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Solta Medical CEO Stephen Fanning Discusses Acquisition of Aesthera


Skin tightening, laser skin treatments, and acne laser solutions can now be found under Solta's roof.

Thermage and Fraxel are two of the most well recognized brand names in the aesthetics industry. Manufactured by Solta Medical, these two cosmetic staples are soon to be joined by Isolaz, the acne laser treatment, thanks to Solta's acquisition of Aesthera, the makers of Isolaz. American Health & Beauty Editor Keith Veseleny sat down in the Illumination Tour trailer with Solta CEO Stephen Fanning at the annual meeting of the American Academy of Dermatology (AAD) to discuss Solta's decision and where they plan to take the Isolaz line.

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"We're very excited. This is a great opportunity for us," says Fanning. "There have been 4 things that we've always said when we do an acquisition.... One, we want to get a company with a brand, and Aesthera has Isolaz, which is a great brand. Number two, we want a company with a gross margin in excess of 60%, and their margins are approaching 70. Number three, we want to make sure that it's within our callpoint which is the plastic and the derm, and finally, a recurring revenue stream." Aesthera met all of these four requirements as well as a fifth, they are geographically close to make which "helps the integration process.... We think that we'll be able to really incorporate this business quickly into the Solta model and we will have everything completed by May 1."

Disposable cost is a key consideration for physicians as they try to make a decision as to which fractional resurfacing or skin tightening technology to purchase for their office. Disposables are equally important to the manufacturers as a large portion of revenue is derived from these sales. Fanning says this continued revenue stream is critical in their decision to acquire Aesthera. "33% of the revenue for the Isolaz brand comes from a disposable tip," says Fanning.

Solta plans to increase Isolaz reach in as they have for Fraxel and Thermage. "Right now there are only 1500 Isolaz systems in place worldwide. To give you another number, there are 5000, between Fraxel and Thermage that are placed. This is on the same callpoint for us, but only less than 10% of the current customers that we call on have an Isolaz product, so we really think it's a great opportunity.... When we took over the business from Reliant, only 10% had a Fraxel and a Thermage, and what we've been able to do is to effectively get customers to purchase both, so in Q4, 26% of our business came from customers who had a Thermage or a Fraxel machine, and now they have both, and 16% of our business came from doctors who purchase both."

Solta will now be a singular place for physicians to purchase technology for skin tightening, age spots, fine lines and wrinkles, and acne. Fanning advises, "We really think there's a great opportunity now to have kind of a trifecta to leverage three of these businesses together."

Fanning says there is a dual sales force in place for their three brands, "All in all, this is a great acquisition for us, we're getting great people from the company, we're increasing the size of our sales force, so overall, we think we're going to be able to play to our strengths."

The dual sales strategy differs from others in the industry, and Solta's innovation doesn't stop there. "We spend more on [research and development] than any of the other competitors within the space. In fact, we spend 2.5 times more in dollars in terms of R&D. All in all, we think this combination of products, people, and having a differentiated business model will really help us with this business.