Westford's Cynosure Looks To Acquisitions
COURTESY
Westford-based Cynosure's Cellulaze Workstation uses a laser to treat cellulite, a skin appearance caused by pockets of fat which affects a majority of women over age 20.
Coming off of several strong fiscal quarters, aesthetic laser and light-based treatment device maker Cynosure Inc. is looking to raise funds for potential acquisitions.
The Westford-based company announced Monday a registered public offering of up to 3.2 million shares of Class A common stock, the proceeds of which could mean more acquisitions in the coming months for a company that only recently started operating in the black.
Deal Means More Independence
The offering is being underwritten by Leerink Swann LLC, a health care-focused investment bank with offices in Boston.
Of the total 3.2 million shares, 600,000 will be offered for sale by El.En. SpA, an Italian company that has held a controlling stake in Cynosure since 2002, allowing it to appoint four of seven directors. That arrangement will be voided as El.En. sells its shares, it said in an announcement, but the two will continue to collaborate on research and development.
In addition, Cynosure will continue to purchase several laser systems from El.En., including one that is an essential component of Cynosure's Cellulaze Workstation, a cellulite treatment approved by the U.S. Food and Drug Administration in January that has driven earnings since.
Acquisition Slowdown In 2012
After acquiring one company and the rights to several technologies in 2011, Cynosure slowed its acquisitions down in 2012.
That could change, according to its stock offering announcement this week, which states that Cynosure will use the proceeds for general corporate purposes "and to fund its potential acquisition of complementary products, technologies or businesses."
In 2011, Cynosure acquired New Hampshire-based Eleme Medical, the laser assets of California-based Hoya ConBio and distribution rights for foot treatment products from NuvoLase, another California firm.
The coming year will also bring the launch of a treatment for facial wrinkles Cynosure has developed with Unilever.
Cellulite Treatment Helping A Swing To Profitability
Betting on Cynosure has paid off for investors this year. The company's stock price has climbed 112 percent year to date, as of Monday afternoon, to just under $25 per share on the Nasdaq.
The company has lost more than $31 million in the past three years, but was profitable for the first nine months of 2012, earning $6.9 million on $110.8 million in revenue, compared to a loss of $3.9 million on $76.5 million in revenue during the same period of 2011.
Much of the difference has been Cellulaze, which hit the U.S. market in February, and through September, has helped boost North American sales by 77 percent compared to 2011.
Cellulaze, according to Cynosure, "is the world's first and only minimally-invasive medical device designed to treat women who have struggled to eliminate cellulite through diet and exercise, or have tried the myriad of lotions and creams currently on the market."
Studies have shown that 85 percent of women older than 20 have some form of cellulite – pockets of fat deposited just beneath the skin's surface – making treatment a multibillion-dollar industry.
Cynosure's performance will depend on a recovering economy. In its public filings, the company states that the elective procedures it develops are not covered by health insurance. And Cellulaze, for example, typically costs between $5,000 and $7,000.
"The cost of these elective procedures must be borne by the patient," Cynosure wrote in a recent earnings report. "As a result, the decision to undergo a procedure that utilizes our products may be influenced by the cost."
Consumer demand for the procedures fell dramatically in 2009, it said, and has since started to recover, though not to pre-recession levels.
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