Outset Medical (Nasdaq: OM) confirmed that it has finalized a securities purchase agreement valued at approximately $168.8 million. This agreement involves a private offering of 843,908 shares of Series A non-voting convertible preferred stock priced at $200 each. Following shareholder approval, each share will automatically convert to 250 shares of common stock. This transaction results in a cumulative issuance of nearly 211 million shares of common stock.
Based in San Jose, California, Outset Medical forecasts that the proceeds will amount to $168.8 million, excluding fees and other expenses. Additionally, select board members and management have committed an extra $3.9 million for the acquisition of 19,432 shares. Among the investors is Leslie Trigg, the company’s chair and CEO.
Outset has also formed a credit and guarantee agreement with a fund under Perceptive Advisors’ management. This deal offers a $100 million five-year term loan with immediate access, plus an option for an additional $25 million term loan, subject to meeting specific conditions and a revenue target for the delayed draw term loan.
Upon closing, Outset intends to apply the initial loan proceeds, along with available cash, to fully repay all existing credit facility liabilities. The company projects having roughly $210 million in cash resources and $100 million in debt.
“Our current forecasts indicate that this financing will enable us to reach cashflow breakeven,” remarked Trigg. “We are grateful for the sustained support from both returning and new investors, which empowers the Outset team to continue advancing our goal of revolutionizing the dialysis delivery process.”
Analysts’ Insights on Outset Medical’s Recent Developments
Besides the financing news, Outset has announced preliminary fourth-quarter revenue of $29 million, with a tentative full-year 2024 revenue of $113 million, exceeding previous forecasts.
This quarterly report could indicate a potential positive shift for Outset, especially after experiencing two consecutive declining quarters. Earlier, the company had disclosed cost-reduction initiatives, including workforce cuts, in response to performance challenges.
BTIG analysts Marie Thibault and Sam Eiber commented on Outset’s “robust” treatment utilization, attributing it to the company’s dialysis innovations, including the Tablo home hemodialysis system.
“The Q4 results show performance trending positively, and the new funding mitigates immediate concerns over cash runway and debt maturity. Consequently, we anticipate OM shares to climb in value today,” the analysts added.
Currently, OM’s stock has risen approximately 5% to $1.47 in midday trading.