Investment Spotlight: Aesthetics, Dermatology and Med Spas

Thank you. Well, good afternoon, everyone. I'm acutely aware that we stand between you and lunch. So we are hopefully gonna have a very entertaining thirty to thirty five minutes before we break and let you have something to eat and some refreshments.

I'm absolutely delighted to present my impeccably well groomed, since we're talking about aesthetics, panel, but more importantly, well qualified panel today. So what we'll do is we'll start with some brief introductions, and then I've been tasked by the panelists just to present a few slides. I promise not to do death by PowerPoint, and then we're gonna get right into our, hopefully, very provocative and interesting discussion. So without further ado, I'm gonna ask maybe my panelists to introduce themselves. Let's start with, can you see my very diverse panel here? So we'll start with the diversity candidate, Julius.

Good afternoon. I'm, Julius Hoogelsoffer.

I, I'm a director at Verl Invest. We are a global evergreen family backed investment company focusing on consumer goods and services, including consumer health. And in that context, we have a number of consumer health investments across Europe and Asia, including one in the aesthetic space in Europe called Faceland, present in five markets starting out of the Benelux, DACH, and, and Italy.

My name is Johanna Oberg. I represent Bergman Clinics, where I'm the CEO of Bergman Clinics commercial care. And that means all our out of pocket, services, currently refractive surgery and aesthetic surgery and also noninvasive, represented by, eight brands in five different markets, Sweden, Norway, Denmark, Germany, and the Netherlands.

And, hello everyone. I'm, my name is Tracy Cohen Sayag, and I'm the CEO and founder of Clinique des Champs Elysees Group. It's a group of clinics, in isetics from invasive to non invasive treatments and we cover, have twenty clinics, in France, and pretty much specialize in everything that's going to be the session of today. And I'm happy to be here.

Thank you all.

Let's see if we can get the slides up.

Can we get the slides up?

Ah, perfect.

All right.

So as promised, just, a few pages just to set the scene for why we're talking about medical aesthetics. Well, I suspect that some of the other segments that have been presenting over the past couple of days would be delighted to see growth rates like we've been seeing in the medical aesthetics, including the MedSpa space. And I've really just pulled out a couple of key countries here in Europe, so UK, Germany, and France data. But you can see what phenomenal growth we've seen historically and projected going forward. And that's really being driven, I think, by four key, key, drivers.

And I'm just gonna step through, one by one, just to give you a little bit more flavor. So the first is, of course, consumer interest. So who hasn't heard, of course that way. Thank you.

Who hasn't heard, of course, of the Zoom boom and the increase in interest in social media more generally in this space? And what's been really interesting, I think, is that this has been across multiple demographic segments, and I'm sure my panelists will talk about this today. So it's not just women, but increasing numbers of men as well, and increasing numbers of us taking up, these kinds of services across both the injectable sector, so that's, for example, the toxins. So Botox is, of course, the brand that you might be most familiar with, and, indeed, fillers, as well, but also laser hair removal and, and other and other such services.

Interestingly, we've also seen a younger demographic picking this up. So not just, the sort of forty, fifty, sixty plus demographics, but increasingly younger consumers as well. And right across the disposable income spectrum as well, which is, again, I think another key driver of growth.

And then perhaps just as a sort of a quick piece of evidence, you can see here the graph on the right hand side, just the phenomenal increase in interest as demonstrated by online searches for these kinds of services and products.

A second key area and driver of growth and one that is near and dear to my heart as a former medical scientist is innovation in products and and, and, what you've really seen particularly in the pharmaceutical side of things has been lots of, interesting innovations coming to market from the big three, so that's Gelderma, Allergan, and MERS, but also increasingly from the mid market and the sort of new entrants are primarily Korean, Korean players.

What what have we been seeing? Well, much longer duration types of treatments, pre filled syringes, that sort of thing, which really make it a lot easier for our clinician colleagues, and related services to actually deliver these services.

On the energy based devices side, so this is like your laser hair removals, similar levels of in of, of innovation, both interestingly on the product delivery side, but also on the financing side. So we just we're hearing from our insurance colleagues on this panel prefer before this one, but a lot of innovation in how to actually finance the large CapEx requirements for some of these machines.

Something that we'll certainly hear about today, third key driver of growth in this segment is, increasing supply.

So certainly, certainly, both Johanna and Tracy will talk about this, and this is indeed the sort of fundamental of their business model, but the increasing proliferation of clinics, really on every high street.

I'm sure it probably hasn't passed you by that you can walk down any high street in any capital city now and really see a number of brands increasing in prominence.

And there's been a lot of innovation from from the provider side as well, both in terms of affordability, and convenience, but also from the service customer service perspective. And I'm gonna ask some questions about that as well.

And then one for Julius, I expect, from an investor perspective.

This reminds me this segment reminds me a lot of how ophthalmology or dentistry or veterinary services was some years ago when we really saw a very fragmented landscape with lots of opportunity for clinic roll up.

And, we have got some good examples on this page here of some of the recent acquisition, activity.

But, really, I think you're gonna see this, and maybe Julius, I'll ask you this, especially in a moment, but I think you're really gonna see this accelerate over the next three to five years, especially as the private equity interest in this space and the strategic interest in this space heats up.

So that those are my four key drivers of growth. I'm gonna just briefly touch on the regulatory environment because it's a question that we get asked a lot.

At present, we have quite a disparate regulatory framework that sits across Europe, but there are plans afoot across multiple dimensions to tighten up the regulatory frameworks. In the UK, for example, it is still the case that literally anybody can stick an injection in your face. It's quite terrifying. We certainly don't have that in France where we are today and certainly not in Germany. And we absolutely hear from the sort of leading investors in this space and the leading strategics in this space that they are desperate for the regulatory frameworks to become harmonized and, indeed, more stringent for the benefit of consumers and patients.

Right.

I'm sure I've taken up quite enough of your time. So what I'm gonna do is I'm gonna throw it open, Julius, for the first question.

As a sort of leading investor in the aesthetic space, perhaps you can kick this conversation off and just to tell the audience why you're so excited and so interested to invest in aesthetics?

I mean, you mentioned it already, Adrian. I think the demand dynamics remain fantastic. Right? I think there's growing demand. We see this market growing three, four times the rate of big traditional, medical specialties.

And we also see actually astonishingly low price elasticity. Right? So, there is and we already saw that saw this during the last macroeconomic downturn, but we continue to see possibility to pass through decent price increases.

The, and the growth is phenomenal. I think on the supply side, and that's where the investors come in, especially for if you think about operators, I think there has been a proliferation of smaller groups. But it's it's an interesting dynamic because investors have seen other health care services. You mentioned dental. You mentioned ophthalmology.

Grow in the last few years, and they're approaching this slightly differently. There's a scarcity of assets of scale in Europe. Right? So people are building up things from a smaller basis, and they're already thinking of the next step. How do we differentiate ourselves? Because clearly, barriers to entry are slightly lower. It's more consumerized.

So there are more questions on, you know, do I maybe focus on dermatology? Do I, go broader on my treatment spectrum? How do I build a moat?

So we see very strong investor interest, and there have been a number of transactions in this space, but slightly smaller scale, and already with, I would say, an eye to differentiation rather than simply buying bills that we've seen in other sectors.

And Johanna, maybe a question for you. I think I'm right in saying that aesthetics represents about a third of the total portfolio.

So why is an organization like Bergman interested in aesthetics given all the other areas that they could be focused in?

Yeah. First and foremost, even if aesthetics is new at this conference, it's at the core of of Bergman.

In nineteen eighty eight, plastic surgeon Robert Bergman started in the Netherlands. So that's really at the heart and the core of of what we do. Then, obviously, we've grown into other therapeutical areas, and, and we see now the last few years that growth rates in aesthetics across our markets is now taking off again. And I think, it both has to do, obviously, with all the factors that we just mentioned. But I also really like to think about our market as a push market, which we control, and we control demand, and we can create demand, and we need to capture demand.

And regardless of macroeconomic situations, we see that we can continue to grow that demand.

And, while putting everything together, everything that is out of pocket pay, because that's a fundamentally different dynamics to out of pocket healthcare than insured healthcare. And while we put that under one umbrella, we can see that this is really an area where we can use geographical our geographical footprint to really create synergies because within private pay and aesthetics specifically, knowledge do travel.

That was actually a question I was gonna ask you about international expansion and how do you think about growth and, brand permission, brand expansion across multiple countries. I think it's much easier if you understand, you know, a single geography, a single patient or consumer cohort or group within a a defined geography, but you've obviously been successful at expanding. So what are the kind of key things that you think about in this space when you think about expanding across geographies?

Yeah. If we take clinical excellence as a given because it has to be there, of course, and also everybody in the entire healthcare space know that operational excellence do travel, I think the key component, which we find as our secret sauce is does commercial excellence travel? And by that, I mean, we have to earn our customers every day in the out of pocket pay space. And we actually have found, a way of of making sure that that that knowledge does travel.

And that's everything. That's not only, you know, how do we do CI and CO. It's it's it's much broader than that. It's the entire customer experience.

It's the capabilities within marketing tech. It's the capabilities within marketing automation, both when it comes to system and capabilities.

And I like to think, and I think we've also proven it, that people are more similar than different.

So even if we obviously have to adapt to certain market peculiarities, we see that with our team of customer acquisition experts, we can easily add an additional brand or an additional geography with not that much additional cost.

Thank you. And, Tracy, turning now to the French experience.

How would you summarize the desires of the French consumers as you think about the Clinique de Champs Elysees, quite a high end clinic? How would you kind of describe what what are consumers really looking for in terms of innovation in the space?

Yes.

It's a very interesting question and, I have a lot of alignment about what you say about customer experience. And we, we have been traveling into every country of France. And at the end, even if we are premium clinics, we have premium patient pathway. Our target is mainly, everyone.

So we we target, every kind of patient from, of course, twenty years old when they come through acnes or hair removal, to there is no end actually for the treatments and self confident need that we we see today. What patient looks, I think it's really the the counsel part, the fact that they are they are listened to and that they have real results, when coming into a clinic because there is a lot of new competitors, entrants in this segment. Most of them don't really have the know how of really what's good for the patients. They will sell what they have given into their clinics or into the center of, what they need to do regarding their objectives, but, I think it's really the the specificity now.

They learn more, they know more, they look, they get interest before they come to the clinic. They have read a lot. They are much more expert than they were ten years ago. So it's not that easy to sell something to a patient if you really don't know what you aim is, is there going to be a result?

I think that what we try to do in Clinique de Champs Elysees and that's really what I've been passionate about this for more than fifteen years now is not the first time the patient comes. It's how we are going to maintain the patient loyalty within throughout the year and this really what's the value, at that creation, is going to be in the long term. It's really easy to attract patients, for us because we have a big brand, of course, in French, in the French market. So, making them come for the first time is pretty much something that a lot of new groups, new competitors, have easy access to.

The difficulty is to make the patient wants to come again and again and to know that he's really in good hands. And when I say in good hands, it has to come with a medical DNA. It's really my vision of aesthetics. There's, in France, I really I talk more about the French market because it's the market that I know best. Most of the competitors that came into the market within the last three years are non medical competitors.

DNA, so maybe they get one doctor.

It's much more about marketing. It's not really them helping driving the protocols, the treatment pathway.

And at the end of the day, this really is going to give the right result for the patient because you can take the same device and that's what we face throughout the year, the same device with the same name with good marketing names. Even the devices now sometimes bring patients to the clinic because some industrial invested a lot in their device. But even just one device can bring so much different results to the patient if it's used by an aesthetician, a nurse, a doctor, or even a nurse driven by a doctor because, of course, protocols are adapted and if you use the devices at five percent of their capacity, the result will not be there and at the end of the day the patient, after one to three sessions, will not come back.

And I think that's really what's important regarding consumer now is that they have access to a lot of offers, which was not the case a few years ago. So it's accelerating the growth that we see, but but in order to maintain the patient, and I think that it's in the long run that's what will make the difference, it's important to focus also on the result that we give to the patients in order for them to trust the brand, to come back and to be able to bring the aesthetic market in the good way because results are needed.

Even if it's not insured and it's a treatment that they can afford, it's still a lot of money and it's true that it's non driven by microeconomics effect. I mean, everyone wants to maintain good health, good self esteem, wants to age well. So it's part of the now everyone is, it's part of the spirit of today. But at the end of the day, they need to get results if we want to maintain their trust within the next few years.

So I think this this topic of the balancing of being medically led, health care professional led, safety led, of course, together with the consumerization, it's one of the segments, I think, it's fair to say where you see probably one of the highest levels of consumerization, ization is one of those topics that often comes up in these sorts of discussions. So maybe I can throw it back to Johanna. How does Bergman think about balancing the trade offs that are required between safety, medically led, patient led with also reacting to the kind of consumer pull and the kind of influence that you get on social media, etcetera? How do you how do you balance those two things as you think about your risk profile as a business?

I think, obviously, within any therapeutical area, the the ethics of the doctors is is, extremely important at at and at the the core and heart of what we do, but it's specifically true in the plastic surgery or aesthetics area.

And we I think we have lots of conversations with our doctors around patient selection.

We typically also, in all our markets, are price leader, and by that, I mean we're the most expensive.

That's price leadership to me.

And that means that we select a slightly higher age group because even if we're fully aware at eighteen you can do whatever you'd like to do, our core demography is twenty five plus.

And I think as important for a doctor or surgeon to accept a client is actually to say no to a client. And we educate our doctors as much in that area as in the actual clinical area.

And, Julius, from an investor perspective, I presume that's one of the things, sort of good governance, good compliance that you're that you are looking for. What are maybe some of the other types of, KPIs, if I can put it like that, that you would be looking for in a business, an aesthetics business that you would be seeking to invest in?

I mean, I think a few interesting points were already mentioned. One is clearly that acquisition in this space is not the problem. Right? It's retention that you should be focusing on.

So and that, I think, is what many of the players and that's not their fault. It's just that they're of small size. They haven't had to think about it yet, but they will start looking into this. So clearly, as an investor looking into, you know, capabilities such as a decent CRM, having good understanding of the price, relations the relationship between price and and frequency and and price and spending, understanding who your customer is, I think that's, that's a key thing to look out for for in a business.

So, I mean, I share what what Johanna said. We at Facelind, for example, the core demographic and that's also something that really convinced us as an investor is core demographic is not, you know, the under twenty four year olds. It's thirty five to fifty five, mainly female, patients who come with a very clear desire, which is, you know, healthy aging, delaying aging, and it's much less fickle in terms of, the demand being driven by short term, maybe social social media induced trends. So I think that's it's clearly one thing that investors look out for.

And then, of course, there's the medical component, which in Europe, country by country, creates a bit of a moat as well. Right? So if you have for example, if you consistently work with doctors, instead of just using nurses where it is allowed, if you or if you, let's say, interplay those those well, I think that is that is also a sign that investors look out for, right, medical medical quality and in house medical capabilities, having a training academy.

What's often the case is doctors don't necessarily get trained in their medical education on how to use syringes. Right? So it's, actually having a good academy in this, in this space is not to be undervalued.

So I think having that capability of producing a decent flow of in house trained doctors, is also something that, that we'd value.

I'm gonna throw it open to the floor for questions.

Perhaps we can get a microphone out. In the meantime, just whilst you're thinking of excellent questions to ask, I'll ask you one more question from me, which is that most of the data that I've seen indicates just how sticky these customer groups are. So you mentioned retention, but the cohort kind of data that I've seen is is very favorable.

And that's the case even when you look at data through harder economic times. Is that something that you've seen as well? How do you think about and prepare for that as we think through some potentially quite uncertain macroeconomic times, in the months and perhaps years ahead? Maybe I'll ask Tracy from a French perspective, and then we'll get the microphone around if anyone wants to ask a question.

Yes. We, we we rely a lot on data to to pretty much take, most of our decision. I've been always very data driven in everything that I'm doing, especially the retention, regarding retention patients. Why do they come if they stay, if they don't stay or if they stop a treatment really understands the reason to be able to to match. Even with the macroeconomic difficulties that we've seen, we we didn't get really a lower attendance of the patients.

They they still come at the same rate pretty much in every every clinic.

Sometimes they just don't launch everything that they wanted to launch at first level, so they they they postpone some kind of treatments, but it's still very focused to continue to maintain a self, self care, because at the end of the day, today's one of, the main concerns of every patient to to feel good, to age well, and to continue to to maintain a good healthy way of living. It passes through through all the the possibility that we get today with innovations.

So, of course, the training is important. We talk about it and but innovation is also the core of our business and it makes the possibility to always offer new new things to improve the technology that we get from year to year. And this is also what's bringing back always the patients, because they they love, of course, having to to be able to to discover new treatments, new way of helping them feeling better about themselves.

Thank you. Do we have any questions? Thank you.

Hi. My name is Daniel. I'm French, as you will see in my, awful accent.

So I I'm more on the vet sector, so I'm not in an aesthetic. And I had a question in terms of development.

From my understanding, a lot of development in terms of growth and new sites has been a greenfield development, if I'm not mistaken. So you you opened, greenfield sites. And is it gonna be, you know, the same in the future? Or are you switching maybe to more M and A and more acquisition strategies?

Johanna, do you wanna answer that one?

Yeah. I can answer that one.

We recently signed a deal, that will propel us into the aesthetic markets in Scandinavia because currently that's a white spot for us.

And, I'm, I'm really looking forward to use that target as the platform for for further growth. So, for us, it's a combination.

We need to have a very strong brand that we can further build on. And and in our case, we have, within both aesthetics and refractive, we have seventy five clinics in five countries. So obviously, we can use that geographical footprint for further growth.

Julius, maybe your perspective on that as well?

I mean, I think the simple answer, and again, it depends on the market, but it's unlike in other areas of health care, you do not have a lot of single site acquisition targets, at least those which suit investor investors because you do have plastic surgeons running their own practices.

You that might not be the treatment mix that you're targeting. Changing that treatment mix is costly. It's complicated. So in certain markets, you just simply don't have, the acquisition targets. I mean, what we did is we we acquired a midsize group in in Italy last year to give us market entry. So I think and and like Johanna, we pursue both the greenfield model as the basis, but then we do our M and A as a, let's say, tactical move to open up certain markets because the regulation is still a moat, where you can leapfrog quite a few years in your business plan by by acquiring a midsize business. So, I think you'll see a combination of both, but those, like, large scale roll ups that you would have seen in dentistry, I don't see them coming, very soon because, you don't have that, that landscape in all markets, in Europe.

The substrate isn't there, is it, Julius, yet? Right? We've still got kind of mom and pop shops predominantly apart from some, kind of chains that are beginning to emerge, but I I agree with you. Any other questions? We've got a minute and a half left.

Then perhaps I'll just ask a final one from my side for each of the panelists just to, give us your thoughts and reflections on what to watch out for, forecast things that you think are gonna be, interesting, whether it's sort of different innovations, m and a type of activity. What do you think is gonna be the next sort of twelve to thirty six months on the agenda for, your respective institutions.

Tracy?

For for us, this year has been the the most booming market for us has been the the hair, the hair part of the treatment. It's not wasn't mentioned, but it's part of what we cover in novel clinics.

And this is maybe the first time we will do actually in acquisitions. Usually, I joined what you said there. We prefer building from scratch, but we've very advanced and, continues to be very innovative in the hair industry because this is really where we get more and more, concerns, more demands, of course, and more treatments that are giving us amazing results. And the hair, it's not about hair loss, but hair quality, hair prevention, hair treatments, is really a focus for us this year and it's been a it has been a very booming market, so we are for the next twelve months, this is going to be a bigger concern for us.

Thank you. Johanna?

That the noninvasive market is is growing double digit, we know. But in in our case, Mozart's surgical part of the business is also growing double digit, and and I foresee that that will continue to to be the case.

And, as I said, shortly, we will also communicate something around the the Scandinavian market, which which we will use as a platform to further propel in that area because, again, it's a white spot and it's a great opportunity for us at Bergen.

Thank you. Last but not least.

I think we're we're looking forward to accelerating growth across the board in all of our five markets. And and, actually, I mean, I think that there are very interesting competitive dynamics here because you have people coming in from across the pond. You have, players from up in the value chain, such as beauty and personal care players suddenly taking stakes, in in other businesses. So I think we'll see a diverse set of new entrants in the market.

And, frankly, I mean, I would call ourselves, to a degree, a first mover. I think we also appreciate this because it will continue force forcing us to to focus on medical quality and excellence because what we need in this space is setting the bar very high with the newcomers to avoid, what we've seen in areas such as in laser, but also other health care areas, where the first generation, you know, does not do things correctly, all the time. So I think for us, it's really setting the bar very high in terms of clinical excellence whilst accelerating growth in all of our markets.

Wonderful. Thank you. All, would you join me in thanking, Julius, Tracy and Johanna for a fantastic panel?