Skin care company Home Skinovations Ltd. filed a draft prospectus with the US Securities and Exchange Commission (SEC) for an offering on Wall Street several months ago. The company's products include the Silk'n long-term hair removal device for home use and other skin care and cosmetic products.
Sources inform ''Globes'' that Home Skinovations has put its IPO plans on hold, for two main reasons: firstly, it recently acquired a private US company, and it wants to complete the consolidation of the financial statements; and secondly, the cosmetics market is weak right now, especially in the developed world, because of economic crises. The company hopes to recover and improve its profitability before holding the IPO.
Home Skinovations was founded by Moshe Mizrahi, who is also its main investor through his private fund Nitzanim Fund. Other investors are Israel Healthcare Ventures Ltd. and US-UK fund Trevi Health Ventures LP. The company has reportedly raised $15 million to date, suggesting a big exit for its investors.
The US capital market is now open for public offerings, and shares of life sciences companies have risen strongly in the past year, although the medical devices subsector, where Home Skinovations is found, has lagged. There have been almost no Wall Street IPOs by medical devices companies in the past year. Home Skinovations' advantages, if and when it holds an offering, is that it already has tens of millions of dollars in sales, apparently reaching $70 million in 2012.
A market dominated by Israelis
PhotoMedex Inc. (Nasdaq: PHMD; TASE: PHMD) is another company in the hair removal business. Israel's Radiancy carried out a reverse merger with Photomedex last year. The company has a fairly strong net profit margin - 10% on $165 million revenue in January-September 2012 - and has steady growth and several promising products in the pipeline. The share price, however, has stagnated since the merger 18 months ago.
The aesthetic skin care market is dominated by Israeli companies, led by the veterans Syneron Medical Ltd. (Nasdaq: ELOS) and Lumenis Ltd. Lumenis had hundreds of millions of dollars in sales, a profit margin of over 50%, and a billion-dollar market in its heyday, but never recovered from its entry into the US market at the start of the great economic crisis in 2008.
The US aesthetics market suffers from falling demand, and home hair removal companies face tough competition from clinics and cosmeticians. Makers of home hair removal and skin care products hope for a revival.
Syneron entered the US home aesthetic care products market in 2012, after the US Food and Drug Administration (FDA) approved its hair removal product, ME. Devices for home use must be inexpensive, resulting in a lower profit margin for manufacturers than products for clinics.
Published by Globes [online], Israel business news - www.globes-online.com - on January 31, 2013
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