Private Equity Loves The Medical Spas Industry

Lots of deals to be had

Tampa – WEBWIRE – Thursday, November 30, 2023

John LaRosa, Research Director

Many med spas need the marketing and management expertise of private equity investors."

November 30, 2023: Marketdata LLC, a leading independent market research publisher of “off-the-shelf” studies about service industries since 1979, has released a new 133-page report entitled: The U.S. Medical Spas Industry . This is a new market study about a booming healthcare market that has become more mainstream. The study examines the operations of “med spas” -- hybrid healthcare/cosmetic facilities that straddle the medical and business fields.

The U.S. med spas industry is booming, with revenues tripling since 2012 to an estimated $17.5 billion in 2022. It’s a fragmented industry populated by small operations that are privately owned -- 81% are single location entities. With strong growth and net profit margins of about 25%, the industry is very attractive to investors.

Many times, these facilities are owned and operated by clinicians that have little or no experience running a business. They are deficient in management and marketing. That’s where private equity firms enter the picture. They invest and are able to implement more efficient methods that boost profits, and can improve the med spa’s marketing efforts. Private equity firms may operate several med spas, rolled up into a new entity.

Private equity investors are usually interested in med spas that gross $2+ million in annual revenues, with an EBIDTA of $500,000.

What’s Not To Love?

* There are now an estimated 8,800 “medical spas” or “med spas” now operating in the United States. This number is forecast to grow to 12,000 by 2027. Med spas only emerged in 1996 and have exploded in number since 2010. As non-invasive cosmetic procedures have become more popular and prices fell, med spas have flourished.

* The Covid-19 pandemic actually boosted this business, as consumers in Zoom meetings viewed their facial faults and decided to do something about it. After weeding out some poorly managed operators in 2020, business boomed in 2021. Fully 17% of the total med spas were started in 2021.

* As primary care MDs seek to replace lost income, and as Baby Boomers and Millennials age, demand will grow for minimally or non-invasive cosmetic procedures made possible by ongoing innovations in laser equipment.

* Marketdata estimates that revenues of the 8,800 U.S. medical spas reached $17.5 billion in 2022. Average revenues per facility are $1.9 million. Industry revenues are forecast to grow 9.8% per year to 2027 as more med spas open.

* The market is heavily driven by laser machine technology advances, a broader customer base, an aging of the U.S. population, a broader range of safe and effective treatments, and lower costs per procedure.

* Americans had 9.2 million surgical and non-surgical procedures performed in 2022, including Botox injections, dermal fillers, laser hair removal, chemical peels, microdermabrasion, and skin rejuvenation. Non-surgical procedures jumped 23% in 2022.

* Growth markets include: laser hair removal, tattoo removal, and the facial injectables markets, all of which are minimally penetrated currently. For example, 19.8 million Americans want to remove their tattoos (at an average cost of $1,500).

* Women account for 88% of med spa clients, and the average profit margin of a med spa is 20-25% of net sales. Start-up costs range from $700,000 to $1 million, with up to half of that allocated to leasing the latest laser machines.

“This new report brings together in one place the most up-to-date and relevant statistics, research and industry information – from trade associations, consultants and other sources. The Census Bureau does not yet cover this industry, but Marketdata’s research fills in the gaps”, according to John LaRosa, Research Director.

ABOUT THE REPORT

The U.S. Medical Spas Industry , published in November 2023, is an independently researched “off-the-shelf” study. The study is 133 pages in length, has 45 tables, and costs $1,295. For the research, Marketdata interviewed market consultants, owners/operators of med spas, laser equipment manufacturers, trade association surveys (AMSPA, ISPA, ASAPS), spa industry magazines, and many others, in conjunction with proprietary Marketdata analyses and secondary sources. This study examines the med spas market structure and history, revenues/growth, key market trends and issues, effects of the pandemic, consumer demand factors and demographics, and extensive med spa operating ratios. Covers national revenues (2002-2022, 2023 and 2027 forecasts). State revenues for 2022. A 20 pp. Executive Overview is available for $99.

ABOUT MARKETDATA

Marketdata LLC, is a 44-year old independent market research and consulting firm that publishes market and industry studies covering a wide range of service and healthcare markets. John LaRosa is available for interviews (813-971-8080). A free report table of contents is available by email or the www.marketdataenterprises.com. Contact: Marketdata LLC, 7210 Wareham Drive, Tampa, FL 33647.