Restoration Robotics and Venus Concept Announce Merger

Restoration Robotics and Venus Concept Announce Merger to Create a Leading Global Medical Aesthetics Company.

Restoration Robotics, Inc. (“Restoration Robotics”) (NASDAQ: HAIR), a global leader in robotic hair restoration, and Venus Concept Ltd. (“Venus Concept”), a privately-held global aesthetic technology leader, announced that they have entered into a definitive merger agreement to combine the companies in an all-stock transaction. The transaction is expected to close in the third quarter of 2019, subject to customary closing conditions, including the approval by stockholders of Restoration Robotics and Venus Concept and receipt of all necessary regulatory approvals.

Transaction Structure:

Under the terms of the transaction, Restoration Robotics and Venus Concept shareholders will own approximately 15% and 85% of the combined company, respectively, on a fully diluted basis, without giving effect to the shares issued in the proposed equity financing that is expected to close immediately after the merger. EW Healthcare Partners has committed to lead a $21 million equity investment, priced at $0.825 per share (subject to adjustment for stock splits), in the combined company’s common stock contingent on the closing of the merger transaction. Additional investors committed to participating in the proposed equity financing include HealthQuest Capital, Madryn Asset Management, Longitude Capital Management, Fred Moll and Aperture Venture Partners. In addition to the equity financing, Fred Moll and InterWest Partners previously funded a $5 million convertible note into Restoration Robotics which will convert into the combined company’s common stock at the closing of the equity financing led the EW Healthcare, at a price of $0.825 per share (subject to adjustment for stock splits).

Concurrent with closing of the transaction, the Company anticipates effecting a reverse stock split. The Company expects to have approximately 283.2 million shares outstanding (or approximately 18.9 million shares outstanding after giving effect to an anticipated 1-for-15 reverse stock split) and after taking into account shares issued to the former Venus Concept shareholders in the merger, shares issued as part of the $21 million equity investment, and shares issued upon conversion of the $5 million convertible notes.

Management Commentary:

“The proposed transaction will create a combined company with the resources, product portfolio and expertise that will benefit our customers, employees and our shareholders,” said Ryan Rhodes, Chief Executive Officer of Restoration Robotics. “We are excited to partner with the Venus Concept team as we see the combination as an opportunity to become the leading player in minimally invasive hair restoration. With more than 600,000 procedures and an estimated $4 billion spent annually in the global hair restoration market, the growth opportunity for the combined entity is extremely compelling.”

“We believe the combination with Restoration Robotics will enable us to offer an end-to-end portfolio of minimally invasive solutions, unique from competitors in the hair restoration market today,” said Domenic Serafino, Chairman and Chief Executive Officer of Venus Concept. “We look forward to leveraging our large direct sales force to accelerate the adoption of ARTAS® in the marketplace following the successful second half of 2018 launch of the next generation ARTAS iX™ Robotic Hair Restoration System with its integrated harvest, site mapping and implantation capabilities. Hair restoration will become an increasingly important part of our global medical aesthetics portfolio, which also includes technologies that address hair removal, skin rejuvenation, wrinkle reduction, cellulite and body contouring.”

Strategic Rationale:

This strategic combination, approved by the Boards of Directors of both companies, will create a company with:

A diversified product portfolio in the aesthetic market with nine major product platforms, including a focused effort on the hair restoration segment with both Restoration Robotics’ ARTAS Robotic Hair Restoration System and Venus Concept’s NeoGraft (handheld follicular unit extraction solution);

Global reach with commercial presence in over 60 countries and a direct selling presence in 29 markets;

Strong research and development capabilities with complementary teams with expertise in non-invasive, energy-based technologies (from the legacy Venus Concept team) and robotics, 3D pre-operative planning and software (from the legacy Restoration Robotics team); and

An attractive financial profile with 2019 revenue expected to be in the range of $130-135 million and estimated 2019 gross margins in the upper 60%s.

Venus Concept is an innovative global aesthetic technology leader with a broad product portfolio (eight major technology platforms), operating directly in 29 international markets and through distributors in 31 international markets, and the industry’s first subscription-based business model. Venus Concept generated approximately $100 million (unaudited) in revenue in 2018, with gross margins of approximately 75%. The company’s strategy has been to grow beyond the aesthetic industry’s traditional dermatology and plastic surgery markets into non-traditional markets including obstetrics and gynecology, family and general practice, internal medicine and medical spas.

Leadership and Governance:

Domenic Serafino, Chief Executive Officer of Venus Concept, will serve as Chief Executive Officer of the combined business. Domenic Della Penna, Chief Financial Officer of Venus Concept, will serve as Chief Financial Officer. Mark Hair, Chief Financial Officer of Restoration Robotics, is expected to lead the integration of the combined business.

The Board of Directors of the combined company will consist of nine members, seven from Venus Concept’s Board of Directors: Domenic Serafino (CEO), Juliet Bakker, Scott Barry, Garheng Kong, Louise Lacchin, Fritz LaPorte and Tony Natale, and two from Restoration Robotics’ Board of Directors: Fred Moll and Keith Sullivan.

Advisors:

In connection with this transaction, SVB Leerink LLC is acting as exclusive financial advisor to Restoration Robotics. Latham and Watkins LLP and Yigal Arnon & Co. are acting as legal counsel to Restoration Robotics. Reed Smith LLP and Gornitzky & Co. are acting as legal counsel to Venus Concept.

About Venus Concept

Venus Concept is an innovative global aesthetic technology leader with a broad product portfolio, global reach in over 60 countries and 29 direct global offices, and the industry’s first subscription-based business model. Venus Concept’s product portfolio consists of best-in-class aesthetic device platforms, including Venus Versa, Venus Legacy, Venus Velocity, Venus Fiore, Venus Viva, Venus Freeze Plus, and recently acquired NeoGraft technology for hair restoration. The company is backed by leading healthcare growth equity investors including EW Healthcare Partners (formerly Essex Woodlands), HealthQuest Capital, Madryn Asset Management, Longitude Capital Management, Aperture Venture Partners and Deerfield Capital Management.

About Restoration Robotics

Restoration Robotics, Inc., is a medical device company developing and commercializing the ARTAS® System and ARTAS iX™ System. The ARTAS Systems are the first and only physician-assisted robotic systems to dissect and assist in the harvesting of follicular units directly from the scalp, create recipient implant sites using proprietary algorithms and, in the case of the ARTAS iX System, implant the hair follicles into the designated sites. The Company has unique expertise in machine vision, image guidance, visual servoing and robotics, as well as developing intuitive interfaces to manage these technologies.