Acutus Medical, Inc., a medical device company specializing in electrophysiology, has reached a settlement with Biotronik SE & Co. KG and VascoMed GmbH, collectively known as the BIO Parties, resolving an ongoing arbitration.
The agreement, disclosed in an 8-K filing with the Securities and Exchange Commission (SEC) on Thursday, October 17, 2024, effectively terminates several material definitive agreements between the companies.
The settlement, dated Monday, October 15, 2024, concludes disputes over allegations that Acutus Medical breached its obligations under five agreements related to the licensing, manufacturing, and distribution of medical devices.
This includes the License and Distribution Agreement from July 2, 2019, two Global Alliance Distribution Agreements from May 2020, a Feasibility and Development Agreement from June 3, 2021, and a Manufacturing and Supply Agreement from April 19, 2022.
Under the terms of the settlement, Acutus Medical will make an initial payment of approximately $2.6 million to Biotronik. Furthermore, contingent payments are outlined, based on future events such as a Qualifying Asset Sale or a Change of Control of the company.
These payments could amount to significant sums, with the potential of 50% of cash consideration from a sale, or varying percentages depending on the nature of a Change of Control transaction.
The settlement leads to the termination of the aforementioned agreements, except for certain obligations that will continue to survive. This marks a significant shift in the business relationship between Acutus Medical and the BIO Parties, as Acutus will move forward independently of these prior arrangements.
This announcement follows the delisting of Acutus Medical's common stock from the Nasdaq Stock Market on May 26, 2024, with the company's shares now trading on the OTC Pink Market under the symbol "AFIB."
The full details of the settlement and its implications are available in the 8-K filing, which includes a copy of the Settlement Agreement and Release.
InvestingPro Insights
Recent InvestingPro data and tips provide additional context to Acutus Medical's (AFIB) current situation following the settlement with Biotronik SE & Co. KG and VascoMed GmbH. The company's market capitalization stands at a modest $5.51 million, reflecting its recent challenges and the impact of delisting from Nasdaq.
Despite the settlement potentially alleviating some legal pressures, InvestingPro Tips highlight that Acutus Medical "operates with a significant debt burden" and is "quickly burning through cash." These factors may complicate the company's ability to meet the settlement payments and sustain operations independently.
On a positive note, analysts anticipate sales growth in the current year, with revenue reaching $12.16 million in the last twelve months as of Q2 2024, representing a substantial year-over-year growth of 717.52%. However, this growth comes with challenges, as the company "suffers from weak gross profit margins" and is "not profitable over the last twelve months."
The stock has shown significant volatility, with a strong return of 135.67% over the last month, possibly reflecting market reactions to the settlement news. However, investors should note that the stock price has fallen significantly over the last year, with a -69.16% return.
For those considering an investment in Acutus Medical, it's worth noting that InvestingPro offers 16 additional tips for AFIB, providing a more comprehensive analysis of the company's financial health and market position.
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