Sunshine Heart Inc. (NASDAQ:SSH) Plunges on Offering Pricing

Sunshine Heart Inc. (NASDAQ:SSH)

Sunshine Heart Inc. (NASDAQ:SSH) shares have plummeted 30% on news of the company’s pricing regarding their public offering of shares. The dilutive public offering will be for 1.6 million shares of common stock and 6,400 shares of convertible preferred stock. Each class A unit will be offered at $1.00 and consist of one share of common stock and one warrant with a five-year term that may be exercised for one share of common stock at an exercise price of $1.10. Each class B unit will be offered at $1,000. Class B units shall comprise one share of convertible preferred share of stock, lacking any dividend rights above that of the common stock, convertible into 1,000 shares of common stock. Class B units shall also include 1,000 warrants to purchase 1,000 shares of common stock at an exercise price of $1.10. In total, a potential increase of eight million SSH shares is being offered. The preferred shares and warrants are fixed-price and do not possess variable pricing characteristics or anti-dilutive features.

The sole book-running manager is Ladenburg Thalmann & co. Inc, which is a subsidiary of Ladenburg Thalmann Financial Services Inc. (NYSEMKT:LTS). Sunshine Heart Inc. (NASDAQ:SSH) is granting Ladenburg Thalmann a 45-day option 1.2 million shares of common stock as well as warrants to purchase up to 1.2 million shares of SSH to cover over-allotments. Sunshine Heart Inc. (NASDAQ:SSH) expects to raise $8.0 million before any expenses being deducted for the offering.

Eden Prairie, MN-based Sunshine Heart Inc. (NASDAQ:SSH) is a medical device company with a market capitalization of less than $2.5 million. One of the company’s lead products is the C-Plus Heart Assist System. This technology is implanted, with minimal invasion, into the patient for the purpose of treating moderate to severe heart failure. Sunshine also is developing for commercial purposes the Aquadex FlexFlow System. This product allows for ultrafiltration treatment of patients for up to eight hours. Patients suffering from this condition have typically failed diuretic therapy and require hospitalization. Sunshine Heart Inc. (NASDAQ:SSH) is a Delaware corporation and has wholly owned subsidiaries in Australia and Ireland.

Shares of Sunshine Heart Inc. (NASDAQ:SSH) closed yesterday at $1.35 and have dropped 30% on the news of the public offering pricing. Volumes are heavy and on track to trade almost 40 times their daily average. SSH shares are over 90% below their 52-week high of $11.03. Publicly available reports show that Cowan & Company and Piper Jaffray follow. Sunshine Heart Inc. (NASDAQ:SSH) and both rate the shares a “Strong Buy” with a consensus price target of $6.50. Interested investors or traders should note the large short position, seen below, being reported.

Ticker Symbol SSH
Last Price a/o 9:30 AM EST  $                      1.01
Average Volume                    597,970
Market Cap (mlns)  $                      2.39
Sales (mlns)  $                      1.30
Shares Outstanding (mlns) 1.77
Share Float (mlns) 1.48
Shortable Yes
Optionable No
Inside Ownership 1.20%
Short Float 31.42%
Short Interest Ratio 0.78

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 96 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading.

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Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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