| Item 1.01. | Entry into a Material Definitive Agreement. |
Private Placement
On January 3, 2025, Outset Medical, Inc. (the “Company”) entered into securities purchase agreements (the “Securities Purchase Agreements”) with various investors, including certain members of management and certain members of the Company’s Board of Directors (the “Investors”) for the issuance and sale by the Company of an aggregate of 863,340 shares of Series A Non-Voting Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”) in an offering (the “Private Placement”). The Series A Preferred Stock is being issued to the Investors pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) afforded by Section 4(a)(2) of the Securities Act. Pursuant to the terms of the Securities Purchase Agreements, the Company has agreed to submit to its stockholders the approval of (i) the conversion of the Series A Preferred Stock into shares of Common Stock, par value $0.001 (the “Common Stock”), in accordance with Nasdaq Stock Market Rules (the “Conversion Proposal”) and (ii) the issuance of the Series A Preferred Stock to certain members of management and certain members of the Company’s Board of Directors and any shares of the Company’s Common Stock issuable upon the conversion thereof (the “Director Issuance Proposal”) at a special meeting of the stockholders expected to be held on March 5, 2025. The Securities Purchase Agreements include customary representations, warranties and covenants by the parties to the agreements.
Pursuant to the Securities Purchase Agreements, the Investors have agreed to purchase the Series A Preferred Stock at a purchase price of $200.00 per share for an aggregate purchase price of approximately $172.7 million. Institutional investors are expected to invest $168.8 million, and following the approval of the Director Issuance Proposal, certain members of management and certain members of the Company’s Board of Directors are expected to invest $3.9 million. The Company expects to use the net proceeds from the Private Placement for general corporate purposes.
The foregoing description of the Securities Purchase Agreements is not complete and is qualified in its entirety by reference to the full text of the Securities Purchase Agreements, the forms of which are filed herewith as Exhibits 10.1 and 10.2 and incorporated herein by reference in their entirety.
Registration Rights Agreement
In connection with the Private Placement, the Company also entered into a Registration Rights Agreement, dated January 3, 2025 (the “Registration Rights Agreement”), with the Investors, which provides that the Company will register the resale of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock. The Company is required to prepare and file an initial registration statement with the Securities and Exchange Commission (“SEC”) as soon as reasonably practicable, but in no event later than 60 days after the closing of the Private Placement (the “Filing Deadline”), and to use best efforts to have the registration statement declared effective within 50 days after the filing of the initial registration statement with the SEC, subject to the approval of the conversion of the Series A Preferred Stock being received at the Company’s special meeting of stockholders. The Registration Rights Agreement also contains customary provisions including, among other things, provisions relating to indemnification and expenses.
The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the form of such agreement, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated by reference herein.
Following the closing of the Private Placement, the Company expects to have 52,943,808 shares of Common Stock issued and outstanding and approximately 268,778,808 shares of Common Stock issued and outstanding on a pro forma basis, which gives effect to the full conversion of the Series A Preferred Stock as of the closing date of the Private Placement, which is expected to be January 8, 2025 (“Closing Date”), without regard to beneficial ownership limitations that may limit the ability of certain holders of Series A Preferred Stock to convert such shares to Common Stock at such time, or the Director Issuance Proposal.
Credit Agreement
On January 3, 2025, the Company entered into a senior secured credit facility for borrowings up to an aggregate principal amount of $125.0 million pursuant to a credit agreement and guaranty (the “Credit Agreement”) among Perceptive Credit Holdings IV, LP, as administrative agent (“Agent”), the lenders from time to time party thereto and the Company.
Pursuant to the terms and conditions of the Credit Agreement, the lenders agreed to extend term loans to the Company in an aggregate principal amount of up to $125.0 million, comprised of (i) a term loan of $100.0 million (the “Initial Term Loan”) to be funded at the closing of the Credit Agreement, which is expected to be the Closing Date, and (ii) a delayed draw term loan of up to $25.0 million (the “Delayed Draw Loan”). The Initial Term Loan and the Delayed Draw Loan are referred to collectively as the Loans. The Delayed Draw Loan is available for funding until July 14, 2027, subject to the achievement of certain revenue milestone and other customary conditions.
