Profusa Eyes Diagnostics Expansion Via Acquisition

Profusa has initiated a strategic move to bolster its presence in the diagnostics sector by entering into a non-binding term sheet for the acquisition of a privately held, commercial-stage company specializing in health diagnostics and toxicology testing. This proposed transaction signals a significant pivot for Profusa, aiming to integrate a revenue-generating entity with established laboratory infrastructure and a provider network focused on critical healthcare segments.

The target company, which operates national CLIA-certified laboratories, is projected to generate approximately $111 million in net revenues for 2025, according to unaudited management figures. This recurring revenue stream, derived from services supporting addiction treatment, pain management, and behavioral health providers, presents a compelling growth opportunity. The integration is expected to create a publicly traded diagnostics powerhouse with a diversified service offering and a solid financial footing.

Under the terms of the preliminary agreement, Profusa anticipates issuing 19.99 percent of its outstanding shares to the target company's stockholders in the form of common stock. The remaining equity stake will be conveyed as non-voting convertible preferred stock, contingent upon Profusa shareholder approval. Existing convertible notes and other obligations held by Profusa are also slated for conversion into preferred stock, streamlining the capital structure.

Further strengthening the financial framework of the combined entity, Profusa plans to secure approximately $7 million in subordinated convertible note financing concurrently with the acquisition's closing. Indicative terms for this financing include a 12-month maturity, an original issue discount of 9 percent, and an annual interest rate of 7 percent. This capital infusion is crucial for supporting post-acquisition integration and future growth initiatives.

In conjunction with this strategic development, Profusa has appointed Jack Stover, a current board director, to the dual roles of Executive Chairman and Chief Executive Officer. This leadership transition sees former CEO, Chairman, and Director Ben Hwang, PhD, move into the position of President. Additionally, Liviu Goldenberg, a seasoned executive with over three decades of experience in complex operations and enterprise transformation, has joined the board as an independent director, bringing valuable operational expertise to the evolving organization.

This acquisition aligns with a broader trend in the healthcare technology and diagnostics market, where companies are seeking to consolidate services, expand laboratory capabilities, and tap into specialized patient populations. The increasing demand for accurate and timely diagnostic testing, particularly in areas like behavioral health and substance abuse, underscores the strategic rationale behind this proposed merger. The combined entity is positioned to capitalize on these market dynamics, leveraging its expanded infrastructure and service portfolio.