Large cap serial acquirer Valeant Pharmaceuticals International Inc (NYSE: VRX) is teaming up with activist investor Bill Ackman to pursue large cap Botox maker Allergan, Inc (NYSE: AGN), but stocks like Cutera, Inc (NASDAQ: CUTR), Cynosure, Inc (NASDAQ: CYNO), PhotoMedex Inc (NASDAQ: PHMD) and Syneron Medical Ltd (NASDAQ: ELOS) actually offer investors more exposure to the growing anti aging and aesthetics market (Note: See my recent article: These Small Caps Seek to Treat Your Crow's Feet and Double Chin (RVNC & KYTH)). To begin with, Valeant Pharmaceuticals International has a wide focus on neurology, dermatology and infectious diseases but acquiring the maker of Botox won't be its first foray into the aesthetic market because earlier this year, the company completed its acquisition of Solta Medical Inc (NASDAQ: SLTM) - a designer, developer, manufacturer and marketer of energy-based medical device systems for aesthetic applications. And while Allergan, Inc may be most well known for Botox, its actually a pretty big company focused on a diverse range of areas, including ophthalmic pharmaceuticals, dermatology, neuroscience, urology and cosmetics – meaning the following stocks offer investors better exposure to the aesthetics market:
Cutera, Inc. A developer, manufacturer, marketer and seller of laser and light based medical devices, small cap Cutera, Inc has an installed base of approximately 4,000 laser solutions with aesthetic solutions focused on:
Hair Removal: Full body treatments. Non-Ablative: Popular for excessive skin redness, large pores and pigment issues. Fractional + Ablative Resurfacing: Invasive with moderate downtime to address issues such as deep wrinkles and to promote overall skin quality. Vascular: treats broad range of vascular conditions including the face and lower extremities such as a variety of common leg veins.Back in mid March, Cutera, Inc announced it was unveiling two new systems at the 72nd American Academy of Dermatology conference in Denver, Colorado, that was scheduled for March 21-25 with these new products being targeted to core physicians for the hair removal, tattoo removal and benign pigmented lesion segments of the growing aesthetic market. A month earlier, Cutera, Inc reported fourth quarter revenues of $22.24 million verses $22.53 million and a net loss of $278,000 verses net income of $1.08 million along with full year revenues of $74.594 million verses $77.277 million and a net loss of $4.747 million verses $6,548 million. The CEO commented:
"Excluding the decline in our Podiatry business, our US revenue grew in the fourth quarter of 2013 by 23%. We believe that our market is healthy and we are focused on improving our market share. As such, we are actively expanding our North American sales team to better represent our expanding portfolio of products."
On Monday, Cutera, Inc fell 0.56% to $10.73 (CUTR has a 52 week trading range of $8.25 to $12.19 a share) for a market cap of $150.65 million plus the stock is up 6.45% since the start of the year, down 3.8% over the past year and up 63.8% over the past five years.
Cynosure, Inc. A developer and manufacturer of a broad array of light-based aesthetic and medical treatment systems, small cap Cynosure, Inc's products are used to provide a diverse range of treatment applications such as hair removal, skin revitalization and scar reduction, as well as the treatment of vascular lesions. In mid February, Cynosure, Inc reported that fourth quarter revenues increased 75% to $74.5 million while revenues for the full year of 2013 were up 47% to $226.0 million from $153.5 million partly due to the acquisition of Palomar Medical Technologies in June 2013. The CEO commented:
"Fourth-quarter revenues reflected successful cross-selling of the Cynosure and Palomar aesthetic laser systems by our combined North American sales force, as well as the complementary nature of our international distribution network. It has been just over seven months since we acquired Palomar, and our integration is now substantially complete thanks to the skill, energy and dedication of our integration teams. Since June we have combined key functional areas including Sales, Marketing, Compliance, Quality Assurance, Clinical, Field & Depot Service, Finance, Legal and, most recently, Information Technology. We are currently transitioning the Palomar product line to our contract manufacturing model. We expect this process, along with the expansion of our Westford headquarters to accommodate the Burlington workforce, to be completed by the end of the second quarter of this year."
The CEO went on to comment that:
"Our integration is largely complete, our products are performing well and we have multiple R&D projects, including flagship products, energy delivery systems and technology enhancements, slated for introduction over the next two years. Adding to this momentum, we have a very strong balance sheet and are well on our way toward achieving the targeted $8 million to $10 million in synergies from the Palomar acquisition in 2014."
On Monday, Cynosure, Inc rose 0.69% to $24.94 (CYNO has a 52 week trading range of $21.09 to $31.48 a share) for a market cap of $555.24 million plus the stock is down 5.6% since the start of the year, down 4.1% over the past year and up 290.3% over the past five years.
PhotoMedex Inc. A global skin health company providing integrated disease management and aesthetic solutions to dermatologists, professional aestheticians and consumers, small cap PhotoMedex provides proprietary products and services that address skin diseases and conditions, including psoriasis, vitiligo, acne, actinic keratosis (a precursor to certain types of skin cancer) and photo damage. Thanks to its December 2011 merger with Radiancy Inc, PhotoMedex added a range of home-use devices under the no!no!™ brand, for various indications including hair removal, acne treatment and skin rejuvenation plus the company also offers a professional product line for acne clearance, skin tightening, psoriasis care and hair removal sold to physician clinics and spas. In mid March, PhotoMedex announced that a recent Saturday no!no!™ Hair Pro3 broke another beauty sales record when consumers purchased more than 10,500 units for total retail sales exceeding £1.7 million ($2.8 million) in a 24-hour special event on the major television home shopping channel in the UK. PhotoMedex also reported that fourth quarter revenues rose 16% to $63.5 million and net income came in at $3.2 million verses $5.9 million while full year revenues increased 2% to $224.7 million and net income came in at $18.4 million verses $22.5 million. The CEO commented:
"International expansion is a significant component of our growth strategy for our no!no! brand. In the fourth quarter we initiated media testing in Brazil with encouraging results. In addition, we continue to build our brand awareness in Germany and Great Britain and are confident we have the pieces in place for a very successful year ahead with each major business segment making significant contributions to our growth in 2014."
Otherwise and back in mid February, PhotoMedex announced it would acquire LCA-Vision Inc (NASDAQ: LCAV), which provides laser vision correction services under the Lasik Plus brand, for about $106 million or $5.37 per share for a premium of 26.3% to the stock's previous closing price of $4.25. On Monday, PhotoMedex rose 1.41% to $15.15 (PHMD has a 52 week trading range of $10.51 to $17.05 a share) for a market cap of $286.38 million plus the stock is up 18.6% since the start of the year, down 1.7% over the past year and up 44.3% over the past five years.
Syneron Medical Ltd. A leading global aesthetic device company based in Israel with a comprehensive product portfolio and a global distribution footprint, small cap Syneron Medical's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications, including body contouring, hair removal, wrinkle reduction, improving the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. The company sells its products under two distinct brands: Syneron and Candela. Earlier this month, Syneron Medical announced that it had received FDA 510(k) clearance to market the UltraShape™ System for non-invasive reduction of abdominal circumference via fat cell destruction and the company also announced its proprietary Sublative™ technology had received the CE Mark indication for the effective treatment of striae (stretch marks) and acne scars. Back in mid February, Syneron Medical reported fourth quarter revenue of $64.282 million verses $72,760 million (that quarter had included a large multi-site PAD order) along with net income of $4.0 million verses net income of $4.1 million. The Chairman commented:
"In 2013 we made several strategic changes to our leadership team and operational plan focused on positioning the Company to achieve revenue growth and expanded profitability. We made good progress with these changes during the fourth quarter, including the continued expansion of our North American sales force, the advancement of our new product initiatives, including our UltraShape and VelaShape III products, and the streamlining of our operating infrastructure. We also entered into a global joint venture with Unilever for home beauty devices that allows us to benefit from the growth potential of the joint venture while eliminating the financial demands of building a consumer business."
He concluded by saying that they believe that over the longer term, Syneron Medical is positioned to achieve "well above market, double-digit revenue growth and improved operating leverage." On Monday, Syneron Medical fell 4.41% to $10.85 (ELOS has a 52 week trading range of $8.04 to $13.32 a share) for a market cap of $397.44 million plus the stock is down 11.5% since the start of the year, up 22.3% over the past year and up 69.85 over the past five years.
Finally, here is a look at the long term performance of all four small caps verses the performance of large cap Allergan:
As you can see from the above chart, small cap Cynosure followed by large cap Allergan have had the best performances while the performance of Cutera, PhotoMedex and Syneron Medical Ltd has been more mixed.
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