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Joyce Meng, FACT Capital - Stock pick: Beauty Health Company (SKIN)

Cliona O'Dowd and Glenda Korporaal
The Australian
Dec 3, 2021

US-based Beauty Health Company’s core asset is HydraFacial, a patented skin treatment offered at beauty spas and clinics whose popularity has grown via social media with the hashtag hydraglow. The treatment costs around $200 a session and is recommended on a monthly basis. According to Meng, its “savvy” product design, much like the vacuum cleaner, is the first of its kind to show customers what has been extracted from their skin, creating ideal content for social media platforms.

“If there is anything we have learned in the last year and half we live in a Zoom and Instagram world where everyone wants to look good on camera,” she says.

The company’s serums, boosters and other tips used in treatment are said to be highly customizable and its ability to personalize treatment has helped the HydraFacial system “become more of a platform rather than a one trick pony that is vulnerable to fads,” the fund manager adds.

On RealSelf, which is said to be the definitive review website for medical treatments, HydraFacial has a 99 per cent “worth it” score which means that of the two thirds who try it for the first time they become repeat customers.

Meng is forecasting 30 per cent durable and organic growth driven by accelerating equipment placements and a price target of $40 a share for 40 per cent upside. While the company was growing at a 52 per cent revenue CAGR, or compound annual growth rate, it was still held up a 30 per cent during the pandemic.

“For a 30 per cent compounder we think that valuation is attractive for the growth,” she says. “The company (also) has $900m available for M&A deployment and given the track record of the management team and board we suspect that there will be a financially accretive announcement made in the near term.”

This article was originally posted by The Australian here.

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