Esthetics medicine company PhotoMedex Inc. (Nasdaq: PHMD; TASE: PHMD) has announced the final cancelation of the agreement to merge part of its activity into US company DS Healthcare. In February, PhotoMedex signed a letter of intent for the merger of its consumer products business into DS Healthcare, but announced in April that it was likely to call the deal off, following internal problems in DS Healthcare. The cancelation decision is now final. PhotoMedex declared that it would demand $3.75 million in compensation for the breach of the contract terms that caused the cancelation. The company's share price was down 3.2% in Nasdaq trading yesterday, reflecting a market cap of only NIS 21 million. The company's market cap has plummeted 99% within two years.
The cancelation announcement follows internal conflicts in DS Healthcare's management, culminating in mutual accusations of fraud and calls for an investigation against resigning executives. DS Healthcare announced errors in its financial statements, and its CEO resigned. The DS Healthcare share price has plunged 75% over the past two months.
PhotoMedex's revenue totaled $11.2 million in the first quarter, compared with $20 million in the corresponding quarter last year. The company lost $4.8 million, compared with a $10 million loss in the first quarter of 2015. As of the end of the first quarter, the company had $3.1 million in cash and $23 million in current liabilities, including a $2.2 million debt from its line of credit from CC Funding, from which it already withdrew $1 million in April. PhotoMedex is burning cash at the rate of $1.3 million per quarter.
Published by Globes [online], Israel business news - www.globes-online.com - on June 1, 2016
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