Increases borrowing capacity to up to $50 million
Provides financial flexibility with interest-only payments on term loan for first 24 months
New agreement will replace existing $15 million term loan and $7.5 million revolver with $30 million term loan and $20 million revolver
SAN FRANCISCO, March 13, 2017 (GLOBE NEWSWIRE) -- Invuity, Inc. (NASDAQ:IVTY), a leading medical technology company focused on minimal access surgery, today announced that it signed a new debt agreement with MidCap Financial (“MidCap”) on March 10, 2017. The new facility consists of a $30 million term loan divided in two tranches. The first tranche of $20 million was funded upon closing and the additional $10 million may be drawn down prior to December 31, 2018 provided that the Company achieves certain revenue milestones. The new agreement also consists of a $10 million revolving credit facility (revolver) that may be increased to $20 million at a later date at the Company’s request and with approval from MidCap.
“We are pleased to announce this debt financing with MidCap, a leading financing partner in the healthcare space,” commented Philip Sawyer, Invuity’s CEO. “This new and lower cost debt facility strengthens our balance sheet as it allows for potential additional funding of up to $27.5 million to support us as we continue to drive growth through execution of our commercial strategies and introduction of additional innovative, high-value medical devices that leverage our expertise in advanced photonics.”
The MidCap facility carries a 60 month term with interest-only payments on the term loan for the first 24 months. The interest rate on the term loan is 6.5% plus the greater of LIBOR or 1.5%, which at closing resulted in a rate of 8.0%. Borrowings under the revolving line of credit bear interest of 3.25% plus the greater of LIBOR or 1.5% which at closing resulted in a rate of 4.75%. These interest rates are lower than the debt the company replaced. The MidCap agreement requires the Company to maintain certain minimum net revenue requirements.
The new agreement replaces the existing $15 million term loan with HealthCare Royalty Partners on which the Company was about to start making payments and the $7.5 million revolver with Silicon Valley Bank which the Company had yet to utilize.
The company anticipates that with the $20 million in borrowings from the initial tranche of the new term loan facility, after prepayment costs of $17.4 million plus an anticipated $3 million draw on the new revolver facility, the reduced interest costs and deferral of principal payments compared to the original debt will improve its cash position by $7.0 million in 2017.
Invuity, Inc. is a leading medical technology company focused on developing and marketing advanced surgical devices to improve the ability of physicians to perform minimal access surgery through smaller and hidden incisions. The company's patented Intelligent Photonics™ technology delivers enhanced visualization which facilitates surgical precision, efficiency and safety. In addition, the company utilizes comprehensive strategic marketing programs to create stronger institutional partnerships. Clinical applications include women’s health, encompassing breast cancer and breast reconstruction surgery, gynecology and thyroid surgery. Additional applications include procedures for electrophysiology, spine, orthopedic, cardiothoracic, and general surgery. Invuity is headquartered in San Francisco, CA. For more information, visit www.invuity.com.
About MidCap Financial
MidCap Financial is a middle market-focused, specialty finance firm that provides senior debt solutions to businesses across all industries. The firm’s years of experience, strong balance sheet, and flexibility make it a lender of choice for companies across all stages of growth and complexity.
MidCap Financial’s debt solutions focus in five areas:
- General and Healthcare Asset-Based working capital loans collateralized by third-party accounts receivable and other assets;
- Leveraged loans to companies backed by private equity sponsors;
- Life Sciences loans to VC-backed and public pharmaceutical, biotech, and medical device companies;
- Real Estate loans on all types of commercial properties, medical office buildings, various types of senior housing and skilled nursing properties; and
- Lender Finance term loans or revolvers provided across the consumer and commercial finance sectors.
Additional information about MidCap Financial can be found at www.midcapfinancial.com.
This announcement contains forward-looking statements that involve risks and uncertainties, including statements regarding our ability to achieve certain revenue milestones, our ability to increase the borrowing capacity under our new credit facility, our anticipated draw down on our revolving credit facility, financial projections related to the new credit facility, such as a reduction in costs and an increase in cash position in 2017, future product introductions and our commercial strategies. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including, but not limited to: fluctuations in demand or failure to gain market acceptance for the Company's devices; the Company's ability to demonstrate to and gain approval from hospitals to use the Company's devices; the highly competitive business environment for surgical medical devices; the Company's ability to sell its devices at prices that support its current business strategies; difficulty forecasting future financial performance; protection of the Company's intellectual property; and compliance with necessary regulatory clearances or approvals. The Company undertakes no obligation to update the forward-looking information in this release. More information about potential factors that could affect the Company's business and financial results is included in its filings with the Securities and Exchange Commission, including, without limitation, under the captions: "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Risk Factors," which are on file with the Securities and Exchange Commission.
Chief Financial Officer