LAGUNA HILLS, Calif. - Sonendo, Inc. (OTCQX: SONX), a dental technology company, has agreed to purchase substantially all assets of the medical device company Biolase (OTC:BIOLQ), Inc. and its subsidiaries for $14 million, plus the assumption of certain liabilities and settlement of ongoing patent litigation. The agreement is part of a Chapter 11 bankruptcy process initiated by Biolase on October 1, 2024.
The transaction awaits approval from the United States Bankruptcy Court for the District of Delaware, where Biolase filed for bankruptcy. Sonendo will serve as the "stalking horse" bidder in the sale under Section 363 of the U.S. Code, subject to higher bids at auction, Bankruptcy Court approval, and other customary conditions.
Sonendo's President and CEO, Bjarne Bergheim, expressed the company's commitment to a smooth transition for Biolase's customers, suppliers, and vendors. Bergheim anticipates the acquisition will allow for cross-selling opportunities and significant cost reductions, ultimately strengthening the combined organization's technology platform and specialty sales.
Biolase, known for developing and marketing laser systems for dentistry and medicine, has a portfolio of approximately 241 patented and 21 patent-pending technologies. The company has sold over 47,700 laser systems in more than 80 countries as of December 31, 2023.
Sonendo, the developer of the GentleWave® System, focuses on innovative treatments for tooth decay. The system is designed to clean and disinfect teeth with minimal invasiveness, improving clinical outcomes and patient experiences.
This acquisition comes after Sonendo's subsidiary, PIPStek LLC, filed a patent infringement lawsuit against Biolase in January 2023, claiming damages of at least $59 million due to alleged patent infringement. Bergheim reiterated Sonendo's determination to enforce its intellectual property rights vigorously.
The information in this article is based on a press release statement from Sonendo.
In other recent news, Sonendo, Inc. has been making strategic moves in the dental equipment sector. The company has shown interest in acquiring assets from Biolase, Inc., which is considering filing for bankruptcy. Sonendo's subsidiary has entered into a preliminary agreement with Biolase, with the assistance of financial advisory firms Craig-Hallum Capital Group LLC and Stifel.
Simultaneously, Sonendo has announced its Q2 2024 financial results, with a total revenue of $8.3 million, a year-over-year decrease, but a 7% increase in console sales. The company has adjusted its full-year revenue guidance to between $31 million and $32 million and reported a GAAP gross margin of 37.5% for the quarter. Projections indicate adjusted gross margins reaching 40% to 41% in the second half of 2024.
In addition, Sonendo has seen changes in its executive team with the departure of its Chief Talent Officer, Roy T. Chen. The company has also replaced its auditor, Ernst & Young LLP, with BDO USA, P.C., following concerns about Sonendo's recurring losses. These are recent developments that investors may want to consider.
InvestingPro Insights
Sonendo's acquisition of Biolase's assets comes at a time when the company's financial position presents a mixed picture. According to InvestingPro data, Sonendo's market capitalization stands at a modest $4.56 million, reflecting its current position in the dental technology market.
The company's financial health shows some strengths amidst challenges. An InvestingPro Tip highlights that Sonendo holds more cash than debt on its balance sheet, which could provide flexibility in financing the $14 million acquisition. This strong liquidity position is further supported by another tip indicating that Sonendo's liquid assets exceed short-term obligations.
However, investors should note that Sonendo is quickly burning through cash, as pointed out by another InvestingPro Tip. This could be a concern given the upcoming acquisition and the need for resources to integrate Biolase's assets effectively.
The acquisition strategy aligns with CEO Bjarne Bergheim's vision for cross-selling opportunities and cost reductions. This could be crucial for Sonendo, as the company is not currently profitable, with a negative P/E ratio of -0.09 for the last twelve months as of Q2 2024.
Despite these challenges, Sonendo's stock has shown a significant return over the last week, with a 32.85% price increase. This recent uptick might reflect market optimism about the potential synergies from the Biolase acquisition.
For investors seeking a more comprehensive analysis, InvestingPro offers 15 additional tips for Sonendo, providing a deeper understanding of the company's financial position and market performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.