Fairmount Supports MELA Sciences Acquisition of PhotoMedex Laser Business

Irvington, NY – June 23, 2015 — MELA Sciences (NASDAQ: MELA), today announced that it has completed the purchase of the XTRAC and VTRAC Dermatology business from PhotoMedex (NASDAQ PHMD) for $42.5 million in cash and the assumption of certain business-related liabilities. The XTRAC and VTRAC businesses generated $30.6 million in revenues in 2014.

Michael R. Stewart, President and CEO of MELA Sciences, stated, “This is a transformational event for MELA Sciences.  As a result of this acquisition, MELA becomes a multi-product company with a single salesforce focused on meeting the needs of dermatologists for the diagnosis and treatment of serious dermatological conditions. The XTRAC laser in particular provides us with a recurring source of revenue that has been growing significantly over the past few years and is expected to generate sufficient cash flow to fund our ongoing operations beginning this year. This should enable us to continue our current commercialization efforts while growing the XTRAC and VTRAC businesses globally.”

Added MELA Sciences Chairman, Jeffrey F. O’Donnell, Sr., “I am thrilled we have completed this acquisition as it transforms MELA Sciences into a sustainable commercial enterprise, providing it with a sales infrastructure, a synergistic product line and a positive-cash flow business platform on which to build a leading franchise in medical dermatology. Given Mike Stewart’s previous experience running the XTRAC and VTRAC businesses at PhotoMedex, we look forward to a smooth transition with him as CEO of the combined businesses.”

XTRAC is an ultraviolet light excimer laser system that has become a widely utilized treatment among dermatologists for the treatment of psoriasis, vitiligo and other skin diseases. The VTRAC Excimer Lamp system, offered internationally, provides targeted therapeutic efficacy demonstrated by excimer technology with the simplicity of design and reliability of a lamp system. In 2014, the acquired businesses generated $30.6 million in revenues, representing year-over-year growth of 41% and a gross profit of 60.1%. As of March 31, 2015, there were 640 installed XTRAC systems in the United States, up from 527 at the end of March 2014. There are approximately 7.5 million people in the U.S. and up to 125 million people worldwide suffering from psoriasis, while 1% to 2% of the world’s population has vitiligo. In 2014, over 300,000 XTRAC laser treatments were performed on approximately 19,000 patients in the United States.

Fairmount Partners advised MELA Sciences, providing a fairness opinion to its Board of Directors.  Neal McCarthy, Managing Director, commented, “We have worked Michael Stewart, Jeffrey O’Donnell and with members of the Board of Directors on multiple transactions and we are pleased the Board selected Fairmount advise them through this transformative transaction.  Our track record of repeat business from dozens of successful healthcare clients, such as Jeffrey O’Donnell, Sr and Michael Stewart at MELA Sciences, is gratifying, and provides tangible validation of   Fairmount’s expertise in providing advice and valuation analysis to premiere middle market companies.”

About MELA Sciences

MELA Sciences is a medical technology company dedicated to designing and developing innovative software-driven technology for the clinical early detection and prevention of skin cancer. MELA Sciences conducted the largest, positive prospective study ever done on the melanoma disease, and is the first and only medical technology company to receive both FDA Pre-Market Approval (PMA) for the U.S. and CE Marking certification for the European Union for a device of this nature.  Through its acquisition of the XTRAC and VTRAC businesses, MELA Sciences markets those products for the treatment of psoriasis, vitiligo and other skin conditions. MELA Sciences was incorporated in 1989 and is based in Irvington, New York.  For additional information, please visit: www.melasciences.com

About PhotoMedex, Inc.

PhotoMedex is a global skin health company providing aesthetic solutions to dermatologists, professional aestheticians and consumers. The company provides proprietary products and services that address skin diseases and conditions including acne and photo damage. Its long-held experience in the physician market provides the platform to expand its skin health solutions to spa markets, as well as traditional retail, online and direct to consumer outlets for home-use products. PhotoMedex sells home-use devices under the no!no!™ brand for various indications including hair removal, acne treatment and skin rejuvenation. The company also offers a professional product line for acne clearance, skin tightening, psoriasis care and hair removal sold to physician clinics and spas.  PhotoMedex, Inc. was founded in 1980 and is headquartered in Horsham, PA.  For additional information, please visit: www.photomedex.com.

About Fairmount Partners

Fairmount Partners is one of the largest investment banking groups in the Mid-Atlantic region. The firm specializes in advising middle-market growth companies with mergers and acquisitions, capital raising and strategic advice.  Fairmount offers deep expertise in the Healthcare Services and Technology, Information Technology Services, Technology and Software and Industrial and Consumer Products markets.  Fairmount has completed more than 150 transactions throughout North and South America, Europe, Asia and Australia.  For more information, please visit: www.fairmountpartners.com

Principals of Fairmount Partners acted as advisors to MELA Sciences in this transaction.

Contact:
Neal McCarthy

Fairmount Partners is a registered Broker Dealer, member FINRA (www.finra.org) and SIPC (www.sipc.org).