Solta Medical enters into securities purchase agreement with investors

Jan 8 2010

Solta Medical, Inc. (Nasdaq: SLTM) today announced that it has obtained commitments from accredited institutional investors to purchase approximately $17.2 million of its common stock and warrants in a private placement. The financing was led by existing investor Longitude Capital and new investor Great Point Partners along with participation from other existing investors. Solta has entered into a securities purchase agreement with the investors pursuant to which Solta will sell an aggregate of 8,259,704 shares of its common stock and warrants to purchase up to 4,264,852 additional shares of common stock. Each unit, consisting of one share of common stock and a warrant to purchase one-half of a share of common stock, will be sold for a purchase price of $2.02, equal to the closing price of the common stock as reported on the Nasdaq Global Market on January 6, 2010. The private placement is subject to customary closing conditions and is expected to close within a week's time. Morgan Keegan & Company, Inc. acted as the sole placement agent and FTN Equity Capital Markets Corporation acted as a financial advisor.

Proceeds from the private placement are expected to be used for general corporate and working capital purposes, as well as to opportunistically pursue strategic initiatives.

The warrants will be exercisable at an exercise price equal to $2.121, which represents a 5% premium over the closing price of the common stock as reported on the Nasdaq Global Market on January 6, 2010. The warrants are exercisable commencing on the six-month anniversary of the closing and will expire five and a half years from the date of issuance.

The securities to be sold in the private placement have not been registered under the Securities Act of 1933, as amended, or state securities laws and may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements. Solta has agreed to file a registration statement under the Securities Act covering the resale of the shares of common stock, including shares issuable upon exercise of the warrants, to be sold in the private placement.

Solta today also announced a preliminary estimate of revenue for the fourth quarter of 2009 to be in the range of $28.0 million to $29.0 million. In addition, the company reiterated that it expects to:

• Generate positive non-GAAP EBITDA for the fourth quarter and the full year 2009; and
• Achieve a non-GAAP gross margin in the range of 64% to 66% for the full year 2009, excluding non-cash amortization charges and non-cash purchase price related charges.

Non-GAAP Presentation

To supplement the preliminary revenue estimate presented on a GAAP basis, management has provided non-GAAP EBITDA and non-GAAP gross margin that exclude the impact of purchase price related charges, severance costs, merger related costs, extraordinary loss on investments and stock-based compensation expenses, all net of income taxes. Solta believes that these non-GAAP financial measures provide investors with insight into what is used by management to conduct a more meaningful and consistent comparison of Solta's ongoing operating results and trends, compared with historical results. This presentation is also consistent with management's internal use of the measures, which it uses to measure the performance of ongoing operating results, against prior periods and against our internally developed targets. There are limitations in using these non-GAAP financial measures because they are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. These non-GAAP financial measures should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider non-GAAP financial measures only in conjunction with Solta's consolidated financial statements prepared in accordance with GAAP and the reconciliation of actual GAAP and non-GAAP financial measures to be provided in Solta's upcoming earnings release for the fourth quarter and year ended December 31, 2009.