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Invuity Proposes Terms for IPO BY ANDREW VAHRADIAN, JUNE 17, 2015

Invuity priced its initial public offering (IPO) of 4.0 million shares of common stock at a price of $12.00 per share, raising total proceeds of $48 million. This equates to an enterprise value of approximately $252 million, valuing the company at 16.3x LTM revenues of $15.4 million.

The final terms came in lower than the initial proposed offering amount of $69 million, and lower than the second proposed offering amount of $60 million with a price range of $14 to $16.

The company intends to use the proceeds to expand sales, marketing and research and development to fund working capital and general corporate purposes and to potentially to acquire or invest in complementary products, technologies or businesses.

Invuity develops single-use and reusable surgical devices that utilize advanced photonics (the science and technological applications of light) platforms to provide surgeons with improved direct illumination and visualization of surgical cavities during minimally invasive and minimal access surgical procedures. The company's proprietary intelligent photonics technology creates optical waveguides that direct and shape thermally cool, light into broad, uniform and volumetric illumination of the patient's anatomical structures.

For the 2014 fiscal year, Invuity reported total revenue of $13.1 million, representing an increase of 82% on a reported basis compared to $7.2 million in 2013. Gross margin decreased to 62.8% in 2014 from 68.1% in 2013. This decrease in gross margin was caused primarily by inventory write-offs and an increase in cost of goods sold (COGs). The company sold devices to roughly 350 hospitals in 1Q:14, increasing from 150 hospitals in 1Q:13. As of December 31, 2014, the company's single-use devices have been used in over 74,000 surgical procedures.

To date, Invuity has raised $96.7 million from private placements of convertible preferred securities, including proceeds from convertible notes, and had $9.4 million of borrowings. The company's largest shareholders include: Wellington Management, HealthCare Royalty Partners, InterWest Partners, Kleiner Perkins Caufield & Byers and Wexford Capital.

The company plans to list on the NASDAQ Global Market (NasdaqGM) under the ticker symbol "IVTY". Piper Jaffray and Leerink Partners are acting as Joint Lead Bookrunners on the deal, while Stifel and William Blair will serve as a Co-managers.

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