Business Context and Reporting Period
Company: EXAGEN INC.
Filing Type: Form 8-K (Current Report)
Date of Report: April 25, 2025
Event: Entry into a Material Definitive Agreement (Perceptive Term Loan Facility) and unregistered sale of equity securities (Warrants).
Key Financial Metrics and Transaction Details
Debt Facility: Senior secured delayed draw term loan facility with an aggregate principal amount of up to $75.0 million.
- Initial Funding (Tranche A): $25.0 million funded on April 25, 2025.
- Net Proceeds (Tranche A): Approximately $22.8 million (after estimated debt issuance costs, fees, and expenses).
- Future Tranches:
- Tranche B: Up to $10.0 million (available through March 31, 2026).
- Tranche C: Up to $10.0 million (available March 31, 2026 – December 31, 2026).
- Tranche D: Up to $30.0 million (available until December 31, 2027).
- Interest Rate: Greater of Term SOFR or 4.75% per annum, plus a 7% applicable margin.
- Maturity Date: April 25, 2030.
- Repayment Terms: Interest-only during the term; full principal due at maturity. Prepayment premiums range from 2% to 10% depending on the date.
Equity Component (Warrants): Issuance of a warrant to purchase up to 1,150,000 shares of common stock.
- Vesting: 400,000 shares vested immediately; remaining 750,000 shares vest upon funding of future tranches.
- Exercise Price (Tranche A): 50% at $4.96/share; 50% at $5.58/share.
- Exercise Price (Future Tranches): Based on 10-day VWAP (50% at VWAP; 50% at 1.125x VWAP) at the time of borrowing.
Material Changes and Covenants
Security: Obligations are secured by a first lien on substantially all existing and after-acquired assets.
Financial Covenants:
- Liquidity: Must maintain aggregate Unrestricted Cash of not less than $3.0 million at all times prior to maturity.
- Revenue: Must maintain Net Revenue not less than specified amounts as of the last day of each fiscal quarter commencing June 30, 2025.
Restrictive Covenants: Limits on incurring new indebtedness, creating liens, mergers/acquisitions, restricted payments, dividends, and affiliate transactions.
Guidance, Risks, and Contingencies
Conditions Precedent: Access to Tranches B, C, and D is contingent upon satisfying customary conditions, including specified revenue milestones and, for Tranche D, business development milestones.
Risks:
- Default Consequences: An Event of Default (e.g., non-payment, covenant violation, insolvency) allows the lender to declare all outstanding principal and interest immediately due.
- Interest Rate Increase: Upon an Event of Default, the applicable margin may automatically increase by an additional 4% per annum.
- Dilution: Issuance of warrants may result in dilution to existing shareholders upon exercise.
Management Commentary: The filing does not provide specific forward-looking guidance on revenue or earnings beyond the covenant requirements. The transaction is intended to provide capital for business operations and development.
Investor Verification Checklist
- Verify the specific Net Revenue thresholds required to access Tranches B, C, and D (not explicitly stated in the summary text).
- Confirm the current Unrestricted Cash balance to ensure compliance with the $3.0 million minimum covenant.
- Review the full Credit Agreement (Exhibit 10.1) for detailed definitions of "Net Revenue" and "Unrestricted Cash."
- Assess the impact of the warrant exercise prices ($4.96 and $5.58 for Tranche A) relative to the current market price of XGN.
- Monitor the company's ability to meet the revenue milestones required to draw the remaining $50.0 million of the facility.