SCHEDULE 13D/A: Venus Concept Shareholders Approve Key Equity Conversions, Paving Way for Major Investor Madryn to Increase Stake

Venus Concept Inc. shareholders have approved the conversion of Series X and Y Preferred Stock and 2025 Convertible Notes into common stock, removing Nasdaq limitations and significantly increasing Madryn Asset Management's beneficial ownership to 85.5%.

Summary

• Shareholders of Venus Concept Inc. approved the issuance of common stock underlying the Company's Series Y Preferred Stock, Series X Preferred Stock, and 2025 Convertible Notes on June 25, 2025, removing prior limitations imposed by Nasdaq Capital Market rules.
• Madryn Asset Management, LP and its affiliated funds (Madryn Health Partners, LP and Madryn Health Partners (Cayman Master), LP) collectively beneficially own 10,891,951 shares of Common Stock, representing approximately 85.5% of the outstanding shares on a fully diluted basis.
• This beneficial ownership calculation is based on 1,424,403 common shares outstanding as of May 9, 2025, plus 434,720 shares issued on June 9, 2025, and shares issuable upon conversion of Series Y Preferred Stock (10,544,354 shares), Series X Preferred Stock (271,866 shares), 2025 Convertible Notes (64,454 shares), and Warrants (1,091 shares).
• Madryn's investment in Venus Concept began with a credit agreement in 2016, followed by a series of debt-to-equity exchanges and conversions.
• Key exchanges include the acquisition of $26,695,110.54 in 2020 Convertible Notes, exchange of 2020 Notes for $22,791,748.32 in 2023 Convertible Notes and 248,755 shares of Series X Preferred Stock in October 2023.
• Further exchanges involved converting $35,000,000 and $15,000,000 of senior indebtedness from the MSLP Loan Agreement into 576,986 and 203,583 shares of Series Y Preferred Stock in May and September 2024, respectively.
• In March 2025, $17,015,808.33 of 2023 Convertible Notes were exchanged for 2025 Convertible Notes and 379,311 shares of Series Y Preferred Stock.
• The Series X Preferred Stock accrues a 12.5% annual dividend, payable quarterly in cash or additional Series X shares, and is convertible into 0.91 shares of Common Stock per share.
• Series Y Preferred Stock was issued at prices ranging from $29.00 to $73.68 per share, is convertible into 9.0909 shares of Common Stock, and carries a liquidation preference equal to twice its issuance price, senior to other capital stock.
• Madryn's stated purpose is for investment, intending to take an active role in the Company's operational, financial, and strategic initiatives, including evaluating potential strategic alternatives.

Sentiment

Score: 6

Explanation: The shareholder approval is a positive procedural step, removing a significant hurdle for capital structure optimization and Madryn's increased stake. However, the underlying context of extensive debt-to-equity conversions and ongoing restructuring discussions suggests the Company is still addressing significant financial challenges, leading to a moderately positive sentiment.

Positives

• Shareholder approval removes a significant regulatory hurdle (Nasdaq limitations) for the conversion of preferred stock and convertible notes, facilitating a cleaner capital structure.
• Madryn Asset Management's continued and increasing beneficial ownership demonstrates a strong commitment from a major investor, potentially providing stability and strategic guidance.
• The conversion of debt instruments into equity can reduce the Company's debt burden and improve its balance sheet, which is generally positive for financial health.

Negatives

• The high concentration of beneficial ownership (85.5%) by Madryn could lead to reduced liquidity for other shareholders and significant control by a single entity.
• The ongoing series of debt-to-equity exchanges and restructurings suggests persistent financial challenges for Venus Concept Inc. that necessitate these complex transactions.
• The potential for substantial dilution from the conversion of preferred stock and convertible notes into common stock could negatively impact existing common shareholders.

Risks

• Significant dilution risk for existing common shareholders due to the conversion of Series X and Y Preferred Stock and 2025 Convertible Notes.
• Uncertainty regarding the outcome of the Company's evaluation of potential strategic alternatives and the proposed debt and equity capital structure restructuring.
• The non-binding nature of Madryn's restructuring proposal means there is no assurance a definitive agreement will be executed or consummated.
• The Company's reliance on Madryn for financing and restructuring could lead to terms highly favorable to Madryn, potentially at the expense of other stakeholders.

Future Outlook

Madryn Asset Management intends to continue taking an active role in working with Venus Concept's management and board on operational, financial, and strategic initiatives, including the evaluation of potential strategic alternatives. Madryn may acquire or dispose of additional securities and engage in discussions regarding financing transactions, extraordinary corporate transactions, changes in governance, or other material changes to the Company's business or structure. Discussions are ongoing regarding the implementation of Madryn's non-binding proposal for a comprehensive debt and equity capital structure restructuring, which could result in Madryn and its affiliates becoming the majority owners of the Company's common stock on a fully diluted basis.

Management Comments

• The Reporting Persons acquired the securities for investment purposes.
• The Reporting Persons intend to continue to take an active role in working with the Company's management and the board of directors on operational, financial and strategic initiatives.
• The Reporting Persons intend to review their investments in the Company on a continuing basis.
• The Reporting Persons may, from time to time, acquire or dispose of additional shares of Common Stock or other securities of the Company.
• The Reporting Persons have engaged and intend to continue engaging in discussions with management or the board of directors of the Company about its business, operations, strategy, plans and prospects.
• There can be no assurance that a definitive agreement with respect to the Proposal will be executed or, if executed, whether the transaction will be consummated.

Industry Context

Venus Concept Inc. operates in the medical aesthetics and device industry. The ongoing debt restructuring and the significant involvement of a healthcare-focused investment firm like Madryn Asset Management suggest that the Company is navigating financial challenges common in capital-intensive, growth-stage medical technology sectors. The need for shareholder approval for equity conversions indicates a focus on improving the balance sheet and potentially attracting further investment or facilitating strategic transactions in a competitive market.

Comparison to Industry Standards

• No specific comparable companies, projects, or results are provided in this document to assess against industry standards.

Corporate Governance

Related Party Transactions

• The various credit agreements, exchange agreements (2020, 2023, May 2024, September 2024, 2025), and registration rights agreements between Venus Concept Inc. and the Madryn entities (Madryn Asset Management, Madryn Health Partners, Madryn Health Partners (Cayman Master), Madryn Health Advisors) constitute related party transactions, given Madryn's significant beneficial ownership and role as a lender and investor.
• The nonbinding transaction proposal from Madryn to restructure the Company's debt and equity capital structure is a related party dealing, aiming for Madryn to become the majority owner.

Stakeholder Impact

• Shareholders: Potential for significant dilution due to the conversion of preferred stock and convertible notes into common stock. The increased beneficial ownership by Madryn (85.5%) could also impact liquidity and control for other shareholders.
• Creditors: Madryn, as a major lender, is actively converting its debt into equity, which could reduce the Company's overall debt burden. The impact on other creditors would depend on the specifics of the ongoing restructuring.
• Management and Board: Madryn intends to take an active role in working with management and the board on strategic initiatives, potentially influencing the Company's direction and operations.
• Employees: No direct impact mentioned, but strategic changes or restructuring could indirectly affect employees.

Next Steps

• Madryn Asset Management intends to continue reviewing its investments in the Company on a continuing basis.
• Madryn will continue engaging in discussions with management and the board regarding operational, financial, and strategic initiatives.
• Discussions are ongoing between the Company and Madryn regarding the implementation of the proposed debt and equity capital structure restructuring and alternatives.
• Potential future acquisitions or dispositions of Common Stock or other securities of the Company by the Reporting Persons.
• Negotiation and execution of definitive documentation for the proposed restructuring, if the non-binding proposal proceeds.

Key Dates

Keywords

Venus Concept Inc., Madryn Asset Management, SEC filing, Schedule 13D, shareholder approval, convertible notes, preferred stock, debt restructuring, equity conversion, beneficial ownership, Nasdaq compliance, capital structure