NeuroPace secures $75 million credit facility with MidCap Financial

MOUNTAIN VIEW, Calif. - NeuroPace, Inc. (NASDAQ: NPCE), a company specializing in medical devices for epilepsy treatment, has established a new $75 million credit facility with MidCap Financial. This financial arrangement includes a $60 million term loan and a $15 million revolving credit facility. The company utilized the term loan to settle its previous debt with CRG Partners IV, L.P. and plans to use the revolving credit for working capital and other corporate needs. According to InvestingPro data, NeuroPace operates with a moderate debt level and maintains strong liquidity, with current assets significantly exceeding short-term obligations at a ratio of 6.63x.

The credit agreement, which spans five years for both the term loan and revolving credit, carries an annual interest rate tied to SOFR with a 2% floor, plus 5.5% for the term loan and 3.75% for the revolving loan. NeuroPace’s CEO, Joel Becker, expressed satisfaction with the new credit facility’s favorable terms, which he believes will reduce cash interest expenses and support the company’s growth. The company has shown strong momentum, with InvestingPro data revealing impressive revenue growth of 22% over the last twelve months, though it remains unprofitable with a net loss of $24.8 million.

The new funds are earmarked for expanding patient access to NeuroPace’s RNS® System, a brain-responsive platform for epilepsy treatment, and for investing in growth initiatives such as site-of-service expansion, exploring new indications, direct-to-consumer programs, new product development, and evidence generation from real-world use. The market has responded positively to the company’s growth strategy, with InvestingPro showing a remarkable 109% return over the past year. For deeper insights into NeuroPace’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

NeuroPace’s decision to partner with MidCap Financial, which is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, Inc., comes with a strategic focus on non-dilutive capital. The move is aimed at strengthening the company’s financial position and flexibility, as outlined in NeuroPace’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission.

This news is based on a press release statement from NeuroPace, Inc. and provides insight into the company’s latest financial maneuvering to bolster its operations and growth trajectory in the medical device sector.

In other recent news, NeuroPace Inc reported mixed results from its NAUTILUS study, which evaluated the RNS System in patients with idiopathic generalized epilepsy (IGE). The study met its primary safety endpoint but did not achieve statistical significance in its primary effectiveness endpoint. Despite this, NeuroPace highlighted significant improvements in a subset of patients, particularly those with lower baseline seizure frequencies, showing a median seizure reduction of over 80%. The company plans to submit the full dataset to the FDA and pursue regulatory discussions for potential indication expansion. Analysts have responded with varied opinions; Cantor Fitzgerald maintained an Overweight rating with a $16 price target, while H.C. Wainwright initiated a Buy rating with an $18 target, citing solid revenue growth and clinical effectiveness in treating drug-resistant focal epilepsy. NeuroPace’s financial performance remains strong, with a 22% year-over-year revenue increase in 2024 and expectations for continued growth. Leerink Partners maintained an Outperform rating despite the trial’s mixed results, acknowledging management’s optimism for future prospects. NeuroPace’s ongoing analysis of subgroup data aims to better understand the RNS System’s benefits for specific patient groups.

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