Solta Medical Inc SLTM.O is considering a sale, succumbing to pressure from activist investor Voce Capital Management LLC that has been pushing the aesthetic devices maker for six months to enter into merger talks.
The company's Shares jumped 20 percent to $2.20 in extended trading after Solta said it has hired Piper Jaffray as adviser.
Solta, which makes products for aesthetic procedures such as skin rejuvenation, skin tightening and body contouring, also reported a bigger-than-expected quarterly loss on Monday.
"I certainly wish they had done it sooner," said Voce Managing Partner Daniel Plants after Solta reported plans to explore options.
Plants denied comment on potential partners for Solta, though he had earlier said he was aware of "substantial strategic interest" in the company.
Solta has been struggling to lift sales since the beginning of this year, after competition in North America forced it to cut prices.
Voce Capital has criticized Solta's financial performance, pointing to growing consolidation in the aesthetic medical market. The San Francisco-based investor said in May that it owned about 500,000 Solta shares.
Voce had similarly pushed Obagi Medical Products Inc to pursue a sale last year. Obagi said in April that it would be sold to Canada's Valeant Pharmaceuticals International Inc (VRX.TO) for about $344 million. <ID: nL3N0CQ4D1>
Solta said on Monday that it would consider options, including a possible sale, merger or strategic partnerships, and unveiled a plan to cut annual costs by $12 million.
The company's cash balance stood at $7.7 million at the end of September, compared with $16.3 million at the end of June.
Solta, which reported a $27 million in debt at the end of the quarter, said it has agreed on terms with lender for a $40 million financing, expected to be completed later this month.
The company's stock has slid nearly 34 percent since January.
It reported an adjusted loss of 4 cents per share for the quarter ended September, compared with net income of 3 cents per share a year earlier.
Revenue fell 4.2 percent to $33.5 million, mainly due to lower average selling prices on its Liposonix system, a non-invasive device used in fat-reduction procedures.
Analysts on average had expected a loss of 1 cent per share on revenue of $40.7 million, according to Thomson Reuters I/B/E/S.
(Reporting by Zeba Siddiqui in Bangalore; Editing by Joyjeet Das)