Solta Medical ($SLTM), a maker of medical devices focused on liposuction, skin resurfacing and other aesthetic areas, will reorganize, slash jobs and may even sell itself in a bid to reverse slumping sales.
The Hayward, CA, operation disclosed that it has hired Piper Jaffray to help it evaluate "strategic alternatives" that could include partnerships or a sale/merger, among other options. Solta made the announcement as part of its 2013 third-quarter financial statement. But, Solta added, it won't comment further on the matter "until further disclosure is deemed appropriate." How cryptic.
As Reuters reported, Solta has missed analysts' estimates for at least four consecutive quarters. Aesthetic medical devices are big business, and Solta has faced fierce competition. Solta's big-ticket item is Liposonix, a noninvasive fat-reduction device. But the company has been forced to reduce the price as it has lost market share to rival Zeltiq Aesthetics and its CoolSculpting system, a more targeted device.
Selling itself could give Solta's technology a wider audience at a time when U.S. demand for cosmetic surgical procedures hit the 1.7 million mark in 2012 and is slated to grow by more than 3% in 2013, according to statistics from the American Society for Aesthetic Plastic Surgery cited by Reuters.
So who would buy Solta? Reuters cited Roth Capital markets analyst Chris Lewis as noting that Valeant Pharmaceuticals ($VRX) International in Canada is at least one potential acquirer, having pursued recent purchases such as cosmetics products maker Obagi Medical Products (a $344 million deal). Another option could be Cynosure ($CYNO), which agreed to buy Palomar Medical Technologies ($PMTI) earlier this year in a $294 million cash and stock deal, creating a larger, more powerful company focused on cosmetic lasers and related products.
Solta booked $33.5 million in revenue during its 2013 third quarter, down from $35 million in revenue over the same period a year ago, shaped by flat numbers in the U.S. and international revenue declines. Net income during Q3 barely hit $600,000, versus a nearly $3 million net loss in the 2012 third quarter. One-time charges relating to "severance expenses" and an acquisition drove down the result, including North American sales force attrition, the company said.
Solta reported just $7.7 million in cash on hand as of Sept. 30 but recently secured $40 million in new debt financing. It is also in the midst of layoffs and a reorganization to reduce spending and improve revenue growth.
- read the full Reuters story
- here's Solta's Q3 numbers
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