Form 4: Madryn Asset Management Acquires Series Y Convertible Preferred Stock in Venus Concept Inc.

Madryn Asset Management, along with affiliated entities, acquired Series Y Convertible Preferred Stock in Venus Concept Inc. through an exchange of existing senior secured indebtedness.

Summary

• Madryn Asset Management, LP, along with affiliated entities including Madryn Health Partners, LP, Madryn Health Partners (Cayman Master), LP, and Madryn Health Advisors, LP, filed a Form 4 regarding changes in beneficial ownership of Venus Concept Inc. securities.
• The transaction involved the acquisition of 203,583 shares of Series Y Convertible Preferred Stock by Madryn Health Partners, LP and Madryn Health Partners (Cayman Master), LP on September 26, 2024.
• This acquisition was made through an exchange of $15,000,000 of existing senior secured indebtedness for the Series Y Preferred Stock.
• Each share of Series Y Preferred Stock is convertible into 100 shares of Common Stock, either at the holder's option or automatically upon certain conditions, including the completion by the Company of a $30.0 million common equity raise.
• Madryn Asset Management, LP, as investment advisor, and Madryn Health Advisors, LP, as general partner, may be deemed beneficial owners of the shares held by the Funds but disclaim beneficial ownership except to the extent of their pecuniary interest.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as it reflects a significant investment by Madryn Asset Management, suggesting confidence in Venus Concept Inc.'s future prospects. The exchange of debt for equity could also strengthen the company's financial position.

Positives

• The acquisition of Series Y Preferred Stock represents a significant investment by Madryn Asset Management in Venus Concept Inc.
• The conversion feature of the Series Y Preferred Stock could lead to a substantial increase in Madryn's stake in Venus Concept Inc. if the common equity raise is completed.
• The exchange of debt for equity could improve Venus Concept Inc.'s balance sheet by reducing its senior secured indebtedness.

Risks

• The conversion of the Series Y Preferred Stock is contingent on Venus Concept Inc. completing a $30.0 million common equity raise, which may not occur.
• Madryn Asset Management disclaims beneficial ownership of the securities except to the extent of their pecuniary interest, suggesting a limited direct involvement in the company's operations.

Future Outlook

The future outlook depends on Venus Concept Inc.'s ability to complete a $30.0 million common equity raise, which would trigger the conversion of the Series Y Preferred Stock into common shares.

Industry Context

This transaction reflects a strategic investment by a healthcare-focused asset management firm into a company in the aesthetic technology sector. Such investments are common in the industry as firms look to capitalize on growth opportunities in the medical aesthetics market.

Comparison to Industry Standards

• Similar transactions involve healthcare-focused funds investing in medical device or aesthetic technology companies.
• Comparable companies in the aesthetic technology sector include Cutera, Cynosure, and InMode, which have also attracted significant investment from private equity and venture capital firms.
• The exchange of debt for equity is a common strategy used to restructure balance sheets and attract new investment in companies with high growth potential.

Stakeholder Impact

• Shareholders may view the investment positively, as it signals confidence in the company's future.
• Employees may benefit from the improved financial stability of the company.
• Creditors may see the debt exchange as a positive step towards improving the company's long-term solvency.

Next Steps

• Venus Concept Inc. may proceed with efforts to complete a $30.0 million common equity raise.
• Madryn Asset Management will monitor its investment and may exercise its option to convert the Series Y Preferred Stock into common shares.

Key Dates

Keywords

Venus Concept Inc., Madryn Asset Management, Series Y Convertible Preferred Stock, Beneficial Ownership, Form 4, Debt Exchange, Equity Raise