DarioHealth (Nasdaq:DRIO) announced today that it priced a private placement of convertible preferred stock at $14.3 million.
New York-based DarioHealth received significant participation in the pricing by select members of leadership, the board and existing investors. The company also refinanced its existing credit facility. As a result, the company reports a proforma cash balance as of the end of the first quarter at a total of $60 million.
According to a news release, the digital therapeutic developer believes these maneuvers extend its cash runway through late 2025. DarioHealth expects the private placement to close on or before today, May 3, 2023.
“These actions are very positive for Dario as they provide an additional year and a half of cash runway, based on our current operating plan, at terms that I believe are very favorable to our company,” said Erez Raphael, CEO of DarioHealth. “We are delighted that approximately half of the newly designated convertible preferred shares, which were priced at the market under Nasdaq rules, were purchased by select members of the company’s leadership, the company’s board of directors, and existing shareholders, which we view as an additional vote of confidence.
“Additionally, the refinancing of our existing credit facility will save approximately six million dollars annually in amortization expenses.
More on the financial moves made by DarioHealth
Raphael added that the financing enables the company to execute on its long-term growth strategy and maintain positive trends into the future.
Each share of preferred stock has a sale price of $1,000 per share. With conversion prices of $3.334 and $3.37, it amounts to gross proceeds of $14.3 million.
DarioHealth also successfully refinanced its existing $25 million credit facility with a new $30 million credit facility. The company expects this to save it approximately $500,000 in monthly amortization payments. After July 1, 2023, it may be entitled to borrow up to an additional $10 million under the new facility.
Additionally, DarioHealth agreed to issue Avenue Capital Group a warrant to purchase up to 584,882 shares of common stock. These come at an exercise price of $3.334 per share. Avenue Capital Group also has the right to purchase up to $2 million of common stock at a future date, at its discretion, at the exercise price.