Silicon Valley biotech Revance Therapeutics (RVNC) has announced the signing of a definitive agreement to acquire Hint, Inc, a private company which has created an integrated fintech platform for the aesthetics industry. Shares fell 5% on the news in Tuesday’s trading.
Revance has agreed to pay HintMD’s shareholders a total of 8.54 million shares of Revance common stock, and the transaction is expected to close in the third quarter of 2020, subject to customary closing conditions.
“This transaction could grow our total U.S. aesthetics market opportunity to more than $2.6 billion, which we believe we can access through our planned commercial infrastructure” comments Mark Foley, CEO of Revance.
HintMD is currently installed in ~175 pilot practices and had 2019 revenue of $1.4 mil. RVNC management expects operational breakeven on the transaction in 2022.
“We believe the acquisition should open up multiple cross-selling points for RVNC between HintMD and its aesthetic products, RHA and DAXI” cheers Mizuho Securities analyst Difei Yang.
She believes HintMD addresses a pain point in aesthetics practices (managing subscription programs), which should help increase RVNC’s sales penetration. Unlike competitors’ apps, which focus on the aesthetic product, HintMD focuses on the aesthetic practice, allowing for multiple products and procedures to be packaged into subscriptions and billed.
Although the deal is expensive on a near-term EV/sales multiple, Yang applauds the strategic fit and expect HintMD sales to ramp beginning in 2021. “Furthermore, the transaction is all stock; though dilutive, the deal structure should maintain RVNC’s cash runway through 2023” she writes.
The analyst sees weakness as a buying opportunity and reiterates her buy rating and $35 price target. Overall, RVNC scores a bullish Strong Buy Street consensus with an average analyst price target of $32 (61% upside potential). The stock is currently trading up 23% year-to-date.
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