GARDEN CITY, NY – Beyond Air (NASDAQ:XAIR), Inc., a medical device company specializing in the development of innovative products, has entered into a significant financial agreement, securing an $11.5 million loan accompanied by an equity warrant deal. The company, which operates under the ticker NASDAQ:XAIR, confirmed the arrangement in a recent SEC filing.
On September 27, 2024, Beyond Air signed a binding term sheet for a secured loan with a group of lenders, including Chief Executive Officer Steven Lisi and director Robert Carey. The independent directors of the company, following advice from an independent investment bank, approved this term sheet.
The loan features a ten-year repayment term with an annual interest rate of 15%, which will be payable in kind until July 2026. Additionally, the agreement stipulates an 8% royalty interest on the company’s net sales, to be paid quarterly from July 2026 until the loan is fully repaid. Beyond Air’s assets will substantially secure the obligations under this agreement.
Furthermore, the lenders will receive warrants to purchase shares of Beyond Air’s common stock at an exercise price of $0.3793 per share. The loan and security agreement, along with the issuance of warrants, are expected to be finalized by October 31, 2024.
In other recent news, Beyond Air has been making notable strides in its operations and financial structure. The company reported a first-quarter revenue of $0.6 million and an operating loss of $13.5 million, resulting in Roth/MKM upgrading Beyond Air's stock to a 'Buy' rating due to the potential of their LungFit PH system. However, Piper Sandler maintained an Overweight rating while reducing its price target for Beyond Air shares to $1.00.
Beyond Air has also announced a strategic partnership with Healthcare Links to expand the distribution of its LungFit® PH system in the US. The partnership aims to simplify the contracting process and make the advanced respiratory therapy more readily available across the country.
On the financial front, Beyond Air retired a $17.5 million debt with Avenue Capital and established a new $11.5 million loan agreement, eliminating $12 million in scheduled debt payments through mid-2026. This move is expected to support the company's operations until the same timeframe.
The company has also deployed its LungFit® PH system at the U.S. Naval Hospital Guam, a move expected to enhance the hospital's neonatal critical care capabilities. These are the recent developments in Beyond Air's journey.
InvestingPro Insights
Beyond Air's recent $11.5 million loan agreement comes at a critical time for the company, as reflected in the latest InvestingPro data. The company's market capitalization stands at a modest $15.26 million, indicating its current small-cap status. This financing move is particularly significant given that Beyond Air is rapidly burning through cash, as highlighted by one of the InvestingPro Tips.
The company's financial health presents a mixed picture. On the positive side, Beyond Air holds more cash than debt on its balance sheet, and its liquid assets exceed short-term obligations. These factors likely played a role in securing the new loan. However, the company is not currently profitable, with a negative P/E ratio of -0.21.
Despite these challenges, analysts remain cautiously optimistic. InvestingPro Tips indicate that net income and sales are expected to grow this year, with analysts predicting profitability in the near future. This potential turnaround could explain why the company was able to negotiate the loan deal, even with its current financial pressures.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for Beyond Air, providing a deeper understanding of the company's financial position and market performance.
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