Just another quick post for today while I work on other posts. Today, Zeltiq Aesthetics (ZLTQ) agreed to be bought out by Allergan (AGN) for a cool $2.47B. We’re fairly new to Zeltiq – having only purchased shares at the end of last year.
At a Glance:
Symbol: US-ZLTQ Price: $55.93 Market Cap: $2.35B Yield: N/A
The key driver for purchasing shares was the growing popularity of the company’s coolsculpting procedures – the only non-surgical FDA cleared fat reduction treatment. Not only was the procedure non-surgical relative to alternatives like liposuction and tummy tucks, but coolsculpting also cost only 1/3 of those procedures.
Q3 also looked to be a turning point for the company – after the company started 2016 terribly – with revenue growth being cut by a third year over year. . However it looks like coolsculpting became more mainstream and in the media and it showed in the company’s results – Q2 and Q3 revenue growth of 40% and 56%. As with longtime held medical device maker Intuitive Surgical, it’s all about system and procedure growth, and Q2/Q3 showed growth in not only system and procedure revenue; but also the number of procedures performed per installed system.
The company is a great addition to Allergan – better known as the creator of Botox. While the short term pop from the buy-out is appreciated (it went up 10% last week on the buyout rumour), it’s unfortunate we won’t get to how high this company could have gone. By Zeltiq’s own account earlier this year, they valued the global non-invasive fat reduction market at over $4B.
The deal is expected to close in the second half of 2017 – so we’ll hold on to our shares for now (similar to what we did in another buyout of medical device maker MAKO) in hopes of a competing bid or if we find something more enticing to buy until the deal closes.