EXETER, N.H. - Vapotherm, Inc. (OTCQX: OTC:VAPO) announced today it has entered into a definitive merger agreement with an entity formed by Perceptive Advisors, LLC. The deal involves debt conversion and a new capital injection, setting the stage for Vapotherm to transition from a public to a private company later in the year.
In this transaction, investment affiliates managed by SLR Capital Partners will convert approximately $81.0 million of term debt into preferred equity of the new entity. Additionally, Perceptive will invest $50.0 million of new preferred equity capital into Vapotherm, which will be allocated partly to fund the merger consideration and certain closing-related payments.
According to the merger agreement terms, Vapotherm stockholders will receive $2.18 per share in cash, a 166% premium over the stock's closing price on June 14, 2024. Notably, certain stockholders have agreed to exchange their shares for ownership interests in the newly-formed entity.
The Special Committee of Vapotherm's Board, comprised of independent directors and advised by an independent financial advisor, has unanimously recommended the merger, concluding it serves the best interest of the company and its stockholders. The Board has endorsed this recommendation and urged stockholders to approve the merger.
Completion of the merger, expected in the second half of 2024, hinges on customary closing conditions, including stockholder approval. Once finalized, Vapotherm will cease trading on the OTCQX market.
Vapotherm, a developer and manufacturer of advanced respiratory technology, is known for its non-invasive high-velocity therapy systems, which have treated over 4.4 million patients. The company's technology is designed to provide respiratory support without the need for a mask, facilitating patient comfort and care.
Legal counsel for the involved parties includes Cooley LLP for Perceptive, Latham & Watkins LLP for SLR, and Ropes & Gray LLP for Vapotherm. Scalar, LLC is the financial advisor to the Special Committee.
InvestingPro Insights
As Vapotherm, Inc. (OTCQX: VAPO) prepares to transition from a public to a private entity, it is essential for stakeholders to consider the financial health and market performance of the company. InvestingPro data reveals a market capitalization of $5.1 million, indicating the relatively small size of the company in comparison to industry peers. Despite the recent surge in stock price with a 13.9% return over the last week, the long-term perspective shows a significant downtrend, with a 1-year price total return of -82.62%.
The company's financials reflect challenges, with a negative P/E ratio of -0.1 and a negative operating income margin of -43.09% for the last twelve months as of Q1 2024. These figures suggest that Vapotherm has been operating at a loss, which is corroborated by the InvestingPro Tips indicating that the company is not expected to be profitable this year and is quickly burning through cash.
However, the recent agreement with Perceptive Advisors, LLC, and the debt conversion by SLR Capital Partners, coupled with a cash injection, may provide the financial restructuring necessary for Vapotherm's future endeavors. This move could potentially alleviate some of the financial pressures, as indicated by the significant debt burden and the fact that short-term obligations exceed liquid assets.
For those interested in a deeper analysis, InvestingPro offers additional insights into Vapotherm's financial health and market performance. Subscribers can access a comprehensive list of 12 InvestingPro Tips for VAPO, which provide a more detailed understanding of the company's financial metrics and market behavior. To explore these insights, visit https://www.investing.com/pro/VAPO and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. This exclusive offer may provide valuable guidance for investors navigating the implications of Vapotherm's transition to a private company.
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