iRhythm greenshoe lifts 1.5% convertibles due 2029 to $661.25 million

By Marisa Wong

Los Angeles, March 8 – The initial purchasers of iRhythm Technologies Inc.’s recently priced 1.5% convertible senior notes due 2029 exercised their $86.25 million over-allotment option in full, bringing the total size of the issue to $661.25 million, according to an 8-K filing with the Securities and Exchange Commission.

iRhythm priced an upsized $575 million of the five-year convertible notes after the market close on March 4 at par with a coupon of 1.5% and an initial conversion premium of 35%, as previously reported.

Pricing came at the rich end of talk for a coupon of 1.5% to 2% and through the rich end of talk for an initial conversion premium of 27.5% to 32.5%, according to a market source.

J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC were bookrunners for the Rule 144A offering.

The initial size of the offering was $450 million with a greenshoe of $67.5 million.

The notes are non-callable until March 5, 2027 and then subject to a 130% hurdle.

They are putable upon a fundamental change.

The notes will be settled in cash, shares or a combination of both at the company’s option.

iRhythm lender and shareholder Braidwell LP intends to purchase a portion of the notes with a portion of the proceeds used to repay a loan from Braidwell.

In connection with the offering, the company entered into capped call transactions with a cap price of $218.10, which represents a 100% premium over the last reported sales price of the stock.

Net proceeds are estimated to be $643.6 million.

About $72.4 million of net proceeds will be used to cover the cost of the call spread, about $80.2 million will be used to repay the outstanding amount of a credit facility with Braidwell Transaction Holdings LLC and $25 million will be used to repurchase 229,252 shares of common stock in privately negotiated transactions with the initial purchasers of the notes.

Remaining proceeds will be used for general corporate purposes, which may include investments in and acquisitions of complimentary companies and technologies.

iRhythm Technologies is a San Francisco-based digital health care company.

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