Venus Concept Inc. (“Venus Concept” or the “Company”) (NASDAQ:
VERO), a global medical aesthetic technology leader, today
announced that it has finalized an agreement with its lenders, City
National Bank of Florida (“CNB”) and Madryn Asset Management, LP
and affiliates (“Madryn”), to restructure its existing debt
obligations, improving the Company's overall financial position by
deferring certain principal and interest payments under its senior
debt and exchanging a portion of its convertible notes for
preferred stock. The debt restructuring supports the Company’s
strategic turnaround efforts, by strengthening its capital
structure, improving its liquidity position, and enhancing the path
to cashflow breakeven in the second half of 2024.
The loan modification and exchange agreements
provide for, among other things:
- Deferral of the approximately $7.7 million annual payment of
principal plus accrued interest, previously due December 8, 2023,
under the Company’s Main Street Priority Loan Facility with CNB
(“MSLP Note”) until loan maturity on December 8, 2025;
- Deferral of approximately $3.9 million, or 50% of the annual
payment of principal plus accrued interest, previously due December
8, 2024, under the MSLP Note until loan maturity on December 8,
2025;
- Exchange of $5.0 million of the Company’s Secured Subordinated
Convertible Notes with Madryn for newly-created Series X Senior
Convertible Preferred Stock, which pays a dividend in kind, on a
quarterly basis, equal to an annual rate of 12.5%; and
- Remaining outstanding Secured Subordinated Convertible Notes
with Madryn subject to a new conversion price of $24 per share and
interest payable in kind, on a quarterly basis, at an annual rate
of 90-day Adjusted SOFR + 8.5%.
“We appreciate the valuable partnership and
continued support from our lenders, City National Bank of Florida
and Madryn Asset Management,” said Rajiv De Silva, Chief Executive
Officer of Venus Concept. “These debt restructuring activities
provide Venus Concept with substantial additional liquidity to
support maintenance of ongoing operations, execution of our
near-to-intermediate term strategic turnaround objectives and
funding of priority investments in key R&D initiatives. The
debt restructuring, along with our previously announced ongoing
multi-tranche equity funding from EW Healthcare Partners are key to
our plan to significantly improve the cash flow and profitability
profile of the Company and return to long-term, sustainable,
growth.”
“CNB and Madryn have been critical to the
Company’s evolution and we are grateful for the role that the Main
Street Lending Program and our lenders have played in financing the
company over the last several years. We will continue to look for
ways to improve our balance sheet as we progress towards achieving
cash flow breakeven in the second half of 2024,” added Domenic
Della Penna, Executive Vice President and Chief Financial Officer
of Venus Concept.
Additional information regarding the amended
credit agreements and the Senior Preferred Stock will be set forth
in a Current Report on Form 8-K, which Venus Concept expects to
file with the SEC today.
Canaccord Genuity acted as financial advisor to the Company in
the debt restructuring.
The offer and sale of the foregoing securities
are being made in a transaction not involving a public offering and
have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), or applicable state securities
laws. The securities may not be offered or sold in the United
States absent registration or pursuant to an exemption from the
registration requirements of the Securities Act and applicable
state securities laws. The Company has agreed to file a
registration statement covering the resale of the Common Stock
issuable upon conversion of the Series X Senior Convertible
Preferred Stock.
This press release does not constitute an offer
to sell or the solicitation of an offer to buy the securities in
the described offering, nor shall there be any offer, solicitation
or sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such
jurisdiction.
Preliminary Third Quarter 2023 Revenue and Updated
Fiscal Year 2023 Revenue Guidance:
Preliminary total revenue for the third quarter
of 2023 is expected to be in the range of $17.0 million to $18.0
million, compared to total revenue of $21.5 million in the prior
year period. The Company now expects total revenue for the twelve
months ending December 31, 2023 to be in the range of $80.0 million
to $82.0 million, compared to prior guidance which called for total
revenue in a range of $90.0 million to $95.0 million. The
preliminary third quarter total revenue results versus expectations
and updated fiscal year 2023 total revenue guidance are primarily a
result of the accelerated impact of the Company’s strategic
restructuring activities in international markets.
“We are pleased with the progress we have made
in our strategic turnaround plan in 2023. Our restructuring efforts
to reduce expenses are exceeding expectations, and repositioning of
the business in the US and internationally supports growth in
2024,” said Rajiv De Silva. “While revenue expectations for the
year are lower than expected, primarily due to our accelerated
restructuring of certain international markets, we are pleased with
the performance in the US market. Our primary objective for 2023
has been to reduce cash burn by 50% or more year over year, which
we are still on track to achieve due to our cost restructuring
efforts.”
Cautionary Statement Regarding
Forward-Looking Statements
This communication contains “forward-looking”
statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. Any statements contained herein
that are not of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify these
statements by words such as such as “anticipates,” “believes,”
“plans,” “expects,” “projects,” “future,” “intends,” “may,”
“should,” “could,” “estimates,” “predicts,” “potential,”
“continue,” “guidance,” and other similar expressions that are
predictions of or indicate future events and future trends. These
forward-looking statements include, but are not limited to,
statements about the anticipated benefits of the debt
restructuring, including the Company’s goal to achieve cash flow
breakeven in the second half of 2024. These forward-looking
statements are based on current expectations, estimates, forecasts,
and projections about our business and the industry in which the
Company operates and management's beliefs and assumptions and are
not guarantees of future performance or developments and involve
known and unknown risks, uncertainties, and other factors that are
in some cases beyond our control. As a result, any or all of our
forward-looking statements in this communication may turn out to be
inaccurate. Factors that could materially affect our business
operations and financial performance and condition include, but are
not limited to, general economic conditions, including the
global economic impact of COVID-19, and involve risks and
uncertainties that may cause results to differ materially from
those set forth in the statements and those risks and uncertainties
described under Part II Item 1A—“Risk Factors” in our Quarterly
Reports on Form 10-Q and Part I Item 1A—“Risk Factors” in our
Annual Report on Form 10-K for the fiscal year
ended December 31, 2022. You are urged to consider these
factors carefully in evaluating the forward-looking statements and
are cautioned not to place undue reliance on the forward-looking
statements. The forward-looking statements are based on information
available to us as of the date of this communication. Unless
required by law, the Company does not intend to publicly update or
revise any forward-looking statements to reflect new information or
future events or otherwise.
About Venus Concept
Venus Concept is an innovative global medical
aesthetic technology leader with a broad product portfolio of
minimally invasive and non-invasive medical aesthetic and hair
restoration technologies and reach in over 60 countries and 14
direct markets. Venus Concept’s product portfolio consists of
aesthetic device platforms, including Venus Versa, Venus Legacy,
Venus Velocity, Venus Fiore, Venus Viva, Venus Glow, Venus Bliss,
Venus BlissMAX, Venus Epileve, Venus Viva MD and AI.ME. Venus
Concept’s hair restoration systems include NeoGraft® and the ARTAS
iX® Robotic Hair Restoration system. Venus Concept has been backed
by leading healthcare industry growth equity investors including EW
Healthcare Partners (formerly Essex Woodlands), HealthQuest
Capital, Longitude Capital Management, Aperture Venture Partners,
and Masters Special Situations.
Investor Relations Contact:
ICR Westwicke on behalf of Venus Concept:
Mike Piccinino, CFA
VenusConceptIR@westwicke.com
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