Shares of TransMedics Group (NASDAQ:TMDX), a medical device company focused on organ transportation, fell about 16% as of 10:37 a.m. EDT on Wednesday after the company announced the pricing details of a common stock offering.
TransMedics let investors know on Tuesday that it wanted to raise about $60 million through a secondary common-stock offering. The underwriters of the deal were also going to have the option to purchase an additional 15% more shares.
The pricing details of the offering were released late Tuesday evening, and investors don't appear to be happy with the details. TransMedics is selling 5 million shares for $14 each. When including the underwriter's option, TransMedics is expected to raise about $70 million before deducting fees.
That $14 price is much lower than Tuesday's closing price of $15.95, which suggests that management was having a hard time drumming up investor interest.
It's also less than half the price that the company was trading for roughly a year ago.
Given the details, it's no surprise to see shares taking a step back today.
TransMedics' net loss was about $9 million in the first quarter of 2020, and it ended March with about $73 million in cash. Those numbers suggest that it was probably going to have to raise capital again eventually, so this news isn't terribly surprising.
TransMedics grew its revenue by 61% in the first quarter to $7.5 million, so this company remains a high-growth healthcare stock. However, it will likely be several more years before the company reaches profitability, so it's certainly a high-risk stock.
If you believe in this company's long-term potential and are comfortable with risk, today might be a good day to consider opening a position.