PainChek Launches A$5.5M Raise to Drive US Aged Care Sales Expansion
PainChek launches A$5.5 million convertible note raise to accelerate US aged care expansion
PainChek Limited (ASX: PCK) has entered into binding agreements to raise A$5.5 million through the issue of unsecured convertible notes to a small group of existing professional and sophisticated investor-shareholders. The raise is designed to fund North American sales expansion and provide general working capital, with the company citing the landmark Sabra agreement covering 350 US aged care homes and access to Remote Therapeutic Monitoring reimbursement as the commercial backdrop underpinning the timing.
Philip Daffas, CEO, PainChek
“We are pleased to have secured $5.5 million in convertible note financing, providing PainChek with additional capital to accelerate our North American growth initiatives and broader commercial expansion strategy. Importantly, this comes at a pivotal time for the business following the landmark Sabra agreement covering 350 US aged care homes and access to Remote Therapeutic Monitoring reimbursement which complement our direct sales and channel partnerships in the US market.”
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Convertible note structure at a glance
Key terms of the A$5.5 million convertible note
The notes are issued in a single tranche, with the full terms summarised below.
| Term | Detail |
|---|---|
| Aggregate principal | A$5,500,000, issued in one tranche |
| Face value per note | A$50,000 per convertible note |
| Minimum subscription | A$100,000 per subscriber |
| Interest rate | 12% per annum, payable monthly in arrears; additional 2% per annum on overdue redeemed amounts, compounding daily |
| Maturity | 12 months from date of issue |
| Conversion price | A$0.195 per share (fixed); noteholder’s election at any time before maturity |
| Maximum shares on conversion | Up to 28,205,128 ordinary shares, within the company’s available 15% placement capacity under ASX Listing Rule 7.1 |
| Options on conversion | 1 option for every 2 conversion shares issued; exercise price A$0.30, expiring 12 months after issue; subject to shareholder approval; up to 14,102,564 shares on option exercise |
Pre-emptive rights and use of proceeds
The announcement outlines the following key terms relating to proceeds and noteholder protections:
- Use of funds: Expansion of sales and marketing activities in the USA; general working capital purposes.
- Pre-emptive rights: Noteholders have the right to participate, on equivalent terms, in any future private placement priced below A$0.195 per share, up to their aggregate note face value.
The company is also subject to standard protective covenants for the duration of the note term, including restrictions on incurring additional financial indebtedness, granting security over assets, paying dividends, and returning capital to shareholders.
Why convertible notes: a brief explainer for investors
Convertible notes are a form of debt financing that can convert into equity under defined conditions. They function as a loan initially, with the company paying interest to noteholders, but give holders the right to convert the outstanding balance into shares at a pre-agreed price rather than receiving cash repayment.
In this case, the conversion price is fixed at A$0.195 per share. If the company’s share price rises above that level, converting to equity becomes more attractive than redemption at face value, aligning noteholder and shareholder interests in a rising share price.
For noteholders in this raise, three potential outcomes exist:
- Redeem at maturity: Receive repayment of face value plus accrued monthly interest at 12% per annum after 12 months.
- Convert to shares: Elect to convert notes into ordinary shares at A$0.195 per share at any time before maturity.
- Exercise options: If conversion proceeds and shareholders approve, receive 1 option for every 2 conversion shares issued, with an exercise price of A$0.30 and a 12-month expiry, creating an additional layer of potential upside.
This tiered structure gives noteholders income while holding, with optionality on the equity upside.
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US market momentum and the investment case
PainChek’s US commercial opportunity is supported by several concurrent developments. The company’s FDA review is currently in progress, and the Sabra agreement covering 350 US aged care homes represents a named, large-scale commercial partnership. Alongside this, access to Remote Therapeutic Monitoring reimbursement pathways and a network of direct sales and channel partnerships are already in place.
The company’s global scale provides further context for the US push. PainChek holds contracts with over 2,000 aged care facilities globally and has conducted more than 20,000,000 digital pain assessments to date.
The proceeds from this raise are directed at a defined set of US commercial priorities:
- Expanding the direct US sales team
- Executing the channel partnership strategy
- Building on the Sabra agreement across 350 US aged care homes
- Leveraging the Remote Therapeutic Monitoring reimbursement pathway
The participation of existing shareholders in the raise signals a degree of confidence in the US growth trajectory from investors already familiar with the business. The A$0.195 conversion price and A$0.30 option exercise price embedded in the deal structure provide a visible benchmark for near-term share price expectations, with both thresholds sitting above current levels and reflecting the upside the noteholders are positioned to participate in should the US expansion execute as planned.
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