Surmodics announces new credit facilities offering up to $125 million in financing
EDEN PRAIRIE, Minnesota, October 17, 2022–(BUSINESS WIRE)–Surmodics, Inc. (Nasdaq: SRDX), a leading provider of medical devices and in vitro diagnostic technologies for the healthcare industry, today announced that it has entered into a new five-year credit agreement with MidCap Financial (“MidCap”), including up to $100 million in term loans and a $25 million revolving credit facility.
“We are pleased to significantly enhance our access to capital on favorable and non-dilutive terms through credit facilities that provide increased borrowing capacity and financial flexibility,” said Gary Maharaj, President and Chief Executive Officer. of Surmodics, Inc. “Our initial borrowings, together with the expected milestone payment from our partner, Abbott, following the Food and Drug Administration’s anticipated premarket approval for our SurVeil™ drug-coated balloon, will provide significant capital to strengthen our balance sheet and support our long-term growth strategy. »
The Company drew $25 million under the term loan and $5 million under the revolving credit facility at closing. This proceed was partially used to repay the company’s existing $25 million revolving credit facility with Bridgewater Bank, of which $10 million was outstanding. At closing, the Company’s cash balance increased by $19.5 million.
Additional drawdowns of the Term Loan may be made in minimum tranches of $10 million, up to a total of $75 million through December 31, 2024. A second tranche of up to $25 million may be available until as of December 31, 2024 at MidCap’s option. The ability to draw on the five-year, $25 million revolving credit facility is based primarily on the Company’s inventory and accounts receivable balances.
The credit agreement provides for interest-only payments on the term loan during the first four years, which can be extended to five years if certain criteria are met. The revolving credit facility matures in five years. The credit agreement provides for the payment of interest on the basis of a base rate of Duration SOFR(1) plus an applicable margin. In connection with the term loan, the Company has also entered into an interest rate swap agreement with Wells Fargo, whereby the initial borrowing at the variable base rate of the term loan will be fixed for the term of the loan of five year. The Company expects total interest expense and fees under the credit agreement to be approximately $3.4 million in fiscal 2023.
The company has filed a current report on Form 8-K with the Securities and Exchange Commission which includes additional details of the credit agreement.
About Surmodics, Inc.
Surmodics is a leading supplier of surface modification technologies for intravascular medical devices and chemical components for in vitro immunodiagnostic assays and microarrays. Surmodics pursues the development and commercialization of highly differentiated medical devices designed to meet unmet clinical needs and engineered to the most demanding requirements. This key growth strategy leverages the company’s combination of expertise in proprietary surface technologies, along with enhanced device design, development and manufacturing capabilities. The Society’s mission remains to improve the detection and treatment of disease. Surmodics is headquartered in Eden Prairie, Minnesota. For more information, visit www.surmodics.com. Content from the Surmodics website does not form part of this press release or any of the Company’s filings with the Securities and Exchange Commission (“SEC”).
Safe Harbor for forward-looking statements
This press release and related information contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical or current facts, including statements regarding expectations of a milestone payment from Abbott Vascular, Inc.; statements regarding the anticipated pre-market Food and Drug Administration (“FDA”) approval for the company’s SurVeil (“DCB”) drug-coated balloon; statements regarding the possibility of making additional drawdowns on the term loan; and the expected total interest expense and fees under the credit facility in fiscal 2023, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and important factors could cause actual results to differ materially from those anticipated, including, without limitation: (1) our ability to successfully develop and commercialize our SurVeil DCB (including realizing all potential benefits of our agreement with Abbott), Avess™ DCB, Sundance™ DCB and other proprietary products; (2) if and when the FDA accepts our responses, including laboratory test results, to a deficiency letter the agency issued to the company, and grants premarketing approval to SurVeil’s DCB; (3) our dependence on third parties (including our customers and licensees) and their failure to successfully develop, obtain regulatory approval, market and sell products incorporating our technologies; (4) possible adverse market conditions and possible negative impacts on our cash flows; (5) compliance with the terms of the credit agreement with MidCap and the discretion that MidCap retains under the agreement; (6) our ability to successfully integrate the acquisition of Vetex Medical Limited and realize the anticipated benefits of the acquisition; (7) current and future supply chain constraints; (8) whether anticipated increases in our operating expenses are effective in generating profitable revenues; and (9) the factors identified under “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended September 30, 2021 and subsequent filings with the SEC. These reports are available in the Investors section of our website at https://surmodics.gcs-web.com and on the SEC’s website at www.sec.gov. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them in light of new information or future events.
1 “Term SOFR” means the annual rate equal to the sum of the 30-day forward-looking guaranteed overnight financing rate, as published by CME Group Benchmark Administration Limited (CBA) from time to time, plus 0.10%, reset monthly.
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Tim Arens, 952-500-7000