Eargo (EAR) Announces October 24th as Date for Proposed $187.5M Rights Offering

Eargo, Inc. (NASDAQ: EAR), a medical device company on a mission to improve the quality of life for people with hearing loss, today announced that the record date for its proposed rights offering is October 24, 2022 at 5:00 p.m. Eastern Time (the “Record Date”). Prospective stockholders who wish to participate in the rights offering are advised to ensure that they complete their open market purchases of EAR's common stock by October 20, 2022 to be considered a stockholder of record on the Record Date.

As previously announced, the Company intends to raise up to $187.5 million in aggregate gross proceeds by way of a rights offering where its existing stockholders as of the Record Date will be granted rights to purchase shares of the Company’s common stock (the “Rights Offering”).

The Company filed a registration statement (File No. 333-267071) (the “Registration Statement”) with respect to the proposed Rights Offering with the Securities and Exchange Commission (the “SEC”) on August 25, 2022.

As background, on June 24, 2022, the Company entered into the note purchase agreement (the “Note Purchase Agreement”) with an affiliate of Patient Square Capital that contemplated the Rights Offering. On June 28, 2022, pursuant to the Note Purchase Agreement, the Company closed an initial issuance of $100 million of senior secured convertible notes. Under the Note Purchase Agreement, the Company was required to obtain certain approvals of its stockholders to enable the Rights Offering to be conducted, which approvals were obtained at the Company’s 2022 annual meeting of stockholders held on October 12, 2022, and must complete the proposed Rights Offering by December 24, 2022. The Company intends to complete the Rights Offering by November 25, 2022 as the completion of the offering by such date provides more favorable terms for the Company and its stockholders under the Note Purchase Agreement.

In the Rights Offering, the Company will distribute to holders of Eargo’s common stock non-transferable rights to purchase up to an aggregate of 375,000,000 shares of at a subscription price of $0.50 per share. Each right consists of a basic subscription privilege and an oversubscription privilege. The rights under the basic subscription privilege will be distributed in proportion to stockholders’ holdings on the Record Date. If a stockholder exercises his or her basic subscription right in full, and other stockholders do not, such stockholder will be entitled to an oversubscription privilege to purchase a portion of the unsubscribed shares at the subscription price, subject to proration and certain limitations.

The Company expects to use a substantial portion of the proceeds from the proposed Rights Offering to repay the outstanding notes issued to Patient Square Capital at a premium. Any notes not repaid will convert into the shares of common stock not subscribed for in the Rights Offering. The amount of common stock that Patient Square Capital will receive upon conversion of its notes will depend on the timing and level of participation of the Company’s stockholders in the Rights Offering.

Further details on the terms of the Rights Offering and the procedures pursuant to which eligible stockholders can exercise their rights, including any changes to the dates included in this press release, will be announced before the commencement of the Rights Offering.

No Rights Offering will be made until the Company announces the definitive terms of the Rights Offering and the Registration Statement incorporating those terms is declared effective by the SEC.

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