Originally published by Mergermarket
25 Oct 2023
Gynesonics, a Redwood City, California-based women’s healthcare and medical device company, plans to announce the completion of a significant financing round soon, said new CEO Skip Baldino.
The company announced a USD 25m financing on 6 April 2023, led by current investors Amzak Health and Endeavour Vision, and joined by Bain Capital and Runway Growth Capital. Baldino, who held executive roles with two healthcare companies that achieved exits through sales, joined in March as CEO.
Since the previous raise, several new investors including “one major blue-chip VC” have been added to the cap table, as well as insiders “significantly” adding more capital, Baldino said.
Fresh capital will provide “a line of sight to profitability” and runway to reach cash-flow breakeven in the next two years, according to the CEO.
The company has developed a minimally invasive treatment for symptomatic uterine fibroids through its Sonata system, a technology platform that the company says integrates the first and only commercial intrauterine ultrasound system. It includes a proprietary advanced radiofrequency ablation device. Fibroids are treated from inside the uterus without incisions or surgery, preserving the uterus.
On 17 October, Gynesonics announced the Sonata procedure had treated over 1,000 women in the United States in 2023 and approximately 6,500 women globally since launch.
Gynesonics’ US CAT 1 code for the Sonata procedure goes into effect on 1 January 2024, Baldino said. The code comes from the American Medical Association (AMA) that publishes and maintains codes of available medical procedures and allows for direct billing to payors.
It is “really critical” for the business, the CEO explained, calling it “an important deliverable” that will lead to significant scaling.
The company has experienced “very substantial year-over-year growth,” Baldino said, declining to provide figures. Two additional payors came onboard this year giving Gynesonics 19 of the top 20 U.S. commercial payors covering Sonata. Collectively the payors represent 275 million insured lives.
Gynesonics’ organic growth will remain where it has approvals in place and its own employees, the CEO explained, which include the US, Germany, UK, Netherlands, Nordics, and Switzerland.
Gynesonics has between 110 and 150 employees, Baldino said.
In 2025, the CEO believes the company could have exit options to consider. For a 2020 report, the company had been having ongoing discussions with strategic acquirers. Gynesonics already has attractive gross margins and an exit to a strategic is a possibility, he explained.
He pointed to the recent USD 850m deal announced last month of Boston Scientific [NYSE:BSX] entering into an agreement to acquire Relievant Medsystems, a privately held medical technology company that has developed and commercialized the Intracept Intraosseous Nerve Ablation System to treat a form of chronic low back pain. The cash payment also includes undisclosed additional contingent payments based on sales performance over the next three years.
The deal exemplified strategics opening-up to more M&A activity, Baldino explained.
Other potential logical acquirers, the CEO mentioned, include Medtronic [NYSE:MDT], Hologic [NASDAQ:HOLX], Organon [NYSE:OGN] and Olympus Corp [TYO:7733].
Another exit option is an initial public offering, he said, noting this is due to its line of sight on profitability. “We have made that pivot,” he said. Gynesonics has relationships with bankers in the sector but is under no mandate, he added.
The company uses Cooley as its legal counsel.
by James Ward in Charlottesville, Virginia
[Editor’s note: The sixth paragraph has been updated post-publication to add Sonata procedure had treated over 1,000 women in the United States in 2023.]