SAN FRANCISCO - iRhythm Technologies, Inc. (NASDAQ: IRTC), a digital healthcare company, has upsized its private placement offering to $575 million in convertible senior notes due in 2029, an increase from the initially announced $450 million.
The offering to qualified institutional buyers is expected to close on Wednesday, subject to customary conditions. These notes, bearing a 1.50% interest rate, will be paid semi-annually and are set to mature on September 1, 2029, unless converted or repurchased earlier under the terms set forth.
The notes are convertible under certain conditions and the initial conversion rate has been set at approximately 6.7927 shares of iRhythm common stock per $1,000 principal amount, which is equivalent to a conversion price of about $147.22 per share. This rate represents a roughly 35% premium over iRhythm's common stock closing price on the Nasdaq Global Select Market as of March 4, 2024.
iRhythm has also granted initial purchasers an option to buy an additional $86.25 million in notes within a 13-day period starting from the issuance date. The company will not redeem the notes before March 5, 2027. Post this date and until June 1, 2029, redemption may occur if the stock price exceeds a certain threshold.
The net proceeds, estimated at approximately $559.5 million (or $643.6 million if additional notes are purchased), will be allocated to various purposes. iRhythm intends to repay $80.2 million of its outstanding debt under a loan agreement with Braidwell LP, and repurchase shares of its common stock worth about $25 million in private transactions.
The company plans to use the remaining funds for general corporate activities, including potential investments and acquisitions, although no specific commitments have been made.
In conjunction with the note pricing, iRhythm has entered into capped call transactions intended to minimize potential dilution upon note conversion and offset cash payments above the principal amount, subject to a cap.
The company has indicated that certain financial institutions may engage in derivative transactions and purchase iRhythm stock to establish their initial hedge positions in relation to the capped call transactions. Such activities could influence the market price of iRhythm's common stock and the notes.
This announcement does not constitute an offer to sell or a solicitation of an offer to buy the securities, and the notes and any shares of iRhythm common stock issuable upon conversion have not been registered under the Securities Act or any state securities laws.
The information provided is based on a press release statement.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.