Touch Bionics buys US supplier Livingskin as it grasps profitability
TOUCH Bionics yesterday revealed it had broken into profitability and announced its first acquisition.
The Edinburgh-based prosthetics company, which was spun out of NHS Scotland in 2003, last September launched the i-Limb, a prosthetic hand with digits that allow multiple movement types. The device offers greater mobility and authenticity than previous artificial hands.
Yesterday, chief executive Stuart Mead said the company had been going like a train. He said it expected to generate sales of at least £4 million this year and had broken into profitability. The company announced it had bought New York-based Livingskin in a cash and shares deal.
Livingskin provides synthetic skin coverings for a range of prosthetic limbs, mainly static products that are realistic but do not allow movement. But since the launch of the i-Limb, Livingskin has been developing flexible and durable skin, known as the "glove".
As the products from Livingskin got better we wanted to secure the supply of the glove and make sure we owned it.
We also wanted to invest in the product and you can't expect a third party to invest in your product to the same extent that you would.
As well as securing supply of the glove, the deal gives Touch Bionics an established business infrastructure, including sales staff and customer service, in the US, where about 70 per cent of its sales are generated. Touch Bionics now has about 50 full-time staff, divided almost evenly between the UK and the US.
The company funded the deal through a fundraising from existing shareholders Archangel Informal Investment, TriCap and the Scottish Enterprise co-investment fund. Livingskin's former owners received more than $1m in cash, and a stake in Touch Bionics of "less than 10 per cent", Mead said.
Livingskin will continue to sell products to other prosthetics companies, where it makes the majority of its revenue.
Mead said the growth curve for Touch Bionics was "exponential" and he would be "very disappointed" if the company did not report sales of £8m next year, though sales could be significantly higher if US health authorities approved the product for use by amputees. A decision on subsidies for amputees is expected by the end of this year.
Mead said there was currently no plan to list the company on the stock exchange or seek a sale. "We think we've got an enormous amount of value still to build in the business, and we're funded to do that," he said.