Acutus Medical revises credit agreement terms

Acutus Medical (TASE:PMCN), Inc. (OTC Pink:AFIB), a medical device company specializing in electrophysiology, has entered into an amendment to their credit agreement with lenders, modifying payment schedules and increasing the exit fee. The amendment, made with Deerfield Partners, L.P. and Deerfield Private Design Fund III, L.P., was announced on Monday and is aimed at adjusting the amortization schedule and exit fees associated with the company's loans.

Under the terms of Amendment No. 4 to the Amended and Restated Credit Agreement dated June 30, 2022, Acutus Medical has rescheduled a $7.5 million principal payment due on June 30, 2025. The payment will now be divided into three equal installments of $2.5 million, with payments due on June 30, September 30, and December 31 of the same year. Additionally, the exit fee for prepayment or repayment of loans has been increased from 5.0% to 6.0% of the principal amount.

This amendment follows the delisting of Acutus Medical's common stock from the Nasdaq Stock Market on May 26, 2024, with the company's stock now trading on the OTC Pink Market. The changes to the credit agreement are effective immediately, with all other terms of the original agreement remaining in force.

The company also disclosed that Andrew ElBardissi, a member of Acutus Medical's Board of Directors, is a partner in Deerfield Management Company, L.P., the investment manager for the lenders involved in this agreement. This relationship was detailed in the company's proxy statement filed on April 25, 2024, for the 2024 Annual Meeting of Stockholders.

In other recent news, Acutus Medical, a medical device company, has finalized a settlement with Biotronik SE & Co. KG and VascoMed GmbH, collectively referred to as the BIO Parties. This settlement resolves an ongoing arbitration and effectively terminates several key agreements between the companies. The disputes revolved around allegations that Acutus Medical failed to fulfill its obligations under five agreements related to the licensing, manufacturing, and distribution of medical devices.

As part of the settlement terms, Acutus Medical will make an initial payment of about $2.6 million to Biotronik. Additionally, contingent payments are outlined, hinging on future events such as a Qualifying Asset Sale or a Change of Control of the company. These payments could potentially amount to substantial sums.

This settlement signifies a major shift in the business relationship between Acutus Medical and the BIO Parties. The company will now proceed independently of these prior arrangements. Full details of the settlement are available in the 8-K filing with the Securities and Exchange Commission.

InvestingPro Insights

Acutus Medical's recent amendment to its credit agreement reflects the company's ongoing financial challenges, which are further illuminated by InvestingPro data and tips. The company's market capitalization stands at a mere $1.82 million, indicating its small-cap status and potential volatility.

InvestingPro Tips reveal that Acutus Medical "operates with a significant debt burden" and is "quickly burning through cash," which explains the need for restructuring its loan payments. This aligns with the article's discussion of the modified payment schedules. Additionally, the tip that the company "suffers from weak gross profit margins" is supported by the data showing a negative gross profit margin of -13.4% for the last twelve months as of Q2 2024.

The company's financial struggles are further underscored by its negative EBITDA of -$15.01 million and a concerning operating income margin of -124.45%. These figures provide context for why Acutus Medical is seeking to adjust its debt obligations and potentially improve its cash position.

It's worth noting that despite these challenges, analysts anticipate sales growth in the current year, which could be a positive sign for the company's future prospects. Investors interested in a more comprehensive analysis can access 17 additional InvestingPro Tips for Acutus Medical, offering a deeper understanding of the company's financial health and market position.

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