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Exact Sciences Offering $1B of Convertible Senior Notes

This story has been updated with new information from the company on the size, value, and details of the offering.

NEW YORK – Exact Sciences announced after the close of the market on Monday that it has launched an underwritten public offering of $850 million of convertible senior notes due 2028, then priced and upsized the offering to $1 billion on Tuesday.

The company has granted the underwriter a 30-day option to purchase up to an additional $150.0 million aggregate principal amount of the notes. The notes will be convertible into cash, shares of the company's common stock, or a combination of the two.

The notes will be senior unsecured obligations of the company and will bear interest at a rate of 0.375 percent per year. Interest on the notes will be payable semi-annually in arrears on March 1 and September 1 of each year, beginning Sept. 1, 2020. The initial conversion rate will be 8.2076 shares of Exact common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $121.84 per share. The notes will mature on March 1, 2028. The offering is expected to close on Feb. 27. 

Exact said it intends to use the net proceeds of the offering for general corporate purposes, such as the repayment or repurchase of debt, working capital, and possible acquisitions. The company also noted that some of the proceeds may go to fund expansion of the commercialization activities for its Cologuard colorectal cancer test and to fund product development efforts. Further, Exact said it expects to use approximately $150 million of the net proceeds to repurchase a portion of its existing 1 percent convertible senior notes due 2025.

According to a prospectus filed with the US Securities and Exchange Commission, Exact's total consolidated indebtedness as of Dec. 31, 2019 was approximately $1.19 billion, including $415.0 million in 1 percent convertible senior notes due 2025 and $747.5 million in 0.375 percent convertible senior notes due 2027.

BofA Securities is acting as sole book-running manager for the offering.

Exact's shares fell nearly 9 percent to $87.03 in Tuesday morning trading on the Nasdaq.