”Congratulations to the team at HintMD and their acquisition by Revance Therapeutics today for more than $170M!
Brandon HahrManaging Partner, Kingsmen Digital Ventures
As a forward thinking, up and coming player in the biotechnology space for aesthetic and therapeutic offerings,Revance’s purchase of Hint, Inc. is an interesting move to essentially buy their way into the doctors office with the launch of DaxibotulinumtoxinA while simultaneously aligning a traditional pharma sales vision with the technology IP as an alternative source of revenue.In addition to all of that, smart purchasing and negotiation in the deal manifested as an all-stock deal of 8.54M shares of RVNC which bolstered their cash position and put them in a position to be cash heavy in the post COVID landscape.
We have some thoughts on the alignment of the acquisition and the effects it will have on the pharmaceutical industry not only in medical aesthetics but therapeutics as well.As an industry that is one of the few frontiers left to be disrupted by technology and the democratization that it brings to the patient, Revance is making big moves that we hope others will finally follow.
A little background on HintMD
HintMD is a Silicon Valley based technology company that started in the patient loyalty space for aesthetic practices with the belief that the experience for patrons was so far removed from the way businesses engage their customers in normal retail practice.Since then, Hint has taken their platform solution and moved it completely as a smart payment solution specifically for the aesthetics industry.
According to Crunchbase:
HintMD has taken $30M in funding.
$3.5M in seed funding, raised in August 2014
$4M Series A
$12.5M Series B
$10M Corporate Round
Revance’s acquisition of HintMD demonstrates the value of digital IP
Technology platform enables quick presence in practices
With their new toxin product Daxi launching in the 3rd quarter of 2020, Revance has an uphill battle in commercializing it and getting the initial sales ramp that Wall street is looking for in this space.Similar to last years newcomer, Evolus, the usage of technology to reach the practice customer base has been the focal point of the rollout.Empowering the salesforce to do much more than be glorified order takers, and giving unprecedented access to purchase the product at any time and any place has proven to be wildly successful at Evolus.The presence of HintMD in ~175 practices gives Revance a headstart in getting the product launched quickly.That number is relatively small compared to the launch of Evolus, but it’s a great start.
New transactional revenue stream
HintMD’s positioning as a smart payment solution is a bold move toward becoming part of the transactional chain in a medical aesthetics office.As a software play, it is the mecca for recurring revenue and operationally the best place to be as every transaction in the practice nets revenue.For Revance, this offers the opportunity to augment their entire company valuation and get a multiplier on a portion of their business that far exceeds what pharma is generally pinned with.The addition of tech to Revance not only allows them to explore interesting commercialization strategies, but offers them an entirely separate stream of revenue that is attached to the performance of every practice using it.
Patient behavior unlocks new insight
Part of the challenge of becoming the payment solutions provider for a medical aesthetic practice is becoming the center of attention for all practice users and the patient at the same time.However, the data generated from offering unique financial products, subscriptions, patient loyalty, visit frequency, per transaction breakdowns, and many more data points proves to be invaluable in determining how to market products to the practice.
How practice payment solutions can drive pharmaceutical sales numbers
HintMD understood the patient desire for subscription sales
According to HintMD, 64% of patients would consider switching their provider due to pricing or integration.Coupled with 2x the number of visits due to subscriptions, and 90% of patients valuing automated brand loyalty as a major value driver, the creation and management of unique finance products for this industry has extreme value.Offering patients low payments and instant service gives practices the power to reach new audiences with frequent visits.
Direct access to patient demand drives purchasing promotions
Because Revance is first a manufacturer of pharmaceutical products, that proprietary data generated from HintMD’s platform will serve to help serve the right promotions to the right practice an ultimately generate more sales.Vial sales is always an indirect and just-in-time decision for most practices which stands to be disrupted by concepts in use by e-commerce giants like Amazon and Shopify.
Single access to an entire portfolio of products through one payment channel
HintMD’s loyalty/rewards programs in conjunction with payments provides a unique opportunity to tie an entire portfolio of products together for both the patient and the practice.Upsell opportunities between products will drive demand for the entire range of products especially if the deal is presented in a low payment model (subscription).Treatment plans will manifest themselves as single prices and move product.
What else did Revance get in the deal?
An entire technical team
Building a tech company when you’re not one is exceptionally difficult.In addition to the people and skillset’s needed to make any software product successful, finding a group that has delivered together before is even harder.For Revance, the acquisition of HintMD gave them access to a great set of engineers, pm’s, designers, and other techinical team members that they can utilize for other tech initiatives without incurring the cost of learning how to hire that team.We can’t reiterate enough times the value that this brings to Revance in the future.
Retain their cash position and keep incentives aligned
The nature of the deal for HintMD was negotiated in a way that it kept their cash position very healthy, but also took advantage of the optimism that their stock price currently reflects.Trading @ near $20/share today, Revance’s direct stock purchase of HintMD with 8.54M shares represents the best way to keep their team incentivized to continue to deliver a great product and get market share.The management team and directors are subject to lockup agreements effectively keeping the leadership on board, and the CEO, Aubrey Rankin, is nominated to the board of RVNC.All in all, a great pickup for Revance and leaves them runway into 2023 with their cash position.