US company ICTV, which markets health and medical esthetic products directly to US consumers, is set to acquire most of the assets of PhotoMedex Inc. (Nasdaq: PHMD; TASE: PHMD) for $9.5 million. $3 million will be paid when the deal is signed, $2 million more 90 days after the deal is closed, and $4.5 million in royalties based on future revenue from these products.
PhotoMedex's share price shot up 60% on the news of the deal, bringing the company's market cap up to NIS 30 million, still 98% below its 2012 peak. ICTV is listed on the over the counter exchange in the US at a market cap of $4.4 million, and has undertaken to raise $7 million to pay for the acquisition.
ICTV will acquire PhotoMedex's no!no! hair removal brand name, which generated $100 million in annual revenue at its peak and $22.4 million in the first half of 2016. It will also acquire the brand names for Kyrobak, a product for treatment of back pain, and acne treatment product Cleartouch, which are generating only negligible revenue.
ICTV will take over PhotoMedex's development center in Israel, its production and marketing setups, its intellectual property, and $6 million worth of inventory. According to the report, PhotoMedex will retain its $3 million in cash.
Managed by CEO Dolev Rafaeli, PhotoMedex (formerly Radiancy) based its success on its leading no!no! product, but concern that the market for the hair removal product was finite led the company to expand into other products. When PhotoMedex acquired a chain of ophthalmology surgical clinics, it acquired $129 million in debt, but did not meeting the sales and profit targets required under the debt agreement, and had to repay it immediately a year after assuming the debt. It therefore gradually sold all of its assets, culminating in the current sale.
Published by Globes [online], Israel business news - www.globes-online.com - on October 6, 2016
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