The Marlborough women’s health tech company Hologic on Wednesday said it has cut ties with a subsidiary that makes non-invasive treatments for body contouring, hair removal, and skin revitalization, netting $138 million for its Cynosure business — two years after buying it for more than 10 times that amount.
Hologic said it sold Westford-based Cynosure to the private equity firm Clayton, Dubilier & Rice, acknowledging that its $1.6 billion decision to buy the company had been a bust.
“Since we acquired Cynosure in 2017, it has significantly underperformed our expectations,” Steve MacMillan, Hologic’s chief executive, said in a statement. “We believe this transaction will unlock value for Hologic shareholders, and at the same time provide Cynosure and its employees the best opportunity to succeed.”
The company said about 825 employees will move with Cynosure into new ownership. The deal is expected to close by the end of the year.
After the 2017 purchase, there was a period of high turnover in Cynosure’s sales force. Last year, it faced another sales challenge when the US Food and Drug Administration issued a warning about laser treatment systems for cosmetic procedures sometimes referred to as “vaginal rejuvenation.”
Such treatments are intended to treat conditions and symptoms related to menopause. But the FDA expressed concerns about the use of energy-based devices for vaginal rejuvenation, such as some sold by Cynosure, and it specifically told the company its MonaLisa Touch laser system was not approved for that purpose.
The company ultimately continued selling the product, but marketed it more narrowly, and it temporarily removed another product that offered a similar treatment.
Hologic said Clayton, Dubilier & Rice had paid $205 million in the deal, but the net proceeds after adjustments related to closing were $138 million.
“We are surprised by the actual price [Hologic] agreed to sell Cynosure for as we think it suggests little management faith in the Cynosure pipeline and business model,” Brandon Henry, an analyst following the company for RBC Capital Markets, wrote in a research note.
Nonetheless, Wall Street reacted favorably to the news, as investors took the sale as sign Hologic will now be able to focus on more profitable product lines.
Hologic stock ended trading Wednesday at $49.19 per share, up 4.3 percent.
Andy Rosen can be reached at firstname.lastname@example.org.