Market Trends in Plastic Surgery Private Equity

Plastic and cosmetic surgery practices often have great potential to become high-margin, scalable businesses with opportunities for expansion that can align well with private equity goals. Additionally, these business models typically feature the following characteristics that make them attractive candidates for private equity partnerships:

• Predictable, recurring revenue from both surgical and non-surgical services.
• Low reimbursement risk due to minimal or no reliance on insurance.
• High patient demand fueled by social media, telehealth and societal shifts.
• Strong brand loyalty and patient retention.

The plastic and cosmetic surgery industry has rapidly evolved in recent years, with some of the most notable changes that have contributed to increased private equity interest being:

• Practice consolidation. Once a very fragmented industry, aesthetic medicine has seen a sharp increase in acquisition and consolidation under larger platforms in the last decade.
• Multi-location business models. Many successful plastic surgery practices have begun to open offices in multiple locations, contributing to increased competition within the industry.
• Expansion into nonsurgical treatments. As consumer interest in non-invasive treatment options skyrockets, more plastic surgery practices have expanded their offerings to include both surgical and nonsurgical treatments, allowing for more diversified revenue streams.
• Increased demand for full-service wellness offerings. To meet demand, many plastic surgery practices are now offering comprehensive wellness services like medical weight loss programs, IV infusions and hormone therapy. 

Not every private equity deal is structured in the same way, and not every cosmetic practice is necessarily a good fit for this type of partnership. A few of the key indicators of a successful potential private-equity-backed partnership include:

• Strong and growing EBITDA. Plastic surgery practices with a healthy EBITDA (earnings before interest, taxes, depreciation and amortization) margin – ideally 20% or more – are far more likely to receive competitive offers and favorable deal terms than less profitable practices.

• Scalable infrastructure. Practices with defined processes, strong management teams and modern digital record and customer management systems signal to investors that they won’t have to build from scratch to scale operations.

• Multi-provider or multi-location business. If you’ve already expanded by onboarding another surgeon or opening a second location, your practice is likely positioned for the type of growth that can be easily fueled by a private-equity-backed partnership.

• Diverse revenue streams. While surgical procedures will remain the bread and butter of a plastic surgery practice, also offering nonsurgical services diversifies revenue and caters to potential patients who are not seeking a surgical procedure.

• Physician alignment and long-term vision. At the end of the day, you are the leader in whom a private equity group is investing and your long-term vision has to align with the goals of the larger platform. If you’re looking for more than a quick off-ramp and want to play an active role in the continued growth of your practice, you can be an invaluable asset to a strategic growth partner.