financing	40,000,000.0
Outstanding principal							1,900,000
Outstanding notes	1,000,000.0
Interest		$ 9,000.0	$ 66,500	$ 87,300	$ 200,000
Total outstanding debt	1,000,000.0						1,838,000
SVB Intial Term Loan
Debt
Principal amount	$ 3,000,000.0
SVB Subsequent Term Loan
Debt
Outstanding principal							$ 19,400,000
Initial warrants
Debt
Shares issued	32,720
Warrant liabilities	$ 28,500,000
Additional warrants
Debt
Shares issued	16,360
Warrant liabilities	$ 7,100,000

Operating Leases - Future minimum payments (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Operating Leases
Three months ending December 31, 2024	$ 39
Year ending December 31, 2025	154
Year ending December 31, 2026	48
Total undiscounted future cash flows	241
Less: imputed interest	(14)
Total operating lease liability	$ 227

Mezzanine Equity and Stockholders' Equity (Deficit)

9 Months Ended

Sep. 30, 2024

Mezzanine Equity and Stockholders' Equity (Deficit)

Mezzanine Equity and Stockholders' Equity (Deficit)

Note 13 - Mezzanine Equity and Stockholders’ Equity (Deficit)

Authorized Shares (Predecessor)

The Legacy Adagio’s Amended and Restated Articles of Incorporation authorize the issuance of two classes of stock designated as common and preferred stock, each having a par value of $0.001 per share. The number of shares authorized as of July 30, 2024 is 11,534,892 consisting of 6,594,946 shares of common stock and 4,939,946 shares of preferred stock, designated as Series A, Series B, Series C, Series D, and Series E preferred stock in the amounts included in the table below.

Convertible Preferred Stock (Predecessor)

Legacy Adagio classifies convertible preferred stock as temporary equity on the accompanying condensed consolidated balance sheets, as all such preferred stock is redeemable either at the option of the holder or upon an event outside the control of Legacy Adagio. The requirements of a deemed liquidation event, as defined within its amended and restated certificate of incorporation filed in November 2020, are not entirely within Legacy Adagio’s control. In the event of such a deemed liquidation event, the proceeds from the event are distributed in accordance with the liquidation preferences, provided that the holders of preferred stock have not converted their shares into common stock. Legacy Adagio records the issuance of preferred stock at the issuance price less related issuance costs. Legacy Adagio has not adjusted the carrying value of outstanding preferred stock to its liquidation preference because a deemed liquidation event is not probable of occurring as of the end of the reporting period.

During the periods from January 1, 2024 to July 30, 2024 (Predecessor), the following transactions have been executed:

•On June 25, 2024, 207,902 shares of Series E Preferred Stock were extinguished and exchanged for 207,902 shares of pre-funded warrants to purchase Series E Preferred Stock. See Note 10- Warrants for additional information regarding the Series E Pre-funded Warrants. The difference between the carrying value of the extinguished Series E Preferred Stock and the fair value of the issued Series E Pre-funded Warrants is recorded in additional paid-in capital.

On the Closing Date, the Legacy Adagio’s 4,732,044 convertible preferred stocks were converted into shares of Legacy Adagio common stock on a one-to-one basis prior to Adagio Merger Effective Time and then converted into 789,337 shares of the Company’s Common Stock and additional paid in capital at the Closing based on the exchange ratio set forth in the Business Combination Agreement.

There were no preferred stock transactions during the year ended December 31, 2023 (Predecessor).

The following table summarizes information related to issuance of the Company’s preferred stock as of December 31, 2023 (Predecessor) (in thousands, except share data):


Preferred Stock Class	Number of Shares Authorized	Shares Issued and Outstanding		Carrying Value (1)		Conversion Price Per Share	Number of Common Stock Equivalent Shares		Liquidation Preference
Series A	270,856	270,856	$	2,500	$	9.23	270,856	$	2,500
Series B	815,730	815,730		10,626		13.04	815,730		10,637
Series C	981,596	981,596		15,988		16.30	981,596		16,000
Series D	992,064	992,064		19,990		20.16	992,064		20,000
Series E	1,879,700	1,879,700		42,365		22.61	1,879,700		42,500
	4,939,946	4,939,946	$	91,469			4,939,946	$	91,637

(1)The carrying value reflects the gross proceeds received from the sale of the preferred stock less issuance costs.

The relative rights, terms, privileges, and restrictions granted to or imposed upon preferred stockholders are described below:

Preferred Stock - Dividends

Prior and in preference to any declaration or payment of any dividends to the holders of common stock, the holders of preferred stock shall be entitled to receive dividends out of any assets legally available therefor, at the rate of eight percent (8%) of the original issue price per share per annum. The original issue price of Series A, Series B, Series C, Series D, and Series E is $9.23, $13.04, $16.30, $20.16, and $22.61, respectively. The dividends shall not be cumulative.

In the event that the dividend amount declared by the Board of Directors of Legacy Adagio is insufficient to permit payment of the full aforesaid dividends, such dividends will be paid ratably to each holder of preferred stock in proportion to the dividend amounts to which each holder of preferred stock is entitled. After payment of the full amount of the aforesaid dividends, any additional dividends declared shall be distributed to the holder of common stock and preferred stock in proportion to the number of shares of common stock that would be held by such holder on an as-converted to common stock basis.

No dividends on preferred stock or common stock have been declared by the Board of Directors as of December 31, 2023 (Predecessor) or as of the Closing date.

Liquidation Preference

In the event of liquidation of Legacy Adagio, including a merger, acquisition, or sale of all or substantially all the assets of Legacy Adagio, holders of preferred stock are entitled to receive an amount equal to the original issue price of each share of preferred stock held plus any dividends declared but not yet paid, prior to any distribution of assets or surplus funds of Legacy Adagio to common stock shareholders. After payment has been made to the holders of the preferred stock of the full amounts to which they are entitled as noted above, the remaining assets would be distributed among the holders of the common stock pro rata based on the number of shares of common stock held by each holder.

If, at the time of liquidation, the assets are insufficient to permit full payment of the liquidation preferences of the series listed in the order above, the assets must be distributed ratably among the holders of the series in proportion to the full preferential amount each such holder is otherwise entitled to receive in respect to such shares.

Voting Rights

So long as the shares of preferred stock that are convertible into at least 1,000,000 shares of common stock (subject to appropriate adjustment in the event of any stock dividends, stock split, combination or other similar recapitalization with respect to the common stock) are issued and outstanding, the holders of preferred stock, voting as a separate class on an as-converted to common stock basis, shall have the right to elect four members of the Board of Directors of Legacy Adagio. The holders of common stock, voting as a separate class, shall have the right to elect one member of the Board of Directors. The remaining directors shall be elected by the holders of the common stock and the preferred stock, voting together as a single class on an as-converted to common stock basis.

On all other matters, the holders of the preferred stock shall have full voting rights and powers equal to the voting rights and powers of the holders of common stock.

Fractional votes by the holders of preferred stock shall not be permitted and any fractional voting rights shall be rounded to the nearest whole number.

Conversion Rights

Each share of preferred stock shall be convertible, at the option of the holder, into shares of common stock without the payment of any additional consideration. The preferred stock shall be convertible into the number of fully paid and nonassessable shares of common stock which results from dividing the conversion price per share in effect for the preferred stock at the time of conversion into the per share conversion value. The initial per share conversion price of Series A, Series B, Series C, Series D, and Series E is $9.23, $13.04, $16.30, $20.16, and $22.61, respectively. The initial conversion price is subject to adjustment for antidilution provisions, as defined. The per share conversion value of Series A, Series B, Series C, Series D, and Series E is $9.23, $13.04, $16.30, $20.16, and $22.61, respectively.

Each share of preferred stock shall automatically be converted into shares of common stock at the then effective conversion rate immediately upon the earlier of (i) the election of the holders of a majority of the outstanding shares of preferred stock, voting as a separate class on an as-converted to common stock basis, or (ii) the closing of the sale of the Legacy Adagio common stock in a firm commitment, underwritten public offering registered under the Securities Act of 1933, as amended, with aggregate offering proceeds to Legacy Adagio (before deduction for underwriters’ discounts and expenses relating to the issuance) of at least $75 million and a public offering price per share equal to at least $67.83 (subject to adjustments for stock dividends, splits, combinations and similar events).

Protective Provisions

So long as there are at least 1,000,000 shares of preferred stock outstanding, Legacy Adagio shall not (by merger, reclassification, amendment or otherwise), without first obtaining the approval of the holders of at least seventy percent (70%) of the then outstanding shares of preferred stock, voting separately as a class, to, among other things: (i) amend the certificate of incorporation or bylaws; (ii) adversely alter or change the rights, preferences or privileges of the preferred stock; (iii) increase or decrease the aggregate number of authorized shares of any class of the capital stock of Legacy Adagio.

So long as shares of Series E preferred stock that are convertible into at least 500,000 shares of common stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the common stock) are issued and outstanding, Legacy Adagio shall not directly or indirectly (by merger, reclassification, amendment or otherwise), without first obtaining the approval of the holders of at least a majority of the voting power of the then outstanding shares of Series E preferred stock, voting separately as a class, to, among other things: (i) amend, alter, repeal or waive any provision of the certificate of incorporation or bylaws of Legacy Adagio in a manner that adversely affects the holders of the Series E preferred stock in a manner different from any other series of preferred stock; (ii) create or authorize the creation of or issue any other security convertible into to exercisable for any equity security having rights, preferences or privileges senior to the Series E preferred stock; (iii) increase or decrease the authorized number of shares of Series E preferred stock.

Common Stock (Predecessor)

Each share of common stock is entitled to one vote. As of December 31, 2023 (Predecessor), Legacy Adagio authorized to issue up to 6,594,946 of common stock at a par value of $0.001 per share out of which 786,510 shares issued and 779,908 shares outstanding.

On the Closing Date, as explained in Note 3- Forward Merger, each share of Legacy Adagio issued and outstanding prior to the Closing Date was converted into the Company’s Common Stock based on exchange ratio set forth in the Business Combination Agreement.

Common Stock (Successor)

As of September 30, 2024 (Successor), the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 210,000,000 of common stock at a par value of $0.0001 per share, and 20,000,000 shares of preferred stock, par value $0.0001 per share. As of September 30, 2024 (Successor), 14,535,136 shares were issued and outstanding, including 1,147,500 Sponsor Earnout (as defined below).

In September 2024, the Company issued 1,147,500 shares of the Company’s Common Stock (such issuance, the “Sponsor Earnout”) to the AYRA Sponsor under the Sponsor Letter Agreement dated February 13, 2024 (“the Sponsor Letter Agreement”). Pursuant to the agreement, the Sponsor Earnout shall be unvested and vests upon the earlier of: i) During the period from the effective time to the 10th anniversary of the Closing Date (the “Earn-Out Period”), the stock price of the Company’s Common Stock equals to or exceeds $24.00 per share (the “Trigger Price”) for any 20 trading days within any 30 trading day period from and after the Closing Date (the “Earn-Out Target”), and ii) immediately prior to the consummation of a company sale during the Earn-Out Period.

As of the reporting date, the vesting of the Sponsor Earnout was not considered probable.

According to ASC 815, it is determined that the Sponsor Earnout is indexed to the Company’s Common Stock and classified as equity and is initially measured at fair value and not subsequently remeasured. The Sponsor Earnout vests when the Company’s stock price meets a stated price or there is a company sale during the earnout period. Upon meeting either vesting condition, the same number of the Company’s Common Stock would be issued and no longer subject to forfeiture or cancellation. The Sponsor Earnout meets the ASC 815-40 indexation guidance. Specifically, the stated stock price and company sale, as the exercise contingencies, do not preclude equity indexation and there is no variability in the number of shares issuable under the Sponsor Earnout. Additionally, the Sponsor Earnout at the issuance meets the ASC 815-40 equity classification criterion as the Company has sufficient authorized shares available to settle the Sponsor Earnout and all the antidilution adjustments are in the control of the Company.

The holders of the Company’s Common Stock are entitled to receive dividends whenever funds are legally available, when and if declared by the Company’s Board of Directors. As of September 30, 2024 (Successor), no cash dividend has been declared to date. Each share of the Company’s Common Stock is entitled to one vote.

Below table summarizes the number of shares of common stock outstanding immediately following the Closing:


		Number of Shares
Contribution from PIPE Financing for cash		3,287,018
Conversion of ARYA convertible promissory notes		355,100
Conversion of ARYA Class A ordinary shares and Class B ordinary shares		2,089,000
Conversion of Class A ordinary shares subject to redemption		123,520
Shares issued in purchase consideration		6,771,769
Additional shares issued and reclassification of Class A ordinary shares subject to non-redemption agreements and open market subscription agreements		761,229
Total		13,387,636

The table below summarizes the Company’s reserved common stock for further issuance as of September 30, 2024 (Successor) and December 31,2023 (Predecessor):


	September 30, 2024	December 31, 2023
	(Successor)	(Predecessor)
Conversion of preferred stock	—	4,939,946
Stock options issued and outstanding under the 2012 and 2022 Plan	—	747,001
Common shares available for future grant under the 2012 and 2022 Plan	—	27,012
Base Warrants	7,528,727	—
PIPE Pre-funded Warrants	670,000	—
Convertible Securities Notes	3,231,327	—
Convert Warrants	1,500,000	—
Company’s Common Stock issuable upon the exercise of outstanding options Legacy Adagio’s equity plans that were assumed in the Business Combination	7,587	—
Common Stock reserved for future issuance under the 2024 Equity Incentive Plan	4,472,592	—
Common Stock reserved for future issuance under the 2024 Key Employee Equity Incentive Plan	3,354,444	—
Common Stock reserved for future issuance under the 2024 Employee Stock Purchase Plan	441,293	—
Common stock reserved for future issuance	21,205,970	5,713,959

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2024

Schedule of Company's financial instruments at fair value based on the fair value hierarchy for each class of instrument

The following tables summarize the Company’s financial instruments at fair value based on the fair value hierarchy for each class of instrument (in thousands):


September 30, 2024 (Successor)		Level 1		Level 2		Level 3
Assets:
Money market account	$	27,298	$	—	$	—
Liabilities:
Convertible Securities Notes	$	—	$	—	$	13,750
Convert Warrants	$	—	$	—	$	743
PIPE Pre-funded Warrants	$	—	$	—	$	1,722


December 31, 2023 (Predecessor)		Level 1		Level 2		Level 3
Assets:
Money market account	$	24	$	—	$	—
Liabilities:
Legacy Adagio Convertible Notes	$	—	$	—	$	36,430
SVB Warrants	$	—	$	—	$	78

Schedule of assumptions used in estimating fair value of convertible promissory notes and common stock warrant liabilities


As of December 31, 2023	Discount rate	Expected Term (years)	Risk-Free interest rate	Volatility
October 2022 Convertible Notes	36.8%	0.33	5.4%	110%
April 2023 Convertible Notes	30.6%	0.33	5.4%	110%
November 2023 Convertible Notes	30.6%	0.33	5.4%	110%

Schedule of presents changes in the Level 3 warrant liabilities measured at fair value

The following table presents changes in the Level 3 convertible promissory notes measured at fair value for the year ended December 31, 2023 (Predecessor) (in thousands):


Year ended December 31, 2023 (Predecessor)		Balance (beginning of year)		Additions		Fair value measurement adjustments		Balance (end of year)
October 2022 Convertible Notes	$	9,500	$	—	$	3,061	$	12,561
April 2023 Convertible Notes		—		15,000		(243)		14,757
November 2023 Convertible Notes		—		5,000		4,112		9,112

The following table presents changes in the Level 3 convertible promissory notes measured at fair value for the period from January 1, 2024 to July 30, 2024 (Predecessor) (in thousands):


Period from January 1 to July 30, 2024 (Predecessor)		Balance (beginning of year)		Additions		Fair value measurement adjustments		Balance (end of year)
October 2022 Convertible Notes	$	12,561	$	—	$	(4,304)	$	8,257
April 2023 Convertible Notes		14,757		—		3,378		18,135
November 2023 Convertible Notes		9,112		3,000		(2,373)		9,739
February 2024 Convertible Notes		—		7,000		(256)		6,744
May 2024 Convertible Notes		—		3,000		685		3,685
June 2024 Convertible Notes		—		2,500		577		3,077
July 2024 Convertible Notes		—		1,000		233		1,233

Convertible Securities Notes

Schedule of assumptions used in estimating fair value of convertible promissory notes and common stock warrant liabilities


Convertible Securities Notes
		July 31. 2024		September 30, 2024
Stock price	$	6.64	$	2.58
Discount rate		25.8%		25.4%
Expected Term (years)		3.75		3.58
Risk-Free interest rate		4.01%		3.55%
Volatility		60%		80%

Schedule of presents changes in the Level 3 warrant liabilities measured at fair value

The following table presents changes in the Level 3 convertible promissory notes measured at fair value for the periods from July 31, 2024 to September 30, 2024 (Successor) (in thousands):


Convertible Securities Notes - July 31, 2024 to September 30, 2024 (Successor)
Balance (beginning of period)	$	17,005
Additions		—
Fair value measurement adjustments		(3,255)
Balance (end of period)	$	13,750

Convert Warrants

Schedule of assumptions used in estimating fair value of convertible promissory notes and common stock warrant liabilities


Convert Warrants
		July 31. 2024		September 30, 2024
Common stock price	$	6.64	$	2.58
Expected Volatility		55.0%		62.5%
Risk Free rate		3.96%		3.63%
Expected dividend yield		0%		0%
Expected term (years)		7.0		6.83

Schedule of presents changes in the Level 3 warrant liabilities measured at fair value

The following table presents changes in the Level 3 Convert Warrants measured at fair value for the periods from July 31, 2024 to September 30, 2024 (Successor) (in thousands):


Convert Warrants - July 31, 2024 to September 30, 2024 (Successor)
Balance (beginning of period)	$	2,996
Additions		—
Fair value measurement adjustments		(2,253)
Balance (end of period)	$	743

PIPE Pre-funded warrants

Schedule of presents changes in the Level 3 warrant liabilities measured at fair value

The following table presents changes in the Level 3 PIPE Pre-funded Warrants measured at fair value for the periods from July 31, 2024 to September 30, 2024 (Successor) (in thousands):



PIPE Pre-funded Warrants - July 31, 2024 to September 30, 2024 (Successor)
Balance (beginning of period)	$	4,442
Additions		—
Fair value measurement adjustments		(2,720)
Balance (end of period)	$	1,722

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Total
Beginning Balance at Dec. 31, 2022					$ 91,469
Beginning Balance (in shares) at Dec. 31, 2022					4,939,946
Ending Balance at Sep. 30, 2023					$ 91,469
Ending Balance (in shares) at Sep. 30, 2023					4,939,946
Beginning Balance at Dec. 31, 2022	$ 1	$ 1,153	$ (97,059)	$ 28	$ (95,877)
Beginning Balance (in shares) at Dec. 31, 2022	756,160
Increase (Decrease) in Stockholders' Deficit
Foreign currency translation adjustment				(1)	(1)
Stock option exercises		11			11
Stock option exercises (in shares)	4,412
Stock-based compensation		329			329
Net income (loss)			(27,969)		(27,969)
Ending Balance at Sep. 30, 2023	$ 1	1,493	(125,028)	27	$ (123,507)
Ending Balance (in shares) at Sep. 30, 2023	760,572
Increase (Decrease) in Stockholders' Deficit
Financial Designation, Predecessor and Successor [Fixed List]					Predecessor
Beginning Balance at Dec. 31, 2022					$ 91,469
Beginning Balance (in shares) at Dec. 31, 2022					4,939,946
Ending Balance at Dec. 31, 2023					$ 91,469
Ending Balance (in shares) at Dec. 31, 2023					4,939,946
Beginning Balance at Dec. 31, 2022	$ 1	1,153	(97,059)	28	$ (95,877)
Beginning Balance (in shares) at Dec. 31, 2022	756,160
Ending Balance at Dec. 31, 2023	$ 1	1,608	(133,649)	17	$ (132,023)
Ending Balance (in shares) at Dec. 31, 2023	779,908				786,510
Increase (Decrease) in Stockholders' Deficit
Financial Designation, Predecessor and Successor [Fixed List]					Predecessor
Beginning Balance at Jun. 30, 2023					$ 91,469
Beginning Balance (in shares) at Jun. 30, 2023					4,939,946
Ending Balance at Sep. 30, 2023					$ 91,469
Ending Balance (in shares) at Sep. 30, 2023					4,939,946
Beginning Balance at Jun. 30, 2023	$ 1	1,367	(114,267)	23	$ (112,876)
Beginning Balance (in shares) at Jun. 30, 2023	760,918
Increase (Decrease) in Stockholders' Deficit
Foreign currency translation adjustment				4	4
Stock option exercises		1			1
Stock option exercises (in shares)	(346)
Stock-based compensation		125			125
Net income (loss)			(10,761)		(10,761)
Ending Balance at Sep. 30, 2023	$ 1	1,493	(125,028)	27	$ (123,507)
Ending Balance (in shares) at Sep. 30, 2023	760,572
Increase (Decrease) in Stockholders' Deficit
Financial Designation, Predecessor and Successor [Fixed List]					Predecessor
Beginning Balance at Dec. 31, 2023					$ 91,469
Beginning Balance (in shares) at Dec. 31, 2023					4,939,946
Increase (Decrease) in Convertible Preferred Stock
Exchange preferred stock for pre-funded warrants					$ (4,686)
Exchange preferred stock for pre-funded warrants (shares)					(207,902)
Ending Balance at Jul. 30, 2024					$ 86,783
Ending Balance (in shares) at Jul. 30, 2024					4,732,044
Beginning Balance at Dec. 31, 2023	$ 1	1,608	(133,649)	17	$ (132,023)
Beginning Balance (in shares) at Dec. 31, 2023	779,908				786,510
Increase (Decrease) in Stockholders' Deficit
Foreign currency translation adjustment				3	$ 3
Exchange preferred stock for pre-funded warrants		4,332			4,332
Stock option exercises		9			9
Stock option exercises (in shares)	305
Stock-based compensation		642			642
Net income (loss)			(21,278)		(21,278)
Ending Balance at Jul. 30, 2024	$ 1	6,591	(154,927)	20	$ (148,315)
Ending Balance (in shares) at Jul. 30, 2024	780,213
Increase (Decrease) in Stockholders' Deficit
Financial Designation, Predecessor and Successor [Fixed List]					Predecessor
Beginning Balance at Dec. 31, 2023					$ 91,469
Beginning Balance (in shares) at Dec. 31, 2023					4,939,946
Beginning Balance at Dec. 31, 2023	$ 1	1,608	(133,649)	17	$ (132,023)
Beginning Balance (in shares) at Dec. 31, 2023	779,908				786,510
Increase (Decrease) in Stockholders' Deficit
Issuance of earn-out shares (in shares)					1,147,500
Ending Balance at Sep. 30, 2024	$ 1	89,786	(13,217)	(9)	$ 76,561
Ending Balance (in shares) at Sep. 30, 2024	14,535,136				14,535,136
Beginning Balance at Jun. 30, 2024					$ 86,783
Beginning Balance (in shares) at Jun. 30, 2024					4,732,044
Ending Balance at Jul. 30, 2024					$ 86,783
Ending Balance (in shares) at Jul. 30, 2024					4,732,044
Beginning Balance at Jun. 30, 2024	$ 1	6,163	(146,692)	22	$ (140,506)
Beginning Balance (in shares) at Jun. 30, 2024	780,180
Increase (Decrease) in Stockholders' Deficit
Foreign currency translation adjustment				(2)	(2)
Stock option exercises		7			7
Stock option exercises (in shares)	33
Stock-based compensation		421			421
Net income (loss)			(8,235)		(8,235)
Ending Balance at Jul. 30, 2024	$ 1	6,591	(154,927)	20	$ (148,315)
Ending Balance (in shares) at Jul. 30, 2024	780,213
Increase (Decrease) in Stockholders' Deficit
Financial Designation, Predecessor and Successor [Fixed List]					Predecessor
Foreign currency translation adjustment					$ (9)
Net income (loss)					3,606
Ending Balance at Sep. 30, 2024	$ 1	89,786	(13,217)	(9)	$ 76,561
Ending Balance (in shares) at Sep. 30, 2024	14,535,136				14,535,136
Increase (Decrease) in Stockholders' Deficit
Financial Designation, Predecessor and Successor [Fixed List]					Successor
Beginning Balance at Jul. 31, 2024	$ 1	89,786	(16,823)		$ 72,964
Beginning Balance (in shares) at Jul. 31, 2024	13,387,636
Increase (Decrease) in Stockholders' Deficit
Foreign currency translation adjustment				(9)	(9)
Issuance of earn-out shares (in shares)	1,147,500
Net income (loss)			3,606		3,606
Ending Balance at Sep. 30, 2024	$ 1	$ 89,786	$ (13,217)	$ (9)	$ 76,561
Ending Balance (in shares) at Sep. 30, 2024	14,535,136				14,535,136

Fair Value Measurements

9 Months Ended

Sep. 30, 2024

Fair Value Measurements

Fair Value Measurements

Note 4 – Fair Value Measurements

The Company’s financial instruments include its money market accounts (included as part of cash and cash equivalents), accounts receivable, accounts payable, common stock warrant liabilities (i.e. Convert Warrants and SVB Warrants), pre-funded warrant liabilities (i.e. PIPE Pre-funded Warrants), and convertible notes payables (i.e. Convertible Securities Notes and Legacy Adagio Convertible Notes). The recorded carrying amounts of cash and equivalents, accounts receivable and accounts payable approximates fair value due to their short-term nature. The convertible notes, common stock warrant liabilities, and pre-funded warrant liabilities are carried at fair value.

Assets and liabilities recognized at fair value on a recurring basis in the condensed consolidated balance sheets consists of cash equivalents, common stock warrant liabilities, pre-funded warrant liabilities, and convertible notes payables. These items are categorized based upon the level of judgment associated with the inputs used to measure their fair values. Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following tables summarize the Company’s financial instruments at fair value based on the fair value hierarchy for each class of instrument (in thousands):


September 30, 2024 (Successor)		Level 1		Level 2		Level 3
Assets:
Money market account	$	27,298	$	—	$	—
Liabilities:
Convertible Securities Notes	$	—	$	—	$	13,750
Convert Warrants	$	—	$	—	$	743
PIPE Pre-funded Warrants	$	—	$	—	$	1,722


December 31, 2023 (Predecessor)		Level 1		Level 2		Level 3
Assets:
Money market account	$	24	$	—	$	—
Liabilities:
Legacy Adagio Convertible Notes	$	—	$	—	$	36,430
SVB Warrants	$	—	$	—	$	78

There were no transfers made among the three levels in the fair value hierarchy for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor) and for the year ended December 31, 2023 (Predecessor).

Legacy Adagio Convertible Notes (Predecessor)

On October 27, 2022, Legacy Adagio entered into a note purchase agreement with investors for the issuance and sale of convertible promissory notes with an aggregate principal amount of $9.5 million at an interest rate of eight percent (8.0%) per annum. On April 4, 2023, November 28, 2023 and February 13, 2024, the October 2022 Convertible Notes were amended. Upon the consummation of the Business Combination, the principal and the accrued interest of the October 2022 Convertible Notes were converted into shares of Legacy Adagio common stock. Further, on the Closing Date, Legacy Adagio common stock was converted to the Company’s Common Stock based on the exchange ratio set forth in the Business Combination Agreement. Refer to Note 9- Debt for details.

On April 4, 2023, Legacy Adagio issued a $5.0 million convertible promissory note to Perceptive PIPE Investor that matures upon the termination of the Business Combination Agreement in accordance with its terms. The April 2023 Convertible Notes accrues simple interest at eight percent (8.0%) per annum. Additionally, Legacy Adagio obtained the right to issue up to $10.0 million in additional convertible promissory notes. On February 13, 2023, November 28, 2023 and February 13, 2024, the April 2023 Convertible Notes were amended. Prior to the Closing Date, the total of $15.0 million convertible promissory note has been drawn by Legacy Adagio.

On November 28, 2023, Legacy Adagio issued a $2.0 million convertible promissory note to Perceptive PIPE Investor that matures upon the termination of the Business Combination Agreement in accordance with its terms. The November 2023 Convertible Notes accrues simple interest at eight percent (8.0%) per annum. Additionally, Legacy Adagio obtained the right to issue up to $6.0 million in additional convertible promissory notes (“Delayed Draw Commitment”). On December 13, 2023, December 28, 2023, and February 13, 2024, the November 2023 Convertible Notes were amended. Prior to the Closing Date, the total of $8.0 million convertible promissory note has been drawn by Legacy Adagio.

On February 13, 2024, Legacy Adagio issued a $7.0 million convertible promissory note to Perceptive PIPE Investor that matures upon the termination of the Business Combination Agreement in accordance with its terms. The 2024 Bridge Financing Note accrues simple interest at eight percent (8.0%) per annum. Prior to the Closing Date, the total of $7.0 million convertible promissory note has been drawn by Legacy Adagio. Upon the consummation of the Business Combination, the 2024 Bridge Financing Note of $7.0 million converted into $7.0 million of the Company’s Convertible Securities Notes and 525,000 Convert Warrants. Refer to Note 9- Debt for details.

On May 21, 2024, Legacy Adagio issued a $3.0 million convertible promissory note to Perceptive PIPE Investor that matures upon the termination of the Business Combination Agreement in accordance with its terms. The May 2024 Convertible Notes accrues simple interest at eight percent (8.0%) per annum. Prior to the Closing Date, the total of $3.0 million convertible promissory note has been drawn by Legacy Adagio.

On June 25, 2024, Legacy Adagio issued a $2.5 million convertible promissory note to Perceptive PIPE Investor that matures upon the termination of the Business Combination Agreement in accordance with its terms. The June 2024 Convertible Notes accrues simple interest at eight percent (8.0%) per annum. Prior to the Closing Date, the total of $2.5 million convertible promissory note has been drawn by Legacy Adagio.

Upon the consummation of the Business Combination, the principal of Bridge Financing Notes along with its accrued but unpaid interest, was converted into the shares of the Company’s Common Stock and Base Warrants as part of the PIPE Financing. Refer to Note 9- Debt for details.

The Company measures Legacy Adagio Convertible Notes at fair value based on significant inputs not observable in the market, which caused them to be classified as Level 3 measurements within the fair value hierarchy.

In determining the fair value of the Legacy Adagio Convertible Notes as of December 31, 2023, the Company applied the probability-weighted expected return method (“PWERM”). The PWERM determines the value of an instrument based upon an analysis of future values for the potential instrument payouts under different future outcomes. The instrument value is based upon the present value of the probability of each future outcome becoming available to the instrument holders, and the rights of each security.

The Company calculated the estimated fair value of convertible promissory notes as of December 31, 2023 using the following assumptions:


As of December 31, 2023	Discount rate	Expected Term (years)	Risk-Free interest rate	Volatility
October 2022 Convertible Notes	36.8%	0.33	5.4%	110%
April 2023 Convertible Notes	30.6%	0.33	5.4%	110%
November 2023 Convertible Notes	30.6%	0.33	5.4%	110%

In determining the fair value of the Legacy Adagio Convertible Notes as of July 31, 2024 prior to the Closing, the Company used the observed closing stock price of ARYA as of July 31, 2024 multiplied by the actual number of shares that the Legacy Adagio Convertible Notes converted into.

The following table presents changes in the Level 3 convertible promissory notes measured at fair value for the year ended December 31, 2023 (Predecessor) (in thousands):


Year ended December 31, 2023 (Predecessor)		Balance (beginning of year)		Additions		Fair value measurement adjustments		Balance (end of year)
October 2022 Convertible Notes	$	9,500	$	—	$	3,061	$	12,561
April 2023 Convertible Notes		—		15,000		(243)		14,757
November 2023 Convertible Notes		—		5,000		4,112		9,112

The following table presents changes in the Level 3 convertible promissory notes measured at fair value for the period from January 1, 2024 to July 30, 2024 (Predecessor) (in thousands):


Period from January 1 to July 30, 2024 (Predecessor)		Balance (beginning of year)		Additions		Fair value measurement adjustments		Balance (end of year)
October 2022 Convertible Notes	$	12,561	$	—	$	(4,304)	$	8,257
April 2023 Convertible Notes		14,757		—		3,378		18,135
November 2023 Convertible Notes		9,112		3,000		(2,373)		9,739
February 2024 Convertible Notes		—		7,000		(256)		6,744
May 2024 Convertible Notes		—		3,000		685		3,685
June 2024 Convertible Notes		—		2,500		577		3,077
July 2024 Convertible Notes		—		1,000		233		1,233

Convertible Securities Notes (Successor)

On July 31, 2024, the Company issued the $20.0 million Convertible Securities Notes to Convert Investor having a maturity of three years and nine months after the Closing. The interest is accrued by quarterly compounding based on a 13% interest rate per annum. The Company received the funding from the Convertible Securities Notes as at the Closing. Refer to Note 9- Debt for details.

The Company measures the Convertible Securities Notes at fair value based on significant inputs not observable in the market, which caused them to be classified as Level 3 measurements within the fair value hierarchy.

The Company utilized the binomial lattice model to value the Convertible Securities Notes at the Closing Date and as of September 30, 2024. The following table summarizes the significant inputs as of the valuation dates:


Convertible Securities Notes
		July 31. 2024		September 30, 2024
Stock price	$	6.64	$	2.58
Discount rate		25.8%		25.4%
Expected Term (years)		3.75		3.58
Risk-Free interest rate		4.01%		3.55%
Volatility		60%		80%

The following table presents changes in the Level 3 convertible promissory notes measured at fair value for the periods from July 31, 2024 to September 30, 2024 (Successor) (in thousands):


Convertible Securities Notes - July 31, 2024 to September 30, 2024 (Successor)
Balance (beginning of period)	$	17,005
Additions		—
Fair value measurement adjustments		(3,255)
Balance (end of period)	$	13,750

Warrant Liabilities (Predecessor)

i.Series E Pre-funded Warrants

On June 25, 2024, the Legacy Adagio issued to certain investor the Series E Pre-funded Warrants to purchase the Legacy Adagio’s Series E Preferred Stock, in exchange of the investor’s existing holding of Series E Preferred Stock. The exercise price of the pre-funded warrants is $0.001 per warrant share. The Company measured the pre-funded warrants at fair value based on the indicated fair value of Series E Preferred Stock, which is not observable in the market. The measurement caused the pre-funded warrant to be classified as Level 3 measurements within the fair value hierarchy. Changes in the fair value of the pre-funded warrants were recognized as warrant liabilities fair value adjustment within the condensed consolidated statements of operations and comprehensive income (loss). Refer to Note 10-Warrants for additional information.

The fair value of the Series E Pre-funded Warrants is based on the fair value of the Series E Preferred Stock minus the exercise price. As of June 30, 2024, the Company estimated the fair value of the Series E Preferred Stock by applying a conversion factor of 1.08 to the indicated fair value of Legacy Adagio common stock.

As of July 31, 2024 prior to the Closing, the Company estimated the fair value of Series E Pre-funded Warrants based on the observed closing stock price of ARYA as of July 31, 2024 multiplied by the actual number of shares that the Series E Pre-funded Warrants converted into. The estimated fair value of the Series E Pre-funded Warrants as of June 30, 2024 and July 31, 2024 prior to the Closing is $0.3 million and $0.2 million, respectively. The change in fair value for the period from July 1, 2024 to July 30, 2024 (Predecessor) is $0.1 million.

Upon the consummation of the Business Combination, the Series E Pre-funded Warrants were automatically cancelled and extinguished and converted into shares of the Company’s Common Stock based on the exchange ratio set forth in the Business Combination Agreement.

ii.SVB Warrants

On February 3, 2023, in conjunction with the Loan and Security Agreement (“LSA”) with Silicon Valley Bank (“SVB Term Loan”), Legacy Adagio issued Initial Warrants to purchase shares of common stock of the Company, and a contingent right to obtain an additional share of the common stock upon the non-occurrence of the Interest Only Milestone (as defined below). The Company measured SVB Warrants at fair value based on significant inputs not observable in the market, which caused them to be classified as Level 3 measurements within the fair value hierarchy. Changes in the fair value of the common stock warrants related to updated assumptions and estimates were recognized as warrant liabilities fair value adjustment within the condensed consolidated statements of operations and comprehensive income (loss).

The SVB Warrants were not material as of December 31, 2023 (Predecessor) and there were no material changes in fair value for the periods from July 1, 2024 to July 30, 2024 (Predecessor), January 1, 2024 to July 30, 2024 (Predecessor), and the three and nine months ended September 30, 2023 (Predecessor).

The SVB Warrants were terminated prior to the consummation of the Business Combination as the fair market value of Legacy Adagio common stock is lower than the warrant exercise price before the Closing. Refer to Note 10- Warrants for additional information.

Warrant Liabilities (Successor)

i.Convert Warrants

On July 31, 2024, the Company issued 1,500,000 Convert Warrants in connection with the issuance of the $20.0 million Convertible Securities Notes. Refer to Note 10- Warrants for additional information.

As set forth in the agreement of the Convertible Securities Notes, the Convert Warrants are exercisable on a cashless basis or on a gross basis for one share of the Company’s Common Stock at $24.0 per share, subject to adjustments. The Company may be required to cash settle the Convert Warrants when it fails to timely deliver shares to the holder who exercises the Convert Warrants or upon the occurrence of a fundamental transaction. It is determined that the Convert Warrants do not meet the equity classification requirements under ASC 815 as the Covert Warrants may require cash settlement outside of the Company’s control upon a failure of timely delivery of shares or a fundamental transaction, and therefore the Convert Warrants are accounted for as derivative liabilities, and measured at fair value both initially and subsequently with changes in fair value recognized as warrant liabilities fair value adjustment within the condensed consolidated statements of operations and comprehensive income (loss).

The Convert Warrants are classified as Level 3 measurements within the fair value hierarchy. The Company utilized the Black-Scholes Merton option model to value the Convertible Securities Notes at the Closing Date and as of September 30, 2024. The following table summarizes the significant inputs as of the valuation dates:


Convert Warrants
		July 31. 2024		September 30, 2024
Common stock price	$	6.64	$	2.58
Expected Volatility		55.0%		62.5%
Risk Free rate		3.96%		3.63%
Expected dividend yield		0%		0%
Expected term (years)		7.0		6.83

The following table presents changes in the Level 3 Convert Warrants measured at fair value for the periods from July 31, 2024 to September 30, 2024 (Successor) (in thousands):


Convert Warrants - July 31, 2024 to September 30, 2024 (Successor)
Balance (beginning of period)	$	2,996
Additions		—
Fair value measurement adjustments		(2,253)
Balance (end of period)	$	743

ii.PIPE Pre-funded Warrants

On July 31, 2024, the Company issued 670,000 pre-funded warrants in exchange for cash proceeds in PIPE Financing to certain Other PIPE Investors (“PIPE Pre-funded Warrants”). Refer to Note 10-Warrants for additional information.

As set forth in the agreement of the PIPE Pre-funded Warrants, the PIPE Pre-funded Warrants are exercisable on a cashless basis or on a gross basis for one share of the Company’s Common Stock at $0.01 per share, subject to adjustments. The Company may be required to cash settle the PIPE Pre-funded Warrants when it fails to timely deliver shares to the holder who exercises the PIPE Pre-funded Warrants or upon the occurrence of a fundamental transaction. It is determined that the PIPE Pre-funded Warrants do not meet the equity classification requirements under ASC 815 as the PIPE Pre-funded Warrants may require cash settlement outside of the Company’s control upon a failure of timely delivery of shares or a fundamental transaction, and therefore the PIPE Pre-funded Warrants are accounted for as derivative liabilities, and measured at fair value both initially and subsequently with changes in fair value recognized as warrant liabilities fair value adjustment within the condensed consolidated statements of operations and comprehensive income (loss).

The PIPE Pre-funded Warrants are classified as Level 3 measurements within the fair value hierarchy. The fair value of the PIPE Pre-funded Warrants is based on the fair value of the Company’s Common Stock minus the exercise price.

The following table presents changes in the Level 3 PIPE Pre-funded Warrants measured at fair value for the periods from July 31, 2024 to September 30, 2024 (Successor) (in thousands):



PIPE Pre-funded Warrants - July 31, 2024 to September 30, 2024 (Successor)
Balance (beginning of period)	$	4,442
Additions		—
Fair value measurement adjustments		(2,720)
Balance (end of period)	$	1,722

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 107
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-107

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 55
-Paragraph 100
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482078/820-10-55-100

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)(3)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2E
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (f)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (e)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 6A
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 820
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (g)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147482106/820-10-50-2

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 940
-SubTopic 820
-Name Accounting Standards Codification
-Section 50
-Paragraph 1
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org/1943274/2147478119/940-820-50-1

+ Details

Operating Leases

9 Months Ended

Sep. 30, 2024

Operating Leases

Operating Leases

Note 11 - Operating Leases

The Company leases distribution and research and development facilities as well as sub-leases office and manufacturing space from third parties and related parties (refer to Note 17- Related Party Transactions) under its operating leases. The leases have expirations ranging from March 2024 to June 2026, some of which include rent escalations or an option to extend the lease for up to three years per renewal. The exercise of lease renewal options is at the sole discretion of the Company. Where leases contain an option to renew, any period beyond the option date is only included as part of the lease term if the Company is reasonably certain to exercise the option.

As of September 30, 2024 and December 31, 2023, the Company does not have any finance or short-term leases and has not entered into leases which have not yet commenced that would entitle the Company to significant rights or create additional obligations during the periods as of September 30, 2024 and December 31, 2023.

The following table summarizes quantitative information of the Company’s operating leases for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 30, 2023 (Predecessor):


		Nine months ended September 30,
		2024				2023
		Predecessor		Successor		Predecessor
In thousands, unaudited		January 1 to July 30		July 31 to September 30		January 1 to September 30
Operating cash flows paid for operating leases	$	108	$	25	$	133
Weighted average remaining lease term (years)		1.7		1.6		1.7
Weighted average discount rate		8%		8%		8%

Operating lease cost was $0.1 million, $33.0 thousand, and $0.2 million for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 30, 2023 (Predecessor), respectively. There has been no variable lease cost for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor) and the nine months ended September 30, 2023 (Predecessor).

Operating lease cost was $17.0 thousand, $33.0 thousand, and $57.0 thousand for the periods from July 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor) and the three months ended September 30, 2023 (Predecessor).

The following table presents the future minimum payments under the non-cancelable operating leases as of September 30, 2024 (in thousands):


Three months ending December 31, 2024	$	39
Year ending December 31, 2025		154
Year ending December 31, 2026		48
Total undiscounted future cash flows		241
Less: imputed interest		(14)
Total operating lease liability	$	227

Inventory, net

9 Months Ended

Sep. 30, 2024

Inventory, net.

Inventory, net

Note 5 - Inventory, net

Inventory as of September 30, 2024 and December 31, 2023 consists of the following (in thousands):


	September 30,		December 31,
	2024		2023
	(Successor)		(Predecessor)
Raw materials	$	2,547	$	2,211
Work-in-Process		509		197
Finished goods		1,083		914
Total inventory	$	4,139	$	3,322

Obsolete and expired inventory are expensed as incurred. Inventory is recorded net of obsolescence and manufacturing scrap of $0.4 million, $58.0 thousand, and $87.0 thousand for the periods from January 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the nine months ended September 30, 2023 (Predecessor).

Inventory is recorded net of obsolescence and manufacturing scrap of $41.0 thousand, $58.0 thousand, and $25.0 thousand for the periods from July 1, 2024 to July 30, 2024 (Predecessor), from July 31, 2024 to September 30, 2024 (Successor), and the three months ended September 30, 2023 (Predecessor).

Income Taxes (Details)		1 Months Ended	2 Months Ended	6 Months Ended	9 Months Ended
Income Taxes (Details)	Jul. 31, 2024	Jul. 30, 2024	Sep. 30, 2024	Jun. 30, 2024	Sep. 30, 2023
Income Taxes
Effective tax rate for the company's operations	0.00%	0.00%	0.00%	0.00%	0.00%