Outset Medical, Inc. (OM), a medical technology company based in California, announced on Monday that it has entered into an agreement for a private placement involving 843,908 shares of its Series A Non-Voting Convertible Preferred Stock, each priced at $200.00.
These Series A Preferred Shares will automatically convert to 250 shares each of common stock, resulting in a total of 210,977,000 common shares.
The company anticipates raising $168.8 million from this private placement, prior to the deduction of fees and other expenses. Moreover, some members of the board and senior management, including Chair and CEO Leslie Trigg, intend to invest $3.9 million for the acquisition of 19,432 shares of Series A Non-Voting Convertible Preferred Stock, subject to shareholder approval.
Additionally, OM has finalized a credit agreement and guarantee with a fund managed by Perceptive Advisors. This agreement will facilitate a $100 million loan with a five-year term at closing, along with an additional $25 million loan option, contingent upon the company achieving a specific revenue milestone.
The loans will carry an interest rate that is indexed to a short-term rate plus 8% and will mature in 2030, secured by most of the company's assets. The company intends to use the proceeds from these loans, along with its existing cash, to completely refinance its current debt due in 2027.
Upon finalizing the financing and settling its debt, Outset Medical expects to hold approximately $210 million in cash and investments, with $100 million in outstanding debt.
As of now, OM's stock is trading at $1.31, reflecting a decline of 6.43% on the Nasdaq Global Select Market.
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