8-K: NeuroPace Secures New $75 Million Debt Facility, Refinances Existing Loan to Fuel Growth

NeuroPace, Inc. has entered into a new $75 million credit facility with MidCap Financial, comprising a $60 million term loan and a $15 million revolving credit facility, while simultaneously repaying its existing $61.9 million secured indebtedness.

Summary

• NeuroPace, Inc. (the "Company") entered into a new Credit, Security and Guaranty Agreement (the "Credit Agreement") on June 4, 2025, with MidCap Funding IV Trust and MidCap Financial Trust.
• The new facility provides a first lien senior secured credit facility totaling up to $75 million, consisting of a $60 million term loan (the "Term Loan") and a $15 million asset-based revolving credit facility (the "Revolver").
• The Term Loan was funded at closing and its proceeds were used to fully repay the Company's existing secured indebtedness.
• The Revolver will be used for general working capital needs and other general corporate purposes.
• Both the Term Loan and Revolver mature on June 4, 2030, a five-year term.
• The Term Loan accrues interest at SOFR plus a margin of 5.50%, with a SOFR floor of 2.00%.
• Borrowings under the Revolver accrue interest at SOFR plus a margin of 3.75%, with a SOFR floor of 2.00%.
• Interest is payable monthly in cash, and an unused line fee of 0.25% per annum applies to the unused portion of the Revolver.
• The Credit Agreement is secured by a lien on substantially all existing and after-acquired assets of the Company and its future domestic and material foreign subsidiaries.
• The Company has the right to prepay the Loans, subject to prepayment premiums: 3.00% in year one, 2.00% in year two, 1.00% in year three, and 0.00% thereafter.
• Concurrently, NeuroPace terminated its existing Term Loan Agreement with CRG Servicing LLC, repaying approximately $61.9 million in principal, interest, and fees.
• The new agreement includes financial covenants: a minimum Net RNS Revenue covenant if liquidity falls below certain levels (starting at $60 million, decreasing to $40 million after June 30, 2027, or $35 million if 2026 RNS revenue reaches $90 million), and a covenant requiring at least $25 million in liquidity at all times (waived if 2026 RNS revenue reaches $90 million).

Sentiment

Score: 8

Explanation: The sentiment is highly positive due to the successful refinancing at reportedly 'favorable terms' that 'reduce cash interest expense,' the non-dilutive nature of the capital, and the stated intent to use the funds for significant growth initiatives and expansion of patient access.

Positives

• The new credit facility provides non-dilutive capital, avoiding equity dilution for existing shareholders.
• Management states the new terms are favorable and will reduce the Company's cash interest expense.
• The facility provides financial strength and flexibility to support continued business growth.
• Proceeds from the Revolver are available for general working capital needs and other corporate purposes.
• The financing enables investment in key growth initiatives, including site-of-service expansion, new indications, direct-to-consumer programs, new product development, and real-world evidence generation.
• The Company successfully repaid its previous secured indebtedness, simplifying its debt structure.

Negatives

• The Company has incurred new secured debt obligations totaling up to $75 million.
• The new debt is secured by a lien on substantially all existing and after-acquired assets of the Company and its subsidiaries.
• Prepayment premiums apply if the loans are terminated early within the first three years (3.00% in year 1, 2.00% in year 2, 1.00% in year 3).
• The Credit Agreement includes financial covenants related to liquidity and Net RNS Revenue that the Company must adhere to.

Risks

• Failure to meet the financial covenants, including maintaining minimum liquidity levels (starting at $60 million, decreasing to $40 million after June 30, 2027, or $35 million if 2026 RNS revenue reaches $90 million) and achieving minimum Net RNS Revenue if liquidity falls below thresholds, could lead to an event of default.
• Failure to maintain at least $25 million in liquidity at all times (unless 2026 RNS revenue reaches $90 million) could trigger an event of default.
• The Company's assets are pledged as collateral, meaning lenders would have a claim on these assets in case of default.
• The forward-looking statements regarding the use of proceeds and anticipated benefits are subject to various factors and actual results could differ materially.

Future Outlook

NeuroPace anticipates that the new credit facility will provide the financial strength and flexibility necessary to continue expanding patient access to its RNS System and to invest in key growth initiatives, including site-of-service expansion, new indications, direct-to-consumer programs, new product development, and real-world evidence generation.

Management Comments

• Joel Becker, Chief Executive Officer of NeuroPace, stated: "We are pleased to partner with MidCap Financial on this new credit facility, which provides non-dilutive capital at favorable terms that reduce our cash interest expense and support the continued growth of our business."
• Joel Becker also commented: "The proceeds and improved structure provide us the financial strength and flexibility to continue expanding patient access to the RNS System and to invest in key growth initiatives, including site-of-service expansion, new indications, direct-to-consumer programs, new product development and real-world evidence generation."
• Joel Becker expressed gratitude to the previous lender: "We also want to thank CRG for their partnership and support over the past several years. They have been an excellent partner in the Company’s development."

Industry Context

NeuroPace operates as a medical device company specializing in transforming the lives of people with epilepsy through its RNS System, a brain-responsive platform for personalized seizure treatment. This financing aims to strengthen its position and expand its market reach within the neuro-medical device sector.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess the new credit facility's terms against global industry benchmarks.

Stakeholder Impact

• Shareholders: Benefit from non-dilutive capital and potentially improved financial health due to reduced interest expense, supporting future growth.
• Employees: Continued investment in growth initiatives and new product development may lead to job stability and opportunities.
• Customers/Patients: Expanded access to the RNS System and investment in new indications could improve treatment availability and options for people living with epilepsy.
• Creditors: MidCap Financial becomes the primary secured lender, while CRG Servicing LLC's debt has been fully repaid and security interests terminated.

Next Steps

• Expand patient access to the RNS System.
• Invest in site-of-service expansion.
• Invest in new indications for the RNS System.
• Invest in direct-to-consumer programs.
• Invest in new product development.
• Invest in real-world evidence generation.

Key Dates

Keywords

NeuroPace, Debt Financing, Credit Facility, Term Loan, Revolving Credit Facility, Refinancing, Medical Device, Epilepsy, RNS System, MidCap Financial, SEC Filing, Corporate Finance