Hologic Moves Into Aesthetics Market With $1.65 Billion Purchase Of Cynosure
By Jof Enriquez,
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Hologic, a manufacturer of diagnostics and women's health products, is moving into the burgeoning — but still underpenetrated — $2 billion medical aesthetics market by acquiring Cynosure, a leading maker of non-invasive body contouring, hair removal, and skin revitalization products.
Cynosure develops, manufactures, and markets aesthetic treatment systems for non-invasive and minimally invasive aesthetic procedures. Its portfolio includes SculpSure, the world's first FDA-cleared laser treatment for non-invasive body contouring, and MonaLisa Touch, a novel CO2 laser for women's health. The company also markets radio frequency (RF) energy-sourced medical devices for precision surgical applications. It reported $433.5 million in revenues in 2016, and has delivered 28 consecutive quarters of year-over-year top-line growth.
"Strategically, this deal enables Cynosure to further capitalize on growth opportunities in the core and non-core aesthetic market, rapidly strengthens our position in women's health – where Hologic has a leading commercial presence – and accelerates our R&D initiatives," said Michael Davin, Cynosure CEO, in a news release.
Hologic's acquisition of Cynosure is an expansion into one of the fastest-growing segments in medical technology, at a time when aesthetics are a growing priority for an aging population, and when physicians look to grow their cash-based procedures, rather than rely heavily on reimbursements.
"Acquiring Cynosure will accelerate our transformation into a higher-growth company by leveraging our core women's health expertise and OB/GYN channel leadership into an adjacent, cash-pay segment that is expanding at a low double-digit rate," said Hologic CEO Steve MacMillan.
Targeting cash-pay opportunities directly from consumers was the same purchase rationale for Botox-maker Allergan, which bought Zeltiq Aesthetics for nearly $2.5 billion earlier this week. Zeltiq markets another non-surgical body contouring technology, the FDA-approved CoolSculpting system.
"Larger acquirers can access a fast growing, profitable market that is just in the first quarter of the game," William Blair analyst Margaret Kaczor told Reuters.
The $2 billion global medical aesthetics market is projected to grow at a low-double-digit rate over the next several years, according to Hologic.
Under the terms of the deal, a subsidiary of Hologic will make a tender offer to buy all outstanding Cynosure shares for $66.00 per share in cash, which amounts to an equity value of approximately $1.65 billion, and an enterprise value of $1.44 billion net of cash. Hologic expects annualized cost synergies to reach about $25 million by the third year after the close of the transaction.