Science, services, and beauty are blossoming in tandem: think the rise of the med spa or AI-driven skincare. One company at the forefront of the evolution has been BeautyHealth.
The company’s journey began in 1997, when founders Roger Ignon and Bill Cohen debuted HydraFacial, a treatment which pioneered hydradermabrasion. But the company’s services didn’t end there. In January 2020, the enterprise debuted the scalp health treatment Keravive, which hydrates the scalp with a complex peptide solution, offering not just a healthier scalp but also fuller-looking hair. In May 2021, the company announced a merger with Vesper Healthcare, equating to a $1.1 billion deal to take the company public and become BeautyHealth. At that time, Hydrafacial already had a global footprint of more than 17,000 delivery systems spanning 87 countries.
In September 2022, BeautyHealth continued its international expansion plans with the opening of educational HydraFacial HFX Centers in Paris and Singapore. In March 2023, it announced the international debut of Syndeo, a connected interface enabled through cloud-based software that allows for logging of each treatment to facilitate customization and personalization of future services, as well as touchless services for increased hygiene during treatments.
This year marked the second anniversary of its listing as a public company, as well as its acquisition of SkinStylus, the FDA-cleared microneedling device that promotes collagen production and firmer skin. To date, BeautyHealth’s journey has spanned 60 patents, 90 countries, and 25,336 installed delivery systems used by over 40,000 aestheticians on tens of millions of customers. But for CEO Andrew Stanleick, who came to the company in February 2022, there is much more potential on the horizon.
Stanleick set a generous target: double revenue growth in three years. It turns out that dreaming big pays off. BeautyHealth has witnessed a 120% increase in top-line sales on a full year basis (2022 vs. 2021), a 66% boost in HydraFacial installations globally (December 31, 2022 vs. March 31, 2021), and increasing HydraFacial earned media value by 166% (since 2019). Net sales in 2022 reached $365.9 million and an estimated 2 million treatments were performed last year alone.
BeautyMatter sat down with the executive to discuss the power of data, the evolution of celebrity beauty brands, and the increasing medicalization of beauty.
What defines successful beauty business leadership?
I've been in the business world for over 25 years. Successful leadership of a beauty business has always been both defined, and continues to be defined, by those who can evolve to meet and stay ahead of all the changing consumer trends. Someone asked me yesterday: “If you had a crystal ball, tell me about the [upcoming] trends.” I told them I think BeautyHealth is really well positioned to capitalize on a number of tailwinds and trends that are defining the next era of the beauty and aesthetics industry. Namely, I'm sure you're seeing it in the UK, we're seeing it here and in Asia, this medicalization of beauty.
Gone are the days when consumers are willing to shell out sometimes hundreds of pounds or dollars for that metaphoric hope in a jar. They're looking for consumer products that give results, efficacy, with physician-backed and less splashy marketing. There is also a new class of influencers. Now, clearly, I've worked with some incredible influencer celebrities in my career, as you saw, but I think the new influencers are now our doctors, aestheticians, who really offer that credibility, and how they endorse products.
The other key to success these days is personalization. The times of the one-size-fits-all, cookie-cutter approach, that European ideal—those days are behind us. People are embracing a more personalized approach to beauty, a more data-driven, inclusive, holistic approach. It’s not just about how you look on the outside; beauty is more than skin deep. It’s about holistic well-being; that's why you see the huge growth of products like not only HydraFacial, but also supplements and other well-being products. It's a really exciting time for the industry.
How have you been seeing engagement differ across BeautyHealth’s three different offerings: HydraFacial, SkinStylus, and Keravive?
If you think of BeautyHealth as a first step to answering that question, we're a category-creating company at that intersection of beauty, aesthetics, wellness, and health. They’re large and growing categories. We recently celebrated two years as a public company at the NASDAQ. We're a platform company, so we have this backend of technology and support. Our products offer efficacious results fueled by this dedicated community.
We have three key products, and engagement is high and growing for all of them. HydraFacial defined and created a new category, hydra-dermabrasion, which in essence cleanses, exfoliates, and hydrates your face in just three steps and 30 minutes. It's not invasive, it doesn't hurt. There's no downtime because of the technology behind it. It's protected by over 60 patents. It gives you all of these amazing results of more invasive procedures but without any downtime. It makes you feel good and gives you a boost of confidence.
Many of the doctors and physicians offices have HydraFacial and what they like about it is, if you're doing injectables, laser, or Morpheus8, and all these other procedures, consumers don't come in very often for those; maybe a couple of times a year. For HydraFacial you come in monthly, typically on a subscription, which means we're a great traffic driver. You’re getting to see a patient monthly, making her or him feel comfortable in the seat, and then you can upsell them other treatments.
We've acquired this wonderful, FDA-cleared microneedling device, SkinStylus, in February, which is very complementary to HydraFacial. Microneedling is highly popular in the US, EMEA, and APAC regions. It has a ton of benefits, five patents. We launched SkinStylus in the US but are planning to roll it out across the world in the near future.
Keravive is an incredible hair and scalp treatment that is delivered through the HydraFacial system. Unfortunately, the team launched it just before COVID, and of course now we've been focused on developing Syndeo. But I truly believe that HydraFacial Keravive can capture this large and growing hair and scalp market, which is huge all over the world, especially in Asia.
I must say, whilst no company or brand is recession-proof in this kind of uncertain economic environment, we're still seeing a really resilient, buoyant consumer, so no slowdown there. Now we operate in 90 countries, 17 direct markets, and we've recently just launched Syndeo, our new device which is a huge leap forward in technology, in Europe and Asia. It's a smart connected device, unique in beauty aesthetics actually. We're able to get a lot of information on the consumer, collect all that data, and then leverage that data to grow our business.
Syndeo is a HydraFacial system which is completely smart-connected to the cloud. It has a number of benefits which we garnered through COVID. For example, a big part of consumers’ experiences and concerns is hygiene. The system has gesture controls; you wave at the machine and it goes through the delivery of the service, so you don't have to touch the machine or the consumer’s face. That's just one benefit; others include an incredible blue and red LED LightStim feature.
Most importantly, other than having all these great features for the provider and consumer, which have been praised since the previous model, it's the data and connectivity. The future of beauty, the future of BeautyHealth actually, will be more on data and how we leverage that going forward to personalize and customize experiences for consumers.
Every consumer that goes into our flagship, they're going to analyze your skin, recommend a program that includes a course of three steps plus a booster which is specifically customized to your skin. These boosters can be HydraFacial boosters, or one of the amazing brands we partner with like Murad, Dior, Jennifer Lopez, Dr. Dennis Gross. Our aim is to probably be the biggest source of skin and scalp data on the planet because every single day when someone comes in and has a scalp and skin treatment, we're collecting data on that consumer: their demographic, skin and scalp type, needs, particular skin types, problems they have.
We're building this massive database—it'll be fascinating how we can leverage that to create new products to meet unmet needs, or that data is probably very attractive to other companies, particularly in the traditional beauty field, who don't have that touch point with their end consumer. If you think of the big beauty companies—and I've worked for a few of them—they don't actually touch the endpoint of the consumers. It’s usually either through a DTC website, a department store, or drugstore. But we have that touchpoint with consumers every single day around the planet.
Speaking of the data, are there any surprises in terms of what that is showing you?
We always felt that HydraFacial was a predominantly female service. Actually what we learned is 20% and growing, particularly in the UK, are men getting into preventative habits of skincare. In Japan, it's up to 40%. It’s good insight for us, an epiphany: we don't have enough men's booster products. You can imagine what we're developing.
We thought consumers were going to perhaps one place, their local derm, to have their HydraFacial. What we learned is they're going to approximately over three places in the US a year. They obviously go to their derm, but then we have a really good following in Equinox and other gyms, so some people get one on the way to work. Finally, if they’re on holiday, they will go to the Grand Hyatt or the Park Hyatt. That’s interesting for us and helping us to develop our app—how we can make it give more functionality to all consumers for their loyalty and capturing the data wherever they travel the world to give a seamless experience.
What's the developmental process like when you're co-creating boosters and how do you choose the brands you partner with?
Our device has 60 patents, and one of the absolutely unique parts of this HydraFacial service is that it has these 7ml booster vials. We have our own HydraFacial-branded boosters that we’re really proud of, but then we get approached by brands, either really clinical brands like Murad, Dr. Dennis Gross, Doctor Barbor, or celebrity brands like JLo [Beauty]. She comes to us—she’s got an amazing brand, she's known around the globe—because she's looking for the very best technology in the world for skincare treatment because it gives her credibility and endorsement. As 60% of our distribution is with the best physicians and doctors in the world, the medical channel, we bring brands a lot of access which they wouldn't get DTC, in Sephora, Superdrug, or Boots. Conversely, we get access to the very best skincare technology in the world. A company like ours, we could never afford all the R&D it takes to do all of that development of these incredible products.
We also work with Dr. Paul Nassif, he is wonderful and we have such a successful range of boosters and products with him. Honestly, we get approached a lot, where I would say with respect, it has to be a credible fit for us and both brands. I've worked with a lot of celebrities, I can see the power of how they amplify brands, but something like Jennifer Lopez with HydraFacial was a really logical fit. If I break it down, first of all, Jennifer has a successful skincare brand. Secondly, she's really known for the iconic Jennifer Lopez glow, and her number-one product is the That JLo Glow Serum, so that's the one we adapted to put in our booster. It’s a perfect match and of course we've seen fabulous results. We launched in the US and are rolling it out now across Europe.
Before BeautyHealth you were also involved in the Kim Kardashian and Kylie Jenner beauty brands. We’ve seen so much explosion in the celebrity beauty landscape. How do you think that's going to develop?
Throughout my career and pre-Kardashians, I had the great pleasure to work with a number of celebrities. I really learned a lot, particularly working with Kylie, Kim, and the family about how celebrities can drive a business through their massive influence. It's still true today as it was a few years ago. The very best celebrity brands—I’ve worked on two of them—will continue to thrive as they are. But I increasingly see consumers, in some cases, looking for more validation, more credibility. Some brands will survive and thrive and I'm absolutely confident Kim Kardashian and Kylie Jenner will. Other brands with perhaps less credibility, less involvement from the founders will perhaps not do so well in the future as this movement towards the medicalization of beauty increases.
You set a very ambitious target for the growth of BeautyHealth: doubling the growth in three years. Do you think that an ambitious target is better than playing it safe?
We laid out a strategy that we will double our revenue and triple our profit-adjusted EBITDA in the next three years; we presented it last September. I'm fully confident in that strategy and goals. In fact, we over-delivered in 2022, which I'm really proud of. We grew 41% year over year, despite the current economic environment in the world, and sadly, the war in Eastern Europe. We lost significant currency headwinds, but it shows that the categories we play in and the brands we have are more resilient. The consumer we speak to—that upper-middle-class consumer—is more resilient than the average consumer and we continue to grow.
I've been in the beauty industry for more years than I care to tell you, I've been through a lot of ups and downs and financial uncertainty and what I can say is: consumers, even more so in times of uncertainty, double down on things that make them feel good and give them confidence. Maybe they forgo those big-ticket items, but a BeautyHealth experience, a HydraFacial, which can start from £150 or $150, is a relatively accessible treatment and it delivers real, clinically backed results. That's why we've held up.
We've created a category, beginning our journey with HydraFacial, and we've got to go for it. We have a fantastic product with SkinStylus microneedling. Keravive we haven't even started [yet]. In fact, my own ambition is that we do even more than what I've planned because I'd love to continue to add to the portfolio with a build-and-buy strategy. We build existing brands, and as we've done with SkinStylus, we make acquisitions, because we're well capitalized. We have over $600 million on our balance sheet to go out and make acquisitions in different spaces. That could be devices, it could be other experiences, it can potentially be skincare futures. We build up this head-to-toe BeautyHealth portfolio.
That success also speaks to the consumer becoming a lot more intelligent about where they put their money, in efficacy, science-backed, professionally driven services.
That is it. It is absolutely the future. The Zoom boom, there’s all these tailwinds. Coming out of the pandemic, it's a global experience, we all experienced something quite unique in humanity. We’ve had time to reflect on a lot of things, and it's about how we have a more holistic approach to health and well-being and what's in our bodies, on our bodies, how we spend our money. Being on Zoom every day, that's why people are prioritizing spending on their skin health, on things that make them feel and look good. This is here to stay, so it really benefits companies like ours that are in this space and can adapt. It’s a wake-up call to traditional beauty companies: just having flashy adverts and packaging is not going to cut through with more intelligent, sophisticated consumers globally going forward.
How vital are the interconnected and seamless systems that you've built in ensuring that business growth?
It's the heart of it because we're a platform company. We have a backend of technology all interconnected with our products, where we're gathering data and then using that data to generate consumer insight and ultimately growth. Then we just plug in other brands to that platform, and we build that infrastructure. We spent two years building it out, so we're now well-placed to seize the growth opportunity with our existing brands and plugging new ones; plug and play.
What has been the key to being able to deliver such impressive growth in such a short period of time?
First of all, when you have a unique, category-creating product, we have no natural competitor, certainly in devices. Still today, our biggest source of growth and biggest competitor is all those millions of people around the world who still have a manual facial. We have to convert all of those because manual facials, like a massage, can be hit or miss depending on who's doing it. A key to our success is having products that are .unique and differentiated; new, better, and different, as I like to say.
Secondly, our secret sauce is that we have doubled down on building and educating a community of aestheticians and providers. Particularly in the medical aesthetics industry, everyone is focused on the doctor, they just walk into an office and ignore the aesthetician. We felt that they were an unheard part of the office, and we've doubled down on them. We educate them with the biggest educator of aestheticians globally. We've trained over 40,000 through a network of training centers we have all over the world, supplemented by HydraFacial Connect, which is an app and online training system where we can give refreshed training. Many of our SPs come from pretty tough backgrounds, perhaps not the best schooling, and we educate and train them. It gives them so much loyalty and advocacy and they post millions of dollars of earned media value online through #HydraFacial or #gunkiejunkie, the gunky canister which is that proof point after your HydraFacial with all that dirt and floaties [pulled from the skin]. It’s been a real engine for our growth.
Thirdly, our marketing has been differentiated and cut through. We can take risks and be more irreverent than perhaps some of the more traditional aesthetics and beauty companies can be. We’ve taken it on the road through our show with the global tour. We have this huge party every year for aestheticians in Las Vegas called Estipalooza. We’ve leveraged marketing activities and digital [in ways] that other brands can't or won't do.
How would you describe your expansion strategy going forward?
Our strategy is as Jennifer Lopez said: we're just getting started. Historically, we’re a California- and US-based company; it’s still 60% of our business today. We still have a lot of white space in the US and we haven't even left the locker room in Europe and Asia. It’s go big or go home, and we have a very aggressive expansion strategy with new doors and products over the next three years.
How have operations changed since becoming a public company?
This company was founded 25 years ago out of a garage in Long Beach, California by two incredible founders, Roger [Ignon] and Bill [Cohen]. They have since retired, but we're very close to them. We have many team members who've been with us throughout that entire journey; in fact, two of them joined me to ring the bell at the NASDAQ to celebrate our second birthday as a public company.
We've done a superb job of fully complying, but that investment in infrastructure is a heavy lift. I often speak to private companies thinking about going public, advising them [that] you underestimate the infrastructure and systems you need to operate seamlessly across 90 countries to be fully compliant, to get that data you need to ensure you're delivering that best experience, getting it right each time. That is quite the undertaking. It's an exciting journey, but it takes investment and a lot of hard work from our team.
How are you seeing that space that BeautyHealth occupies, this merging of beauty, aesthetics, wellness, and health, develop?
It’s large and growing categories. Everywhere I travel around the world post-COVID, consumers are taking more care of themselves, having conversations about their mental health, well-being, and sexual well-being. Topics which were taboo a few years ago and now it's widely discussed in a cocktail conversation, which is a good thing. This is just fueling an entire new industry meeting the growing consumer demand, but it's also a wake-up call for that traditional view of beauty, which is typically very European and white, frankly.
What have been the biggest milestones in the past two years?
We've doubled our business in the last two years, incredibly proud. We became public. Launching our connected device, Syndeo, the name by the way which means "connected" in Greek, that's a leap forward. If you look at our systems, it's cooler than an Apple phone, really beautiful. It's fully connected, getting data, a great experience, doesn’t hurt, gives you this wonderful glow and boost of confidence. There’s nothing like it on the market, and we continue to innovate. Innovation is the DNA of this company, and we’ll continue to accelerate and bring new experiences to consumers around the world.
