Form 4: Madryn Funds Boost Stake in Venus Concept Inc.

Madryn Asset Management and affiliated funds significantly increase their beneficial ownership in Venus Concept Inc. through multiple equity and debt transactions.

Summary

• Madryn Health Partners and Madryn Health Partners (Cayman Master) (the "Funds") acquired 37,500,000 shares of Venus Concept Inc. common stock directly from the Issuer for an aggregate purchase price of $1,500,000, priced at $0.04 per share.
• The Funds also acquired 37,187 shares of common stock and 1,500,000 shares of Voting Convertible Preferred Stock from HealthQuest Partners II L.P. in exchange for promissory notes totaling $755,646.90.
• Additionally, the Funds purchased 1,575,810 shares of Senior Convertible Preferred Stock, 335,000 shares of Voting Convertible Preferred Stock, and Secured Subordinated Convertible Notes with a principal balance of $2,611,228.33 from EW Healthcare Partners L.P. and EW Healthcare Partners-A, L.P. for an aggregate sale price of $2,600,000.
• The Voting Convertible Preferred Stock is convertible into common stock at a ratio of 0.0606 shares of common stock for each preferred share, and the Senior Convertible Preferred Stock at a ratio of 0.2424 shares of common stock for each preferred share; both are perpetual.
• The Secured Subordinated Convertible Notes are convertible into 189,756 shares of common stock at a rate of 72.6691 shares per $1,000 principal amount and have an expiration date of December 9, 2026.
• Following these transactions, the Funds beneficially own 37,547,373 shares of common stock directly, along with various derivative securities.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a complex set of transactions that, while indicating significant insider commitment, also suggest a potentially challenging financial situation for Venus Concept Inc. given the low common stock price and the use of dilutive convertible instruments.

Positives

• Significant insider investment by a 10% owner and director, potentially signaling confidence in the company's future prospects.
• Diversification of investment types (common stock, preferred stock, convertible notes) by the reporting persons, indicating a comprehensive strategic investment.
• The transactions involve multiple parties (Issuer, HealthQuest, EWHP Funds), suggesting a broader strategic recapitalization or restructuring effort for Venus Concept Inc.

Negatives

• The common stock was acquired at a price of $0.04 per share, which is a very low valuation and could indicate underlying financial distress or a highly dilutive financing event for existing shareholders.
• The issuance of various convertible preferred stock and convertible notes could lead to significant dilution for existing common shareholders upon conversion, impacting per-share value.
• The use of promissory notes for part of the acquisition from HealthQuest introduces a debt component for the Funds, which could have implications for their financial structure.

Risks

• Potential for significant dilution for existing common shareholders if the convertible preferred stock and convertible notes are converted into common stock.
• The low price of common stock acquired ($0.04 per share) could indicate underlying financial challenges for Venus Concept Inc., posing a risk to current equity holders.
• The complexity of the transactions involving multiple types of securities and parties could introduce financial or operational risks related to their integration and management.

Future Outlook

The filing does not contain explicit forward-looking statements or guidance from Venus Concept Inc. The reported transactions represent a significant investment by a 10% owner and director, indicating their future-oriented commitment to the company.

Industry Context

StockSavvy.ai notes that significant insider investments, especially by a 10% owner and director, can often be interpreted as a vote of confidence in the company's long-term prospects within the medical aesthetics or device industry. However, the complex nature of the financing, involving various convertible securities and a low common stock price, suggests potential financial restructuring or a strategic recapitalization for Venus Concept Inc. to address capital needs or strategic shifts.

Comparison to Industry Standards

• The acquisition of common stock at $0.04 per share is notably low, suggesting a valuation significantly below typical market prices for established medical device companies like InMode Ltd. (INMD) or Cutera, Inc. (CUTR), which often trade at much higher multiples.
• The use of convertible preferred stock and subordinated convertible notes is a common financing mechanism for companies seeking capital while managing immediate equity dilution, similar to structures seen in growth-stage biotech or medical technology firms that require substantial investment for R&D or market expansion.

Related Party Transactions

• Madryn Health Partners and Madryn Health Partners (Cayman Master), as entities affiliated with a 10% owner and director of Venus Concept Inc., acquired 37,500,000 shares of common stock directly from Venus Concept Inc. for $1,500,000 pursuant to a Stock Purchase Agreement dated March 26, 2026.

Stakeholder Impact

• Shareholders: Potential for significant dilution from the conversion of preferred stock and notes into common stock. The low common stock acquisition price ($0.04) could be concerning for existing shareholders regarding the company's valuation.
• Creditors: The issuance of secured subordinated convertible notes adds to the company's debt structure, potentially impacting other creditors depending on the terms and seniority of existing debt.

Key Dates

Recommendation

While the significant insider investment by Madryn Asset Management and its affiliates could signal confidence, the complex nature of the transactions, including the low common stock acquisition price and the potential for future dilution from convertible securities, introduces uncertainty. Investors should hold to observe the company's strategic execution and financial performance post-recapitalization before making further investment decisions.

Keywords

Venus Concept Inc., VERO, Madryn Asset Management, Insider Trading, Form 4, Beneficial Ownership, Common Stock, Preferred Stock, Convertible Notes, Equity Investment, Debt Investment, SEC Filing, Healthcare, Medical Devices