Mela Sciences (NSDQ:Mela) said today that it agreed to purchased PhotoMedex’s (NSDQ:PHMD) Xtrac and Vtrac laser business assets for $42.5 million.
Xtrac and Vtrac are devices used to treat psoriasis, vitiligo and other skin diseases, the company said.
“This is a transformational event for Mela Sciences. As a result of this acquisition, Mela becomes a multi-product company with a single salesforce focused on meeting the needs of dermatologists for the diagnosis and treatment of serious dermatological conditions. The Xtrac laser in particular provides us with a recurring source of revenue that has been growing significantly over the past few years and is expected to generate sufficient cash flow to fund our ongoing operations beginning this year. This should enable us to continue our current commercialization efforts while growing the Xtrac and Vtrac businesses globally,” CEO Michael Stewart said in prepared remarks.
To fund the purchase, Mela Sciences said it is planning a debt offering, issuing senior secured notes and convertible debentures to certain investors. The skin-treatment businesses made $30.6 million in revenue in 2014, the company added.
“I am thrilled we have completed this acquisition as it transforms Mela Sciences into a sustainable commercial enterprise, providing it with a sales infrastructure, a synergistic product line and a positive-cash flow business platform on which to build a leading franchise in medical dermatology. Given Mike Stewart’s previous experience running the Xtrac and Vtrac businesses at PhotoMedex, we look forward to a smooth transition with him as CEO of the combined businesses,” Mela Sciences chairman Jeffrey O’Donnell Sr. said in a press release.
Last month, Mela Sciences recalled its flagship MelaFind melanoma diagnosis aid because some of its software wasn’t included in its pre-market approval from the FDA.
