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November 10, 2006

Thermage IPO Gets a Flabby Reception

posted by MR WAVETHEORY at 11/10/2006 03:14:00 AM
Thermage Inc. (Nasdaq THRM), the company that makes a device to remove flab under your arms and your face, got a flabby reception this evening. Even as Americans get older and flabbier, the company couldn't get support for its IPO. Guess the market doesn't think women will continue to go under the Thermage machine to get the sag removed.

NEW YORK, Nov 9 (Reuters) - Thermage Inc., a wrinkle treatment medical company, on Thursday raised $42 million with an initial public offering that priced below a forecast range, according to an underwriter.

The 6 million share offering, which represents about a 27 percent stake in the company, sold for $7 per share compared with an $8 to $9 forecast.

The forecast was adjusted from an initial $11 to $13.

For all intents and purposes, more and more Americans will probably need this procedure. It's very popular with men and women who have sagging bags under their arms - sorry, I couldn't find a better way to describe. The procedure is non-invasive. With boomers getting older and baby boomers starting to get saggier, I would bet the other way. I think this is a really big market. Seeing is believing. Check these before and after photos.

The deal is backed by a list of who's who's of Sandhill Road: Institutional Venture Partners, Morgenthaler Ventures, Delphi Ventures Technology Partners, Draper Fisher Jurvetson ePlanet Ventures, Essex Woodlands Health. I find the weak pricing very surprising. The lack of revenue momentum may have something to do with the weak pricing. (Read the IPO prospectus). Investors seem to be squeemish unless there is a clear shot at some hypergrowth. It may also have to do with the market sentiment which has not be too good on recent IPOs.

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