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Disappointing Sales Lead Solta Medical to Consider Sale

Nov. 14, 2013

Solta Medical, a California-based maker of devices to remove fat and improve skin, is considering hanging out a for sale sign after four consecutive quarters of lower-than-expected sales of its Liposonix and Fraxel brands and increased market competition.

Though no buyer has been confirmed, but CFO Jack Glenn alluded to Valeant Pharmaceuticals, a Laval, Quebec company, as a potential buyer during a Monday earnings call. A merger with Valeant could be a good fit for both companies — Valeant markets branded pharmaceuticals, branded generics and over-the-counter products with a specialty in dermatology.

The company has hired Piper Jaffray & Cos. to advise it on strategic alternatives.
According to Glenn, 54 percent of the company’s 2013 third-quarter revenues of $33.5 million came from overseas. The results were $1.5 million lower than the previous year. The company attributed the performance in part to “lower than average selling prices on systems, primarily on the Liposonix products, and a higher proportion of international distributor business affected revenue and the gross margin in the quarter.”

Going forward, Solta said it plans to concentrate on emerging markets, particularly China, where it is awaiting a green light to market Liposonix, Fraxel and its Clear + Brilliant brand.

Solta also plans to restructure its operations to cut costs by $12 million. The effort should improve cash flow, but will result in little to no revenue growth, Mark Sieczkarek, the company’s interim president and CEO, said during the Monday call.

Despite Solta’s recent performance, said Sieczkarek, “we do remain very confident about its growth potential and we do expect to see results from our efforts.” – Lena Freund

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