Invuity, a medical technology company focused on minimal access surgery, signed a new debt agreement with MidCap Financial for a $30 million term loan divided in two tranches.

The first tranche of $20 million was funded upon closing and the additional $10 million may be drawn down prior to December 31, 2018 provided that the company achieves certain revenue milestones. The new agreement also consists of a $10 million revolving credit facility that may be increased to $20 million at a later date at the company’s request and with approval from MidCap.

“We are pleased to announce this debt financing with MidCap, a leading financing partner in the healthcare space,” commented Philip Sawyer, Invuity’s CEO. “This new and lower cost debt facility strengthens our balance sheet as it allows for potential additional funding of up to $27.5 million to support us as we continue to drive growth through execution of our commercial strategies and introduction of additional innovative, high-value medical devices that leverage our expertise in advanced photonics.”

The MidCap facility carries a 60-month term with interest-only payments on the term loan for the first 24 months. The interest rate on the term loan is 6.5% plus the greater of LIBOR or 1.5%, which at closing resulted in a rate of 8.0%. Borrowings under the revolving line of credit bear interest of 3.25% plus the greater of LIBOR or 1.5% which at closing resulted in a rate of 4.75%.

The new agreement replaces an existing $15 million term loan with HealthCare Royalty Partners on which the company was about to start making payments and the $7.5 million revolver with Silicon Valley Bank which the company had yet to utilize.