In this episode, Cameron is joined by  Ben Hernandez, founder and CEO of Skytale Group, and they discuss the growth of the MedSpa market, the importance of data, consumer spending trends, and the challenges faced by practices. They highlight the resilience of aesthetic services during economic downturns and the increasing demand for weight loss treatments. They provide valuable insights for practice owners and those interested in entering the aesthetics field.

In this conversation, Cameron Hemphill and Ben discuss the evolving landscape of aesthetic services, focusing on market trends, profitability, patient retention, and the shift from surgical to non-surgical treatments. They talk about the importance of understanding demographics, the impact of new technologies, and the necessity for practices to adapt and specialize in order to thrive in a competitive market. They also emphasize actionable insights derived from data to enhance patient loyalty and operational efficiency.

Transcript

This is medical millionaire the podcast, helping your Med Spa increase in status, visibility and profitability. Join your host as he dispels myths, shares trends and gives you actionable steps today that will take your medical practice to the next level. Here’s your host, expert marketer and founder of growth 99 Cameron Hemphill,
Hey, what’s up, everybody? Cameron Hemphill, here your host for medical millionaire. Hey guys, thank you so much for taking the time to tune into the podcast. Our goal is to give incredible value and insight for practice owners. So if you own a practice, medical esthetics practice, or you are thinking about getting in the industry, or this specialty, this podcast and all these episodes we make, they’re 100% designed for you and to help you take your practice to the next level. Guys, I have a good friend on today. We’ve known each other for a few years. We’ve been on panels together. I feel like I run into this guy like every conference I go to.
He’s deep in the in the weeds of what’s going on in the world of esthetics. He owns a group called the skytail group out of Dallas. His name is Ben Hernandez. He is very well, let’s just call it in the tune of what’s happening in the private equity side of things, the buy side of things, the consulting side of things. Ben, I don’t know how many practices that you have touched and consulted at this point and transacted, but man, it’s so good to have you back on the show. Welcome to the podcast. Cameron, thank you so much for having me back. And yeah, we were just talking. It’s been about a year, so happy to be back. Appreciate it. And yeah, definitely enjoy seeing you at all the conferences and learning from you as well every time I go there. Absolutely, man, I appreciate it. I just saw you recently at GAC in Miami
shoot. Before that was like a weekend before when, let’s see, we were at face it, live Gretchen’s conference, and then before that, it was a symposium that Scott Callahan puts on. So I’ve seen you a lot. I know that we live across the country from one another.
It’s nice to have you back. So
just for the audience, can you just give us a quick update? What is skytel group? What is it that you guys do over there? And then, you know, you guys, he has a report that they came out with with a company called Q sites, and it’s an incredible report that we will get into. And that’s really the purpose of this episode. It’s like, what’s going on in the world of esthetics. But before we go, there Ben, just for the audience, like, give us a recap, background history update. I know that a lot of people that are tuning in know who skytell group is and who you are and what you do, but there’s definitely some people that do not, so we just give us a quick update, of course, yeah, for those of us who don’t know skytail, we do three things. On one hand, we do management consulting, where we try, we take two true strategy, and we typically work with one of two type of clients. One are typically founder owned businesses that either have large practices or multi site organizations that are wanting to grow in scale. The other one is financial sponsors, such as private equity we help, at times, with their portfolio companies to deal with very specific opportunities that they’re seeing or issues that they’re having. The second side of the business is investment banking. Most of our business there is we take companies typically found around and we sell them to either private equity or the platforms, the strategics. And then finally, we have a smaller private capital side, where we invest in either our clients or the spaces in which we play. And yeah, as you said, Kim, we were very excited to put out a white paper, because, as you know, there have been so many new entrants into this space, and one thing that we consistently saw is just a thirst for data. And I know you have a lot of it as well, and we talk about it a lot, so this will be a lot of fun.
Yeah, absolutely. And the the last channel of that to the business that you guys are now working in, that’s an that’s the newest site, right? It is. It was propped up in March of 24 so, you know, eight months ago or so. And we did it because some of our early consulting clients would ask, you know, would you ever take the risk alongside us so with the advice that you’re giving? And you know, back then, we had like, one or two acorns on our balance sheet, so there was zero capital to deploy. But that’s, that’s what got the the wheels turning. So it’s.
Really exciting piece of the business. I love it. I love it. I think it’s definitely needed. And just to kind of break this down for you guys, so the consulting side, and Ben, you can, you can stop me anywhere, but I, what I want to do is explain it in more of a understanding approach for the audience. So the consulting side of the business, the way I understand it, is a practice will come to you guys and say, You know what, I am interested in, potentially exiting my practice, whether that’s soon later, how can you put me in position to trade at the highest value? And then, of course, I’m sure you guys have expertise internally that can help guide them along that journey is that, is that right? That’s correct. And, you know, we’re generally agnostic. Oftentimes, that is why folks come in, which is, you know, show me how to turn my B’s into A’s and my C’s into V’s, if you will. But we’re agnostic, you know, someone could come to us and say, I want to give my organization out to my child down the road. We take a similar approach, which is really solving for any opportunities to make the business more valuable, whether it’s to yourself or to the potential partner or buyer, whichever it may be. We take a pretty similar approach. I like it, yeah. And I mean, basically what I hear from that is, hey, we’ll take your current infrastructure, see where you are at on a grade, whatever that grade is, and we’re going to fine tune it to increase that that grade, right, which ultimately is going to make the practice run more efficiently, effectively, make it more profitable, more attractive for whoever you’re going to, you know, hand it to sell it to whenever. That may be
pretty, pretty cool exercise. And then, you know, what’s interesting, guys, is coming out of that. It makes total sense. I’m sure a ton of practices were like, Hey, can you also help deploy some capital to put us in position to grow based upon whatever area that makes sense to deploy capital. And so I would assume you guys would go through some sort of underwriting diligence process, and at some point, I’m sure it’s made sense to participate and partner, which I think is amazing. And I’m sure that,
you know, these practice owners are super thankful for having the opportunity. Yeah, and that one is a really mutually beneficial one. I mean, as you said, we we do the diligence side of things, which we typically do anyhow, as we’re running consulting, but you know, from a diligence perspective, make sure that it’s an investment that we think will get a good return for our limited partners. And then the beauty of it is, then we become true partners, and we work together on, you know, maximizing that practices efficiency, and hopefully down the road, if they’re ever ready to go to market, getting a nice return on that. So it’s a really fun process and and it brings you really close to to your partners as well. That’s amazing. I like it. It’s going to be interesting to see. I know that it’s, you know, March. I’m sure that’s moved super fast, um, from, you know, we’re recording this in November at 24 from March to 24 to November 24 I mean, not A, not a huge time, but it’ll be interesting to see, like in the next 24 months, what happens there? So dude, let’s definitely stay in touch and remember these conversations so we can go back on them and listen and then see where things are in the future. I would love that. Yeah, hopefully by then, Cam, where we’re raising fun too,
we can look back on some success here, on our first one, you’ll be looking back and saying, Hey, do you guys remember fun one
long time ago?
All right, so let’s get into the meat. So this Q site, first off, who is Q site?
Q site is a guide point company, which is basically a large firm that is very, very data driven. So they have all the data that you would ever want within various sub sectors. And Q site is the metastatic side of it. And, you know, we, I think it was July of 23 we sat down for lunch and had this idea of, wouldn’t it be great to put out a really extensive white paper? Because all of us, as you know, are getting calls from financial sponsors as well as practice owners themselves, wondering, you know, what is the true data out there? And there wasn’t a lot out there at the time. I mean, you could get things from different places, don’t get me wrong, but we wanted to come out with something really comprehensive. And the thought was, Q site, you have all this amazing data. Skytail has the industry knowledge, you know, kind of boots on the ground that can translate that data, ideally into English. And that’s where we had the thought. And we’ve spent, you know, the past.
Half Year, so really trying to refine it as best we could.
I’m glad you guys did it. And you know, I know that am spot came out with a recent report. I’m glad you guys did just a quick
insight for the audience. I don’t talk about growth. I nine a ton on the podcast, but we have, we’re releasing a benchmark report that we will be pushing out there. I think that’s actually going to come out maybe in the next 30 days, something that we’ve been working on as well. To your point, man, it’s like the industry is craving data, and it’s interesting that, you know you guys have, obviously, that’s been in your ear, and you guys took initiative and push that out, right? So we’re going to go through this report together, and I’ve spent the time digesting it. Obviously, I know that you’ve probably been through it a lot as well, probably more than you’d like, but I appreciate you taking the time, because it’s extremely valuable, guys. So we’re going to get into the meat of this. I think that if you’re turning in, you know, make sure to pay attention and because there is some interesting stuff that has happened in the esthetic space, right? So, what are patients spending? How many practices are opening, like, real like, what are, what is the industry spending their money on when it comes to services and treatments, like to the dollar amount from Q site and sky tell that put out this report right like, there’s a lot like, what is happening in weight loss, what is happening in private equity, because I know that there’s a lot of talk about it, but now we have some really cool Meat and data behind it. So that being said, let’s, let’s talk about it. There’s, there’s a couple interesting points that I wanted to to point out here Ben. And the first one was non surgical patient spend that that I saw in the report was estimated to be right around 15 billion in 2023,
and that’s up 4% from the previous year, right? Which? Which is it just shows that, like, Oh my gosh. Like,
it continues to grow. Like, 4% of 15 billion is, is a lot of cash.
So talk to us a little bit about that. I mean, because I know that you guys have been at this, like, at this like, you know, for years, and as you can you continue to see demand from the consumer side outpace supply, correct? Yeah, you know, this stat was interesting to us for a few reasons. One, I think there’s a chart in there where, if you look at 2017
and you go to 2024
This market has doubled in size in that amount of time. So, I mean, that’s phenomenal. In 2017 I see you have this up here at 7.4 billion, 23 15 billion, in that short of time for an entire market to double is just phenomenal, and just speaks to the growth. I think the other thing is, you know, we oftentimes see reports that point to the cater, which is basically just compounded annual growth rate of closer to 10 to 12% over the next decade. So the 4% while not great compared to that number, it’s actually very positive from our perspective. Because if you think about what 23 was high inflationary environment, we were just coming out of, or in the middle of, potentially a mini recession. You know, we knew we had the presidential election coming up. These are all things that, from a consumer confidence perspective, make people nervous. So for it to still grow 4% is tremendous. I know you and I talk sometimes about other healthcare sub sectors, like in dental, it grows three, three and a half percent a year, and that’s a good year. So if you put that into perspective, you’re exactly right, Kim, it just really speaks to the dynamic space that we’re in right now.
Yeah, I agree. And that’s, that’s why I wanted to call that one out. Because, to your point, like, yeah, dental, you know, it’s, it’s like 3% good year, you know, but 4% in a very,
let’s call it an very interesting world and dynamic. You know, to see it grow at that pace is amazing. And really, like, from 2017 to 2023 doubling. You know, 7.4 billion to 15 billion in that shorter period is, I mean, that’s just a different world. In fact, I got into the industry late 2016
so, oh, wow. I like saw that just continuous surge, which has been crazy. I mean, so many practices have opened up and met so many incredible people. And, you know, unfortunately, I’ve seen practices close to right, like that’s, that’s a real thing too, yeah, a lot of competition out there. I know you mentioned earlier on the new med spas that opened in 23 and that number was, I think, 17% and.
And you can dissect a lot from that figure. I mean, when you have 17% new med spas, if you think about what that points to Cam, it’s exactly what you said. You see some that are failing. It’s increased competition. It also, you know, we have a provider shortage. There’s more demand for services than we have providers. And so you actually have providers that are leaving exist, existing practices to open up new med spas and and that was a big reason for that 4% growth that you’re mentioning. So, so there’s a lot to dissect there. You’re exactly right? Yeah, I mean, 17% growth last year in new medical esthetics practices. That’s it. That’s an outstanding number, especially in, like, given the type of environment that we were going through.
Dude, it’s bananas. I mean, it’s, it’s incredible. I don’t know what the what it’s going to be for 2024
I mean, we’re consistently getting hit up by practices that are still opening. I don’t know if you have any forecasts on what 24 looks like, but
I know that am SPA was projected to see like a 10 to 12% growth rate.
Not sure if you guys have saw the same thing. Yeah, we’re expecting something similar as well this coming year, and I think q1 and two of 24 we were, we were continuing to see that uptick. And you know, that’s that’s both great, but it also presents challenges to existing practices, like, from a growth perspective, the new practices were the ones that really helped fuel that 4% overall market growth you mentioned, and above a certain revenue level. What we saw in 20 3v 22 is actually declining revenues for the larger practices. So, so, you know, it’s kind of a mixed bag, but it’s certainly something that, you know, if I’m an existing practice owner, I start thinking, Okay, how do I protect myself against this, you know, is it? You know, marketing, obviously, is a big one, making sure that I have really good training, making sure that my patients trust my brand, not a specific provider, as much as you can anyway. But there are a lot of things I think that you can take action on with this data. Of you know, how do I retain my providers as well. So, yeah, some pretty neat things I think that you can do with it. Yeah, retaining your providers is, is key. You know, like, I’ve seen
lots of practices where providers will will jump, they’ll want to go open up their own, their own practice, or just go to another environment. Maybe it’s a compensation thing, a personality thing. I’m not sure
you know that’s like. Retaining providers is like
more important than like, if you look at the data, more important than retaining your patients. Not saying that retain your patients isn’t important, right? But, but they are very important to keep in revenue and growth and market share where you want it to be
one of the interesting things too, that that we were seeing, and this kind of goes with, with the report, was the marketing, right? So as competition goes up, as you see this 17% growth, and we’re projecting to see it, you know, let’s just call it. Let’s call it 10 to 13 to 13 to 14% growth in 24 for example. And I think 24 could actually is even more of an interesting year than 23 given the fact that this is the election year and degree a lot of uncertainty that that was taking place. And in fact, for our business, we saw like, like, demand from online search drop like install pretty significantly mid October to, like, November 10, and then it went back up. Oh yeah, I think waiting for the election to be over, and then, you know, where we are bullish is, you know, from an inflation perspective, the 50 bit break cut should help with consumer confidence. Hopefully we’re seeing that in 25 but I agree with you. I think 24 is going to look like a wonky, mixed bag. But, you know, q4 I think, will be pretty positive from a numbers perspective, and then heading into 25 that could be an exciting year. I think I’m bullish on 25
you know, I’m bullish, obviously, in this industry, and it being so, so strong when it comes to recession. You know, there’s some interesting data in the report that I’ll call out there. But
you know, just like really, the patient loyalty speaks volume of wanting to get services and treatments done by providers, you know, at their practices and they, they want to invest in confidence, they want to invest in feeling good and looking good. And, you know, we’ll get into that. But
in fact, it was, there was somewhere in the report. I’ll need to go in and find it, but it was talking about a.
The recession like how households
are wanting to invest more in
getting treatments done than than purchasing household items. Yeah, it’s fascinating.
And there have been a few reports out on this that for whatever reason, medical esthetics is very recession resistant, and that’s a beautiful thing for our space. And once people get in it, they don’t typically stop services. It’s actually very rare. Even as consumer confidence goes down, it’s one of the services that people will cut last and there have been a few questions as to why, if it’s a non essential service, and one of the psychological reasons, according to a few reports anyway, is due to when you don’t feel very good about the environment You’re in, investing in oneself is actually something that psychologically, people tend to do, whether it’s, you know, working out, or eating a lot or metastatics. In this case, that’s something that people will invest in. But, yeah, you’re exactly right. I think that’s a fascinating statistic. I can’t remember where it was in the report. I’m trying to find it now. Ben, but I was reading on it earlier. I think it’s like in the first few pages, 27 I think is it page 27 Let’s go. Let’s go there really quick. Okay, yeah, the scrolls pretty quickly.
It says, Here, studies have shown patients with prioritized treatment before household expenses if they have treatment, yeah. So it’s one of those things, like, eggs are too expensive. Won’t buy that, but I’ll continue
toxins. You know, what’s interesting is, that’s what my gut told me to like, just in talking with my wife and her friends, like, you know, like she’s the ideal candidate. She’s the ideal patient for a practice owner that’s going to continue to go and I I’m just like, okay, like, I can see why it’s, you know, like, let’s, let’s not call it full recession proof. Like, I know that patients, like, they slow down, maybe they skip a visit or whatever. But I mean to back this up with data and look at it and say, okay, cool. Like, yeah, maybe we could slow down on our grocery bill, because I still have to go get treatments and services done.
It’s fascinating. Once you start, it’s it’s proven that it’s pretty difficult to stop. I mean, it works. People see the results. And unlike other health care, it’s one of the few that people go in excited to actually go, and they leave happy, and it’s a good experience. So, yeah, it’s a fascinating statistic. I agree, yeah, and that’s a good point. You know, it’s like, I hate going to the doctor hospitals. Doctors don’t like to do it. I think that’s pretty common for most men,
but I’m a patient. I go to medical esthetics practices, and I have a great time, and I leave there feeling great. And so I can speak to that too, you know. And there it is, backed up by data, like, I think, like, when you compound that too, with the weight loss, like, you know, feeling good and then looking good inside, outside. Type, like, two way punch,
it’s hard to hard to miss, you know, really going to one of your services and treatment of treatment appointments? Yeah, and weight loss was another interesting one. Wasn’t it like the category grew to one point 2,000,000,023
which, I think it was point 3,000,000,022
and it was, I think the stat was like 236%
increase, right? So it’s phenomenal. So already you’re baselining benchmarking against that. And what we did is we refreshed q1 and q2 as well cam, and I think it grew like 85%
q1 q2 20 4v, 23 so like, it just continues to grow. So if you think about what that does. There’s a stat in here as well. I think that a lot of these patients too, if you talk about expanding a market, a lot of these patients that come in from weight loss were not originally medical, esthetic patients. So what you’re doing is you’re getting a brand new patient base, grand brand new demographic. And there’s another stat in here, I think. And I forget what the exact number is, but of those that come in that we’re not, lot of them end up adopting broader medical esthetic services. So if you think what weight loss has done, it’s been quite fascinating. It’s opened up the market. It’s added another ancillary services under the medical esthetics arm, and the growth is just phenomenal. It’s exploded. It’s exploded. No, I agree. I think that’s, that’s a really good point. I think, you know, like this whole talk of semi glutide, GLP, one like, you see the ads everywhere. Hymns, like, I mean, shoot, it’s, it’s all over.
Sure, and you know what? Like, it works, and people are getting benefits and results. And so, you know, you’ve seen the surge now, they go into a facility, they go into a practice, and if that provider is doing what they’re supposed to do, educating that patient on all the other treatment services, benefits that they can do on the surface of the skin, right? Like it’s, it’s just it’s opening up the world for education to learn more about the benefits of esthetics, which is interesting. So that makes total sense to me. Yeah, that’s a great point on the education piece. I know a lot of our clients bring that up of how do you do that without feeling salesy? And to me, it’s all about treatment planning, right? Like it would be as well. Cam, I think you like to work out a lot. It’d be as if you were my trainer, and I’m like, I only want you to work on my biceps. I think your responsibility to me would be to say, that’s great. We’ll do that as well. But here, here are the other things from a totality perspective. And it really does allow you to, okay, great. Now that you’re doing this, it opens the door for things like, you know, because you’ve heard of some thick face or butt or whatever, it allows you to talk about, okay, maybe dermal fillers, bio stimulators, some of these other things and and by the way, as people start looking better, they start feeling better, they see The results. That’s a perfect time for them to invest more money into other services that ultimately they probably want. If your treatment planning totally, you know, and I think, like there’s like, even though that demand is outpacing supply when it comes to customer again, guys, customer demand based upon provider count. It’s outpacing now, and I truly think that the consumer is this would be an interesting data point. I don’t know if it’s in this report or not, but it’ll come out eventually. Like, what of the total US population based upon, like, let’s call it men, female from the age of, I don’t know. I guess I can go to, like, 20 to 65 if you want big range. But out of that cohort,
I think, like, there’s probably a big chunk in that category that think a med spa is just Botox. Yes. I mean, you know, like, obviously not for you, and I because we’re in it every single day, and it’s like, man, like, how do you understand that? But go talk to your, you know, like people that are that don’t work in the industry,
it’s astonishing to hear. So, you know, you’re going to continue to see this grow, and it has to grow through education. Like, to your point, yeah, I mean, if you’re, if you’re going to hire a personal trainer and you’re just going to focus on biceps, like, you know, it’s that trainer’s job and responsibility to educate so you don’t have to be salesy, be people like to buy information exactly. You’re the expert. I want you to tell me, it’d be as if I went to and said, Hey, Cam, I want to do two videos a week for Instagram or something along those lines. And I would hope that you would say, Great, we can do that. But how about this for an overall marketing approach, and you’re the expert, and I would actually appreciate that. Yeah, totally. You’re like, Guy me right. People want to buy expertise. They want to buy expertise, you know? And so I think, like, especially as a educator and provider and academic, like, man, these, these people are well equipped to give information, oh yes, and help like, so if you guys are tuning in now and you’re, you know, you’re, I would include that in your consults, your treatment, planning, your journey, like, just continuously educate your patients. And then those patients are going to go tell their friends, their colleagues, like information spreads, right? And so you’ve really seen that through weight loss lately. There was, I mean, here to what you’re saying. Like, yeah, it was a 236%
increase in GLP ones like weight loss, semi glutide, from 2022
to 23
that’s, that’s huge, right? Like 1.2 billion to spend. And I think you said the in the stat here was 880 million in total revenue. Q1, q2, which was an 85% increase in the same time period from 2023 to 2024 Yeah, that’s what that’s, that’s the call out right there in the in the data, yeah. I mean, that’s amazing. And I think there was a number in there, that monthly weight loss spend went from 14 million to 136 million. I mean, it’s just, the growth is just unbelievable. Yeah, right there, yeah. So on page 23
from 21 to 24
Yeah. Monthly spend 14,000,230
6 million. That’s three years. Isn’t that amazing? Yeah. I mean, and that the beauty of medical esthetics as well as this is something that wasn’t on anyone’s radar in 22 we talked about the chart that we doubled in size from 17 to 23 and.
And these are some examples as to why, as the science gets better, as the technology continues to improve, there are services that cam we might be talking about next year that aren’t on our radar. And I think that’s the beauty of this space, is all of these ancillary things that are now being absorbed within medical esthetics and then at large, from a global perspective, certainly in the United States, the focus on overall wellness, a lot of it, which kind of falls under our umbrella. It’s just such a perfect time to be in this space. I mean, if you know, I wish I owned medical esthetics practice sometime, because talk about great timing, right? It’s not often that you come in on the first or second floor of an industry? Yeah, no, absolutely, I, I totally, I wish I owned like four or five. I’ve had opportunities to invest in them, like, years ago, on just, like, unique opportunities just be being in the industry, just like you, yeah, and, and I’ve, I’ve passed, there has been times where, you know, we were going to open one up and have to get it, you know, because I shoot you don’t want me touching your face, your body. I am not qualified for that at all, but I’m a business guy, and I could definitely find a location and know how to market the crap out of the bit, and know the numbers, and know how to run a console, and know how to get the provider and get to get the right people in place to do it. I think I’ve just been too busy
running your company.
I mean, you know, we kind of hit that. I mean, from, you know, that growth phase, you know, from
2016 all the way up to to, you know the numbers that we had last year. It’s just, it’s,
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But I hear you, man, it’s still very, very interesting to me. And I think that even though we’ve seen this incredible growth over the past, you know, years. It’s, uh, there’s, there’s going to be a new, exciting thing that’s going to come out and, and that’s the beauty of it, is, yeah, you know, 22 I wasn’t talking about weight loss at all. Maybe some practices were doing that. But now it’s like the talk of the town. I agree. Yeah. And, you know, as we mentioned earlier, brings in a new demographic of patient that starts adopting other core Med, spa, non invasive services, which is exciting. And you know, as you said,
new things continue to come out that aren’t on the radar. And you know, like, I see the page you’re on, like dermal fillers is a perfect example. In 23 it actually shrunk, I think, 7%
from as compared to 22 and you wonder, why, right? It’s like, well, that doesn’t make sense, because we’re talking about weight loss and and Zep face or whatever people are saying. Well, it’s because of bio stimulators more natural longer so, so it’s really fascinating that the type of service remains, but, but as the science technology changes, it’s just a different kind of adoption. Now, with that said, on fillers, we did see an uptick in q1 24 so, you know, we’re starting to see that creep back up. But that was an interesting one that we saw when you looked at the different segmentation of services. Everything else grew. Everything else grew, yeah, Derma fillers, it shrunk slightly, right? Nothing dramatic. Still up from 2021 and 21 it was 3.1 billion in total cells. And this is Derma fillers. And, you know, 22 went up to 3.4 and 23 down to 3.2 but, but you’re right. It’s the only data point on this entire graph that did shrink. Now, look at weight loss like, that’s like, crazy. That’s like, I mean, I know that we’ve, we’ve talked about it, but you can just see those charts. It’s just.
It’s just bananas. That’s like, just massive growth.
And so if it continues that run rate, just on weight loss for a second at eight, what was it? 800 million in q1 to q2 for this year, right? Continues that run rate, that’d probably be at what? 1617,
maybe that’s right. Yeah. So you’re gonna see another big pop in terms of weight loss for the overall year, if that run rate continues, which there was one, two and 23
just like for comparison on what you just did, and amazing, yeah, all year, all year long, which is, which is wild. So, yeah, let’s look at this report in more detail. You know, I think,
in fact, there was another graph before I get into that. Okay, it was this one right here. Let’s see. So this is page 10. This graph is really interesting. Now this this graph will get into you guys. It’s us, esthetic sales, share by segment in 2023, so this is like broken down by the entire segment. So, Ben, will you walk us through this really quick? Sure, yeah. And you know, this didn’t really surprise us, you know, I’ll start by stating that, you know, we took, we talked to a lot of practice owners, obviously, investors as well. And generally speaking, we like a practice right? If I had a magic wand, that’s maybe 50 to 60% injectables, you know, maybe 20% or so energy based, maybe 10% skin care. And then, you know, you round it out by some of these, these things we’re talking about, like weight loss. And what we’re seeing here is it kind of broke down that way. Interestingly enough, 32% of sales were neurotoxin. I don’t think that surprised anyone 21% dermal fillers. So that’s, you know, right in line with that 50 to 60% and then 21%
energy based devices. Now, one thing that’s interesting is weight loss was right behind that. Now at 8% so for that to be number four in that short of a time we thought was really interesting. You know, skincare was 7% I think that’s, you know, an opportunity for a lot of practices we suggest that to maybe be a little bit higher. If it can be, it just has really nice margins. But, yeah, I think overall, it was really interesting, but fortunately, not overly surprising as to what we would have hoped for. And what’s interesting too, I think neurotoxins carry the lease margin, right? Yeah? Like, that’s a good point. I’m glad you mentioned that. Like neurotoxins the plus and minus, right? Like the cogs, the cost of goods sold on those are 35 40% oftentimes.
So that’s the negative, if you want to look at it that way, like if I inject the dollar 3540 cents or flying out the door, so and I haven’t even paid my people or paid my rent yet. Now, the beauty of it, though, is that I know that cam is going to come back, according to this report, in 91 days. That was average, which is kind of interesting. I know cam is going to come back in 91 days for that. So that’s the repeat revenue perspective that makes this industry so attractive. And then if you balance it out by some of these other things, Cam, that’s where we get to that ideal, like total cogs of maybe 20, 25%
because, like, energy base skin care, professional grade skin care, those are lower cost of goods sold that kind of start from an overall portfolio perspective. You can get the cost of goods sold there, but, yeah, that’s a really good point. Neurotoxins have a high cost of goods sold percentage on those. Yeah, and it’s the highest thing. So that’s, I mean, it’s, it’s predictable, right? Like, and I think I can get volume discounts. But the nice thing about it is, you get repeat patients, and then you get the another opportunity to educate your patient on all the other procedures and benefits that your practice carries, which, which is huge. You brought treatment planning up earlier. That’s a perfect example of of why you should, you know, you compare practice with the makeup we’re talking about, like this makeup that you’re showing, as opposed to 100% injectables practice, you know, very easy to see which one’s going to be more profitable totally. And the energy based devices like that, that actually it’s the same as Derma fillers. Derma fillers was 20 21% energy based devices was the same. And I mean, I know that the the profit margins on energy based devices are much higher than fillers. Oh, yeah, much higher, much higher. So, I mean,
yeah. I mean, I was at a recent event, and we were talking about, there’s a specific device we were talking about to operate the machine. It was a micro needling device. I won’t, I won’t say the name or brand, but it to run. It was cost about 100 bucks to run the device, and the average practice was selling. It was like a package type opportunities, but basically.
1500 $1,800 treatment, yeah. I mean, that’s a very profitable machine, yeah. What is that? Seven 8% cogs? I mean, that’s unbelievable. That’s like, SaaS business, dude.
I’m like, why not just open up a practice and just do micro needling? I almost said that just,
oh, that’s crazy. Just focus on that. Like, man, I know what would happen though. Like, I totally get that you have to have other services and categories. But you know, if you look at like Scott Callahan, like he knows threads like to it, that guy gets it under that’s like, that’s his area of expertise.
Yeah, he’s unbelievable at it. And that’s like, what he’s honed in on. But like, I haven’t talked to a practice. It’s just like, hey, we only do, you know, like, microneeding, it seems like.
And this is carries positives and negatives, and I get having a broad based service menu. But I do think some of the practices and practice owners
just want to carry everything as well and not specialize, because practice down the street has the same stuff and, you know, like just a call out there, I think it’s important to specialize as well. That’s such a good point. I mean, it reminds me of like Steve Jobs, right? One of the first things that he did when he was rehired at Apple is he basically got rid of most of the products and focused on, like, two or three. And if you’re the best at something and you have that level of focus, yeah, usually what you see is a very focused entrepreneur that knows their lane and therefore is able to completely succeed in it, versus someone that’s, you know, that mediocre at everything. Completely agree. I think having a true focus knowing your patient base is such an important piece to running an organization. That’s a great point. Totally, totally, and I was running, I have this really cool AI tool that kind of breaks down like
I’ve ran it in various different ways, but essentially you could, you could say, Okay, I’m gonna buy this device. Let’s say this cost is 150k
some are more, some are less. But I put it that and then I said, Okay, how many treatments do I have to do in order to pay off this device in one year, two years, three years, four years, like, 10 years, I think I put up the 10 years, and then how many patients do I have to have, and I put in, like, the percentage of what it would cost to finance it, like the patient acquisition costs Like, and it is mind blowing, really, like when you go from just doing, like, this specific microneedling device, if you were just doing, let’s call it, I think it was like five treatments a month, versus like 20, which is not, that’s only 15 treatments. That’s not, that’s nothing crazy. Some of these practice owners I’m talking to are doing like 15 a day. So it’s, uh, it basically cuts down the you can pay off this device. I think it was like, you know, cuts the time off by like, 80% or something like that. And then when you have it all paid off and you have, like, you know, no interest on it, your margins go up even further. And so it’s just really interesting to kind of play with the numbers on how many patients do I have to service to pay this device off? What’s the cost and what does that look like? Is very interesting. I think every laser rep should actually be using it. That’s a fascinating exercise. I’d love to see that. That’s That’s pretty neat. Yeah. I’m like, Dude, if I was selling lasers like this would be my number one tool that I would use to be talking to providers about, well, you might be getting a lot of calls from laser techs after,
oh yeah. Okay, dude. So the other interesting point, this was interesting to me on this report, something I wasn’t aware of. I figured like so 11 billion was spent on non surgical, or, sorry, let’s say 11 billion spent on surgical compared to 15 billion on non surgical. Yeah, I always like, maybe it’s just because I’ve been in esthetics. Like, that was something the report I thought was pretty interesting. You know, because the the cost per transaction is much higher on a surgical treatment, obviously less, right? So I’m like, Man, how many Botox appointments can you do in order to, like, compare next to breast augmentation, rhinoplasty, right? For example, that’s a $4 billion delta. So people continuously want to invest in non surgical treatment, yes, yeah. And, and that’s that speaks to a lot of things, right? I mean, the Technology Science getting better for non invasive you know, in fact, we’ve we talk. I know you’re in it as well. We’re in the plastic surgery space. And some plastic surgeons have mentioned to us that the effects that semaglutide has.
Had on their practices, like people who are going to do liposuction, okay, maybe not anymore. So as these technological things change, you know, I think plastic surgery is changing along with it, of course. But yeah, I agree. I think certainly the growth in medical esthetics is outpacing plastic surgery, which has been around longer. In fairness, it’s a more mature market, and so the growth rate is closer to other, you know, medical sub sector growth rates. But yeah, that’s a really good point. That one stuck out to me as well. Yeah, and I don’t know if it was like, where it was in 22 or 21 I didn’t see that in the report. Might be in there. I definitely want to go through this thing again. But, you know, it just goes to show like, like business changes and evolves. And if I’m a plastic surgeon, I, you know,
I see a lot of plastic surgeons that obviously adapt and bring in esthetics into the practice, and we’ve seen that. But if I haven’t, or I’ve only kind of done it, or I haven’t. I think some of them still
may devalue it, because they’re a surgeon, you know, carries a little bit of ego, if you will. And, man, I think that they better really start considering this going forward, that this, this is probably going to, I mean, the overall spend is outpacing so, like, eventually, it just kind of goes to show that the esthetic side is going to outpace your surgical side of your practice eventually. And that’s such an interesting conversation cam, because I remember a few years ago, you’d go into plastic surgery conference, and, you know, you didn’t really talk about medical esthetics. You didn’t talk about non invasive, you know, you’ve been to the recent ones as well. I know they’re starting to introduce those sessions in there. So it starts, you know, it starts showing you, I think, macroeconomic, where that market is going, which is, okay, it’s going to start to be adopted to your point, which is wise. But then you start looking at, okay, what do investors think about this? And if you look at some of the statistics, like we talked about this space, the non invasive space, being resistant to market economic downturns, plastic surgery gets hit pretty hard, oftentimes during market economic downturns, because it’s, you know, sometimes it’s a one time thing you need, and you might put it off a year or two years before you cut a $40,000 check or depending on what you’re doing. So that’s one thing. The other thing is, from a risk perspective, surgical revenues are a lot riskier than from an investor perspective, anyway, surgical revenues are a lot riskier than non surgical revenues, so they’re actually valued lower, which I think shocks a lot of people than you know, medical esthetic, non invasive revenues. So completely agree. I mean, obviously our first suggestion is, run your organization according to your vision and your DNA. But if you are open to that, we are big proponents of, you know, adding, you know, kind of that medical esthetics, non invasive side to surgical practice. It works. It works really well. It also reduces, like, key person risk and things of that nature, that if you’re a, you know, single surgeon, or even two surgeon organization, you have quite a bit of risk there, because, yes, you’re able to produce four or 5 million revenues by yourself, which is unbelievable, by the way,
but it’s all dependent on you. So it’s a really fascinating conversation that one totally, totally yes, you’re saying that
the the valuations on the EBITDA trade at a higher rate on the non invasive side, correct? Yeah, if I have a $2 million business, both of them, two of them, one surgical, one’s not, the one that’s not is going to trade higher. I figured
that, I mean, that makes sense, like, yeah, you’re gonna go and it’s a one and done. Typically, most, you know, most times it’s, it’s, you’re buying the, you’re buying the, I call it patient lifetime value, you know, and that’s what, that’s what you’re buying is the loyalty and the repeat, right? Yeah, which kind of brings me up to my next point. Like, on here page 27 it talks about retention. You know, patient retention is, is, oh my gosh, so important.
In fact, a quick little call out here, like
you guys, please invest in running a consult the right way, building out a treatment plan. I know I talked about it a few times on recent episodes, but this is what’s really going to help protect you in patient loyalty, patient retention. The benchmark here that Q sites puts out is patient retention should be high, and in fact, they say greater than 70%
is most attractive,
since higher retention facilitates revenue.
Substantially and has a compounding effect on a patient visits and therefore profit a lifetime client can be invaluable. Considered a patient who returns four times a year, spends 100 to $500 per visits and stays more than three years. What’s so interesting about that? That’s the same data I have. That’s awesome. I love that. That’s really good to hear, you know? And this is what was fun about this white paper with them, right? Is Q site had the data, and I think the data, if I recall, is 48 50% retention is what they came up with. The 70% was then from us, which is like, that’s great. We see it our best in class. What we try to push for is 70% and then it’s funny, you brought this one up because it’s my personal favorite, KPI cam, because, like, if you’re if you have a practice, it’s 50% and one that’s 70% there are a lot of KPIs that is a standalone, don’t tell me a lot. It’s like, okay, but I want to look at this other one. This one tells you a lot, doesn’t it? I’m curious your viewpoint, because this one to me, tells me I’m a patient walking in and you’re greeting me correctly at the front. From a provider perspective, you’re treating me well. Your chair side manner is good as I’m leaving, you’re trying to rebook me after I’ve left. You’re adding some sort of value. Maybe you’re sending me an email. Certainly, you’re sending me reminders of my appointments coming up, so you’re keeping me in touch with you. And top of mind, so it’s this one KPI that takes the clinical as well as operational efficiencies of an organization. It’s the one that I really enjoy looking at, because the other thing is, like, if I’m if I’m paying you a bunch of money to bring patients in the door, and I’m letting them leave out the back door. I mean, that’s pretty frustrating, that all you’re doing is replenishing patients versus growing a practice and organization. So yeah, I’d love your thoughts on this one, since you went to it. So, yeah, no, absolutely. I mean, I see like,
I mean marketing companies, social media, you know, SEO can always produce new leads. You know, we can just take it there, right? You you have the ability to produce leads. And you know, because the the audience hangs out on those platforms, are either going to do a Google search or they’re going to look your Instagram, your social you know you’re gonna hit them with a Facebook ad. You have a website, you have Google, my business, you can bring leads in, right? But, like, kind of zeroing back, you actually, you have to have a system to convert them. And you you have to,
you know, acknowledge the fact that someone’s raised their hand and they’re interested in a service and a treatment. And if you nail that with systems, processes, tech, and you have the ability to to convert these leads, you know, at a decent percentage, that’s like nailing the first thing, right? So if you can convert at a really high rate and bring them in, educate them, get them on a treatment plan, and then have a robust checkout process. And the robust checkout process that I like that,
what is best in class that I see is upon leaving, educate them like during the treatment. Let’s roll back a little bit during the treatment. Educate them on all the products and services you have, not through sales, you know, but information and you’re the expert, right? And then, as they’re checking out, rebook them, ask for feedback and get a Google review out of them,
educate them on the inventory that you have, right? Most practices carry a skincare line that’s going to enhance their experience, right? So that’s an upsell which keeps them loyal and wanted to come back and reload when that product runs out. Connect with them on social media. Great time to get a testimonial. Have them call you out on social media, on a story, right? Get them on a membership plan, then they’re really low. That’s going to increase best in class when it comes to patient retention, right? So like, not like, it’s important to obviously, get the leads in and convert them, but if you are do not have that checkout process dialed in, it’s going to be a turn and burn operation, and you’re continuously having to spend a tremendous amount on marketing and be stressed out to get new clients.
That’s great advice. And isn’t that cool? Like these little data points. That’s where I think folks can go in and compare it against their practices. And let’s say that I am listening to this, and I’m one of those 48% and I see 70% and I listen to your advice like these are things that like data is so valuable, because if you benchmark yourself against this, you kind of know exactly where you can tweak. You know what’s possible anyway, like, if I’m 48%
okay, what should I be? And if 70% is your new target and benchmark, then I heard what you said, and I’m comparing what I’m doing versus what you said, and I can take action on some of these things. And that’s how you really start turning the practice for.
Organization into this, like, really efficient machine, which is pretty exciting when you see folks do it. Dude, you just nailed it. Like, that’s the whole point of the data, right? Like, let’s get the data, let’s look at it, let’s talk about it. And then where are we at as a practice? So it doesn’t matter if you’re guys, if you’re not at 70% cool, it’s an area to explore, of opportunity to evaluate you are. And now you can bring this up in your your weekly sales meetings with your team, and say, Hey, we want to go from from y or x to y or whatever. Guys like, what are we not doing, you know, and focus on that retention. But you have to know your numbers. Ben like, yeah, that’s the other hard part. Is I see time and time again where you know the practice owners, they may not know what their retention rate is,
you know, and maybe not have the best systems and tech in place to know what that is. I think EHRs and EMRs are obviously getting better, and if you’re using them diligently, the way that they’re designed, like you should be able to pull these reports pretty quick. But, you know, that’s another issue that I see 200%
that’s exactly right. And I’m hoping that you know, with consolidation in this space and the newfound focus on data and knowing what’s going on in practices, that we’ll see that get better, and they’re continuing to get better, as you just mentioned. Cam, but yeah, I completely agree with you. I think practice owners have to have the ability to have good tools in place to give them a chance to succeed. Yeah, man, I know we can talk on this report for a long time. I don’t know how much more time you have, but you know, like, I think we’ve covered a ton of meat and given a tremendous amount of value. I know you’re super busy, and
I’m as I’m as well. So why don’t we do this? Guys, you know, for the audience that think there’s a lot more to go through on this, you know, like, for example, let’s just do a couple quick call outs before we go. Ben, 42% of all esthetics patients were Millennials or younger in 2023
like, that’s amazing, you know, so and again, back to the exercise, you and I just did, I see the data. Okay, cool. If that’s what it is, what are we going to do in terms of our marketing and the demographic of the approach, right? So, like you see the data, who is your who is your audience, and then What action are you guys going to take? Right? Let’s just go. Is there any other call outs you want to talk about before a second transaction? That’s actually the one that I was going to mention is, is the 42% Millennials are younger, and you just nailed it. Like now that you have this data you can analyze. Is this who I’m reaching out to? Is my service mix geared toward these people? Because, you know, a decade or 15 years ago, that wasn’t the case. It was an older, you know, female wasn’t really talking about it because medical esthetics wasn’t as accepted as it is now. Now things are preventative and so forth, which completely changes the demographic of the patient base. You know, I would say one thing would be, then we haven’t really seen the uptick yet. We keep saying we’re going to see it. We haven’t seen it. You know, male adoption was kind of interesting. Male adoption into this space hasn’t been as fast as we would expect. However, if you look at spending habits, they line up with the females, and in some cases, outpace it. And that’s something that I think surprised us, which was a pretty interesting, you know, I think it’s like in a chart there, right here, kind of an Excel thing, yeah. So that was kind of interesting. I thought, yeah, so is that the males actually spend almost $400 more per visit.
Yeah, I thought that, yeah, I when I pre read this, that was, uh, very interesting. I’m like, Huh. Wonder how, wonder why that is. But yeah, it shows here guys in 2023, females, the average, like ticket, for example, 1380 males, 1766,
which is, which is really interesting, but, and then it breaks it down by like, segment, female, male. There’s also a really cool report in here, guys that talks about a Gen Z and younger millennials, Gen X boomers, what they spend, what services they invest in? You guys, you have to get this report like, it’s amazing, and take the time to read it. And then don’t, like, don’t get the report and just read it. And just tell yourself, you read the report, like, read the report, and take action. Like, that’s my biggest thing is, there’s a lot of people that are like, listen to podcasts. They listen like, they read books audio. And they just, like, don’t just read it to read it like, take notes from it and then implement all of the data points that can move the needle for the practice, because that’s what’s going to put you guys in a position to have ultimate success, especially going into 2025 like, this is a perfect time over the holidays digest the report.
And then take action based upon what the data tells us. Yeah, I think financial data or KPI data really can drive everything from culture to operational guidance. We do it all the time, by the way. I mean, I look through things like this for investment banking and management consulting firms to see how we’re tracking, and it’s really neat, because, as you said, Cam, I do take notes, and I put it against our numbers, and I keep it there as a reminder of where we have the ability to tweak, because it allows you then to double click into why am I lower than industry, and therefore it allows you to start correcting some of your behaviors. It really works, because, you know, there’s that saying, I know you say it too. You get what you measure right, and if you’re measuring that, that’s something that you’ll be focused on. Yeah, no, absolutely, I 100% agree. Ben, it’s been a pleasure having you on. Man,
I think we could talk for another hour, for sure. But like, if somebody, if they want to go get the report, where’s the best place if you guys publish this on the site, or, yeah, I think we have it on our website. You can also, you know, kind of use any of the emails on our website that are available there, and we’ll get it over to you. It’s certainly something that we like sharing with the industry.
Yeah, I’m on their site. Guys. If you go to knowledge base, I believe it’s under blogs business development, it’s on the site. Oh, perfect. Yep. And if, for some reason, you guys get fine, I just get in touch with skytel. These guys are best in class when it comes to understanding the market. They are, like, extremely detail oriented when it comes to understanding what success looks like in order to run an effective practice.
I know quite a few people on Ben’s team. They’re amazing. They’re out of Dallas. So if you guys are are you know, seeking for advice on what to do within your esthetics practice? From a consulting standpoint, maybe you’re looking to exit. Maybe you’re looking to exit in 10 years from now. Maybe you want to run your practice like you want it to exit so you can get the highest value from it. That’s that’s like, you know, that’s one of the things I always say, is run it like you’re gonna sell it, because that’s how you can really get tightened up in your numbers and your efficiency and your process. And you run it that way, and you’re gonna have a very robust machine. So I’ll leave it at that. Guys, thank you so much for taking the time to tune in, Ben, thank you for joining and you guys, if you found this valuable, this this specific episode, please share it. Let’s keep the conversation going. I know that you have colleagues that could get a tremendous amount of value from this white paper and from Ben and I just kind of going through the data and talking about taking action from the data. So I’ll leave it at that. Guys, you guys have a wonderful weekend. Until next time. Happy injecting you.