Insulet Corp. wants to work off a few more IOUs.
The Bedford, Mass.-based device company is again dusting off its prospectus — this time with plans to sell 6 million shares of stock for $10.25 per share.* At that price, the proposed offering would generate nearly $58 million in net proceeds once the underwriters’ usual 6 percent fee is deducted.
Timing for the offering will be subject to market conditions and is effective under a shelf registration filed April 1. Insulet has dipped into this well before, the last time in May 2007 when the company banked $107 million from its initial public offering. It’s also put its weight behind the sale of shares two years ago by pre-IPO investors wanting to cash in on their early stakes, although it did not share in any of that money.
And while it’s still far from going broke, money remains a critical issue at Insulet. The company earlier this week reported an 85 percent jump in year-over-year sales for its Omnipod insulin delivery systems and confidently raised projections for full-year revenues. The problem instead is the bottom line. Net loss for the three months ended Sept. 30 was $24.7 million, up from a $21.7 million deficit last year — and its $18.7 million in record revenues did not even cover the $19.3 million in operating expenses for the quarter.
Insulet also paid out $11.2 million in interest costs during the third quarter and is carrying a total of $95.9 million in long-term debt. Company officials last month re-financed a portion of that debt load, convincing a New York-based hedge fund to convert roughly half of a $60 million term load into equity, a move expected to save Insulet about $4 million a year in interest expense.
The company had about $73 million in cash on hand at the end of the quarter, according to its latest balance sheet data.
In a statement Wednesday, Insulet executives said they plan to use proceeds from the upcoming offering for general corporate purposes, “which may include the repayment of certain outstanding debt obligations.” First on that list may be paying the remaining $32.2 million in principal due on the recently renegotiated loan facility with Deerfield Management. As part of that deal, the company shaved 125 basis points off the annual interest rate, but will still be paying a hefty 8.5 percent a year until the note comes due in 2012.
The company also is paying 5.375 percent on $85 million in five-year convertible notes issued in June 2008. New York-based J.P. Morgan Securities was the lead underwriter for that deal, as well as the IPO, and will reprise that role with the new stock offering.
Company officials, meanwhile, got a head start earlier this month on their requisite road show duties, participating in a healthcare focus conference at The New York Palace Hotel. Organizer for the event was JMP Securities, which along with Canaccord Adams, has signed on co-managers for the upcoming stock offering.