SCHEDULE: Madryn Proposes Venus Concept Takeover at $0.01/Share

Madryn Asset Management proposes a comprehensive debt-for-equity restructuring and short-form merger for Venus Concept Inc., valuing common stock at $0.01 per share.

Summary

• Madryn Asset Management, LP and its affiliates (Reporting Persons) beneficially own 91.0% of Venus Concept Inc.'s common stock.
• Reporting Persons have been actively involved in the Company's strategic initiatives and debt restructuring efforts since 2020.
• On April 23, 2024, Madryn acquired the entire outstanding MSLP Loan from City National Bank of Florida.
• On May 3, 2024, Madryn proposed a non-binding debt-for-equity restructuring, which would make them majority owners.
• Multiple exchange agreements between May 2024 and September 2025 converted various debt instruments (MSLP Loan, 2023 Convertible Notes, March 2025 Convertible Notes, June 2025 Convertible Notes) into Series Y Preferred Stock.
• On January 13, 2026, Madryn discussed reducing operational costs with the board, including potential delisting and deregistration of the Company's Common Stock.
• On March 13, 2026, Madryn agreed to acquire all common and preferred stock held by HealthQuest Partners II, L.P. for $755,646.90, payable via promissory notes.
• On March 16, 2026, Madryn agreed to acquire all preferred stock and convertible debt held by EW Healthcare Partners, L.P. for $2,600,000, payable in cash installments.
• On March 17, 2026, in response to a $1.0 million funding request, Madryn proposed issuing Common Stock at $0.01 per share for the funding, which would result in Madryn owning over 90% of the common stock.
• The March 2026 Proposal includes a short-form merger by March 31, 2026, contingent on Madryn acquiring all outstanding preferred stock from HealthQuest and EW.
• In the proposed short-form merger, each common stock share would be converted into $0.01 cash, reflecting the minimal expected value after debt and preferred stock liquidation preferences.
• After effecting the Short-form Merger, the Reporting Persons would own 100% of the Common Stock.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a highly negative development for common shareholders, as the proposed restructuring effectively wipes out nearly all common equity value, indicating severe financial distress and a likely transition to private ownership by the primary lender.

Positives

• Madryn is providing additional funding of $1.0 million to Venus Concept Inc., which could help address immediate liquidity needs.
• The proposed restructuring could provide a clear path forward for the company's significant debt obligations, potentially stabilizing its financial structure.

Negatives

• The proposed short-form merger values common stock at $0.01 per share, explicitly stating this reflects "little to no value" for existing common stockholders after debt and preferred stock obligations.
• The proposal suggests potential delisting and deregistration of the Company's Common Stock, which would eliminate public market liquidity for shareholders.
• The company requested $1.0 million in additional funding, implying ongoing financial distress and a critical need for capital.

Risks

• There is no assurance that a definitive agreement for the May 3, 2024 proposal will be executed or consummated, leaving the company's future uncertain.
• The March 2026 Proposal is non-binding, and there is no certainty as to the outcome of discussions or timing for definitive agreements, creating execution risk.
• The proposed short-form merger is contingent on Madryn's acquisition of all preferred stock from HealthQuest and EW, introducing a condition that must be met.
• The valuation of common stock at $0.01 per share in the proposed merger reflects the significant risk of minimal or no recovery for common shareholders in a liquidation scenario.
• Potential delisting and deregistration of the Company's Common Stock could severely limit liquidity and exit opportunities for existing shareholders.

Future Outlook

The Reporting Persons intend to continue their active role in Venus Concept Inc.'s operational, financial, and strategic initiatives. They have proposed a comprehensive debt and equity restructuring that would lead to their majority ownership and potentially a short-form merger, converting existing common stock into $0.01 per share. The future involves ongoing discussions regarding these proposals and potential delisting/deregistration.

Management Comments

• Madryn discussed with the Company's board of directors its desire for the Company to reduce operational costs, including the potential delisting and deregistration of the Company's Common Stock.
• The Price Per Share of $0.01 reflects the little to no value of the expected distribution to the holders of Common Stock upon a liquidation of the Company's assets after taking into consideration the repayment of the Company's debt and other obligations and the liquidation preference associated with the currently outstanding shares of the Company's preferred stock.

Industry Context

StockSavvy.ai notes that this aggressive move by a significant lender and shareholder, Madryn Asset Management, to consolidate ownership and restructure debt at a distressed valuation is common in the medical aesthetics and device industry when companies face severe financial challenges. Such actions often precede a private restructuring or sale, aiming to salvage value for senior creditors and preferred shareholders while common equity holders bear the brunt of the losses.

Comparison to Industry Standards

• StockSavvy.ai observes that a proposed common stock valuation of $0.01 per share in a short-form merger, reflecting "little to no value" after debt and preferred stock, is indicative of a company in severe financial distress, often seen in highly leveraged biotech or medical device firms nearing insolvency. This contrasts sharply with healthy industry players like InMode Ltd. (INMD) or Cutera, Inc. (CUTR) (prior to its own recent struggles), which typically maintain positive equity valuations and growth prospects.
• The consolidation of ownership by a major lender (Madryn) through debt-for-equity exchanges and acquisitions of other investors' stakes (HealthQuest, EW) is a standard distressed asset management strategy, similar to how private equity firms or specialized distressed debt funds operate in sectors like healthcare technology when a company struggles to meet its obligations.

Corporate Governance

Related Party Transactions

• Madryn Asset Management, LP and its affiliates are significant stockholders and lenders to Venus Concept Inc.
• Multiple exchange agreements between Madryn and Venus Concept Inc. converted Madryn's debt instruments into preferred stock.
• Madryn is proposing to provide additional funding and acquire common stock from Venus Concept Inc.
• Madryn is acquiring shares and debt from other significant investors (HealthQuest and EW) in Venus Concept Inc.

Stakeholder Impact

• Shareholders (Common Stock): Highly negative impact. The proposed short-form merger values common stock at $0.01 per share, indicating a near-total loss of value. Potential delisting and deregistration would eliminate liquidity.
• Shareholders (Preferred Stock): Madryn is acquiring preferred stock from other holders, suggesting a consolidation of preferred equity, which typically has liquidation preferences over common stock.
• Creditors (Madryn): Madryn is consolidating its position as a primary lender and moving towards full ownership, indicating a strategy to protect its investment and potentially recover value through a private entity.
• Management/Board: Engaged in discussions with Madryn regarding strategic alternatives, debt restructuring, and operational cost reductions, facing significant pressure from the majority shareholder/lender.

Next Steps

• Negotiation and execution of definitive documentation for the May 3, 2024 Proposal.
• Company successfully completing an equity financing (condition for May 3, 2024 Proposal).
• Obtaining requisite stockholder consents (condition for May 3, 2024 Proposal).
• Ongoing discussions between the Company and Reporting Persons regarding the March 2026 Proposal and alternatives.
• Madryn's acquisition of all shares from HealthQuest Partners II, L.P.
• Madryn's acquisition of all shares and convertible debt from EW Healthcare Partners, L.P.
• Provision of $1.0 million additional funding by Reporting Persons to the Company on or about March 24, 2026.
• Effecting a short-form merger by March 31, 2026, contingent on Madryn's acquisition of all outstanding preferred stock not currently owned by them.

Key Dates

Recommendation

The filing explicitly states that the proposed short-form merger would convert common stock into $0.01 per share, reflecting "little to no value" after accounting for debt and preferred stock liquidation preferences. This indicates a near-total loss for current common shareholders. The intent for potential delisting and deregistration further removes any future public market liquidity. Investors should consider selling immediately to salvage any remaining value.

Keywords

Venus Concept Inc., Madryn Asset Management, Schedule 13D, Debt Restructuring, Equity Financing, Short-form Merger, Delisting, Deregistration, Preferred Stock, Convertible Notes, Shareholder Agreement, Corporate Governance, Strategic Alternatives, Healthcare Investment