The new financing includes the initial term loans in the amount of $7.5 million previously funded under the original loan agreement entered into June 2018, along with an additional up to $7.5 million loan in three revolving tranches of $2.5 million.
The initial interest rate on the term loan is 9.75% and will float with LIBOR when north of 2% (currently 2.49%). The initial blended interest rate on the financing is approximately 10.24%.
Catasys intends to use the proceeds to support its growth strategy, including investments in new technology platforms, and to provide excess capital.
The company also has access to the previously announced receivable facility agreement of $2.5 million with Heritage Bank of Commerce.
Terren Peizer, Catasys chairman and CEO, commented, “This amended financing provides greater financial flexibility to implement all of Catasys’ growth initiatives without any dilution to existing shareholders. We have been pleased with our partnership with Horizon, which is focused on financing high growth companies in the technology and healthcare space. We were pleased to expand our financing terms following their extensive due diligence on Catasys’ recent expansions of its partnerships with healthcare plans, as well as visibility into our 2019 business model.
“We believe that the company’s capital-light model allows for the use of debt financing upon favorable terms for Catasys and its shareholders. We expect that this provides sufficient runway to drive the accelerating expansion in our business and technological advancements in the coming months. We further believe that any capital requirements from possible launches of new plan partners and expansions from existing partners not contemplated in our 2019 business may be funded by additional debt capital availability. Our 2019 model is generally based on the business that we have in hand and not on possible or unanticipated launches and expansions that may occur throughout the year.”