Strata Skin Sciences (NSDQ:SSKN) said today it raised $17 million in a new round of financing, and that investor Dr. Dolev Rafaeli is slated to take over as interim CEO, with former chief exec Frank McCaney taking the role of interim CFO.
In the sale, the Horsham, Penn.-based company said it floated 15.7 million shares of stock. The round was led by Accelmed Growth Partners, who invested $13 million, and joined by Dr. Rafaeli, Gohan Investments, Broadfin Capital and Sabby Management.
“We are very pleased to have Accelmed as an investor in Strata. Their experience in medical devices and providing growth equity to drive significant value creation serve to further position Strata for its next phase of growth. We are delighted also to have Dolev Rafaeli join as the company’s new CEO. He has considerable experience in leadership roles in medical device companies and has a successful track record of turning around organizations and creating value for shareholders. We are confident he will make a significant contribution to the future of Strata.” board chair LuAnn Via said in a prepared statement.
Before assuming the interim CEO role, Dr. Rafaeli previously served as CEO of PhotoMedex and its subsidiary Radiancy, Strata Skin Sciences said. In addition to Dr. Rafaeli’s new position, the company said that Accelmed CEO Dr. Uri Geiger will become board chair.
“I am very excited to have the opportunity to lead Strata. The company has a portfolio of proven, best-in-class skin science technologies, including the market leading Xtrac laser for the treatment of psoriasis, vitiligo and other skin deseases. I look forward to helping Strata achieve its goal to become the valued business partner of choice for dermatology practices,” interim CEO Dr. Rafaeli said in a press release.
In connection with the financing round, Strata said it amended its existing $10.6 million credit facility with MidCap Financial Trust, using $3 million from the new round to pay down its loan with MidCap. The facility will be amneded to a lower interest rate with less restrictive covenants and lower prepayment and exit fees, Strata said.
Remaining proceeds from the round will support the company’s current business as well as research and development.
“The investment by Accelmed and the appointment of Drs. Geiger and Rafaeli mark a significant change to the makeup of Strata. The additional $17 million in capital will allow the company to renegotiate its credit facility and reinvest in advertising its flagship Xtrac laser system, options that until now were unavailable to existing management. Accelmed is a seasoned medical device investor and turnaround specialist that recently made a similar investment in Cogentix just 18 months ago and which was recently sold with significant appreciation for its shareholders,” Sabby Management managing member Hal Mintz said in prepared remarks.
Last December, Strata Skin Sciences said its board of directors has begun a process to explore and review “strategic alternatives” focused on improving shareholder value, which could include a sale of the company or other transactions.