Outset Medical Raises $168.8M in Series A Convertible Preferred Stock Sale

TL/DR –

Outset Medical has sold 843,908 shares of its Series A Non-Voting Convertible Preferred Stock at $200.00 per share, generating gross proceeds of $168.8 million. The company has also entered into a $100 million five-year term loan agreement with Perceptive Advisors, which also offers an additional loan of up to $25 million. The private placement was led by PFM Health Sciences, and Perceptive Advisors, and included investors such as T. Rowe Price Investment Management, Durable Capital Partners LP, and multiple large mutual funds.

Outset Medical Raises $168.8 Million Through Private Placement of Convertible Preferred Stock

Sidley has acted as counsel to Outset Medical, Inc. in its issuance and sale of 843,908 shares of its Series A Non-Voting Convertible Preferred Stock, priced at US$200.00 per share. With stockholder approval and within beneficial ownership limits, each preferred stock share will automatically convert to 250 common shares, totaling 210,977,000 common shares. The gross proceeds from this private placement are US$168.8 million, with an additional US$3.9 million to be invested by selected board and management members upon shareholder approval.

Outset Enters Into Credit and Guaranty Agreement with Perceptive Advisors

Furthermore, Outset Medical has signed a credit and guaranty agreement with a fund managed by Perceptive Advisors. The agreement entails a five-year, US$100 million term loan at closing, plus an optional additional term loan up to US$25 million at the company’s discretion. These are subject to customary closing conditions and meeting specific revenue milestones. Outset intends to use the initial term loan, along with existing cash reserves, to fully repay its due credit facilities, which were due in 2027.

PFM Health Sciences and Perceptive Advisors Lead Private Placement Financing

The private placement financing was headed by PFM Health Sciences, LP, and Perceptive Advisors, with contributions from existing and new investors. Participants include funds and accounts managed by T. Rowe Price Investment Management, Inc., Durable Capital Partners LP, healthcare sector specialist funds, and several large mutual funds.

About Outset Medical, Inc.

Outset Medical, Inc., a medical technology firm, is developing an innovative technology aimed at decreasing the cost and complexity of dialysis treatments. For more details, check out the official press release.

Sidley Legal Team Involved

The Sidley team involved in the transaction was spearheaded by Frank Rahmani and Robert Ryan from the Capital Markets, Emerging Companies, and Venture Capital divisions. They were supported by a host of specialists from M&A, Restructuring, Securities and Shareholder Litigation, and Employee Benefits and Executive Compensation departments.

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