The Corner Series Why the Investor Community Should be Watching Medspas
The healthcare sector attracts interest from the investment community because it’s seen as being more resilient compared to other parts of the economy. But how does the medspa sector compare? During COVID, cosmetic procedures actually rebounded faster than the medical dermatology side.
On this episode of The Banker's Corner, McGuireWoods' Geoff Cockrell discusses all things medspas with Mike Pisani, Managing Director and Co-Head of Healthcare Services at Houlihan Lokey. They discuss the trends, growth opportunities, and challenges that are present for today's medspas and how that affects investors' views of the space.
The market has massive opportunity, and looking at the variety of services available, its value could be upwards of $25 billion. Combined with a strong margin profile, the opportunity for recurring revenue, and a cash-pay service line, this makes it attractive to investors.
The medspa sector currently has a high level of fragmentation both in terms of the number of single clinic businesses that are operating and in how many businesses have been opened within just the past few years. This provides a high level of opportunity for investors looking for attractive deals in the sector.
Recently there has been a mix of consumer and healthcare teams doing deals in the space. This has also been the approach at Mike’s firm, as they prefer to co-team a medspa deal with expertise from both sides.
But where is the industry headed? Given the growth in the category and the opportunity still left on the table, true consolidation can be projected to be 5-10 years away still.
“As we think out 10 years, which is oftentimes irresponsible to do, I think what you'll find is there's going to be some consolidation that exists to create national brand opportunities, but there's also going to be some convergence, where I think we'll see medical derm groups realize perhaps they need new and innovative models outside of their existing clinics,” Mike says.
Featured Guest
Name: Mike Pisani
What he does: Mike is the Managing Director and Co-Head of Healthcare Services at Houlihan Lokey. He has approximately two decades of healthcare and investment banking experience, including more than 15 years at Houlihan Lokey. During his career, Mike has closed more than 100 healthcare transactions, including sellside and buyside M&A transactions, and private financing and equity raise transactions for public and private companies.
Organization: Houlihan Lokey
Connect: LinkedIn
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