Syneron Irons Out Some Wrinkles

Syneron Medical (Nasdaq: ELOS) is hoping to smooth out the wrinkles in its growth with its latest offering. The aesthetic device maker's Matrix RF applicator, which is used to reduce facial wrinkles, was approved for use in the European Union Friday.

The Matrix RF applicator is an add-on that works with the company's eLight, eLaser, and eMax systems. Through radio frequencies -- that's what the RF stands for -- the device damages the layers under the skin, shrinks the collagen and promotes the generation of new collagen to smooth out the wrinkles. Unlike pure laser-based applications, the device doesn't damage the outer skin as much, leading to a quicker recovery.

Perhaps most importantly for Syneron, the Matrix RF has a disposable treatment tip. That'll supply a recurring revenue stream -- think Gillette razor blades -- something that the company has desperately needed. Syneron has also set up a "subscription" service for at least one of its fairly expensive machines, but the program isn't likely to bring in recurring revenue. It's more like an interest-free loan than a subscription because the price of the subscription can be used toward the purchase of the machine. I imagine most doctors will stay in the program just until they've paid enough to collect the machine.

The European approval for Matrix RF is probably more important than U.S. approval, given the growth Syneron has experienced overseas lately, though at least some of that was because of currency changes. In Europe, the market for its devices extends beyond doctors to other "aesthetic professionals," making for easier sales.

Syneron and other aesthetic device makers -- Palomar Medical (Nasdaq: PMTI), Cutera (Nasdaq: CUTR), and Cynosure (Nasdaq: CYNO) -- have been beaten down pretty well over the past year as discretionary spending has scaled back. The aesthetics market isn't likely to regain momentum until that turns around, but it looks like Syneron is setting itself up for success once it does.

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