Chartered accountant Costa Koulouris has a vision: to establish the first national plastic and cosmetic surgery brand in Australia and list it on the ASX.

To that end, Koulouris sold his Me Clinic group (it acquired Melbourne’s Ashley Centre cosmetic surgery business in 2013) with six sites in NSW and Victoria to Strategic Alliance Health (SAH) and became its first CEO.

Most importantly Koulouris confirmed the project closed its initial phase gathering partners in early February and the formal IPO will occur ‘in the second half of 2018, as it will take until then to get the business model up and running’.

Corporate financier Glenn Gaudet shares Koulouris’ vision: as founder of Strategic Equity Alliance, he started the company which oversaw the negotiation and acquisition of select businesses to form a consolidated group of veterinary practices which listed on the ASX as Greencross Ltd. Gaudet explained: ‘The vision of plastic and cosmetic surgery aggregation is a unique concept that I was happy to support. We have found these businesses to be larger than other specialities, such as vets and dentists.’

Gaudet’s chief portfolio officer and head of finance Aaron Thomas also shares Koulouris’ dream and enthused: ‘Our vision for this IPO is a plastic and cosmetic surgery consolidation and roll-out investment with a proven track record of value- add and operational performance. ‘SAH, under Costa’s leadership, will optimise each site we acquire through a range of proven, specific strategies which focus on patients and deliver proven patient outcomes and earnings improvement, as demonstrated with Greencross and National Veterinary Care.

‘These were both successful IPOs and continued to perform as public companies on the ASX.’

Koulouris admitted many key figures in the industry are ‘resistant to some of the inevitable changes’, but declared: ‘No one has offered this model before – a ‘diversified aesthetic group’ with plastic surgeons, cosmetic surgeons, cosmetic physicians, dermatologists and nurse injectors all under the one banner.’

Vertically Integrated Business Model

Fellow accountants Julian Andriesz and Joseph Rifkin also have a vision. Andriesz founded Verita Healthcare Group in 2015 to ‘offer an approach to anti-ageing which combines scientific breakthroughs in biological age screening, genetics, regenerative therapies and product innovations from around the world under one roof from scientists and doctors that specialise in longevity medicine’.

By the following February Verita announced it was:
• ‘planning its initial public offering (IPO) on the ASX in the first half of 2016’;
• had ‘already raised AU$10 million in private equity for acquisitions and organic growth’; and
• ‘is now firmly on an expansion path with a healthy acquisition pipeline and growing intellectual property portfolio’.

Andriesz boldly declared: ‘Verita is well positioned to meet the growing demand for personalised, regenerative healthcare which is an emerging sector currently poorly serviced by mainstream medicine. We are expanding in two of the largest demand areas, complementary cancer care and leading edge, longevity medicine and are in the process of making strategic investments in this space’.

In commenting on the healthcare sector, Andriesz added: ‘Given that healthcare stocks represent one of the best sectors likely to outperform the general market for the foreseeable future and Verita’s accelerating earnings, it gives us confidence
of building substantial value for our shareholders.’

In 2018, Verita – which continues to expand its global footprint via a carefully planned ‘integrated healthcare infrastructure’ – is now headquartered in Singapore, with:

• offices and manufacturing facilities in Australia, Malaysia and Thailand;
• clinics in Germany, Thailand, Singapore and Mexico; and
• over 35 partner clinics and hospitals across Southeast Asia and Europe.

Verita’s Medical and Scientific Board includes prominent Sydney ENT and facial plastic surgeon Dr Michael Zacharia, and its current Australian operations include the ACPharm sites at Caringbah in southern Sydney and Mermaid Waters on the Gold Coast.

A key strategy in Verita’s plans has been its investments in both:

• a cosmetic manufacturing and analytics laboratory plus a TGA- approved manufacturing facility set up by Daryll Knowles’ Sydney-based Australian Custom Pharmaceuticals (ACP) – Australia’s largest compounding-only pharmacy; and
• Knowles and Bill Anseline’s Queensland-based Allmedic (an Australian skin health company founded and operated by medical doctors who specialise and practice in the fields of skin cancer, medical cosmetology, molecular immunology, and skin allergies).

By investing in both the products and the manufacturing, and then putting those skin care products into the clinics, Verita hopes to successfully tap into the currently lucrative ‘skin plus cosmetic procedures’ market.

Knowles, now Verita’s Chief Scientific Officer, confirmed the group’s latest corporate timetable ‘is aiming for an IPO on the Singapore stock exchange in August’. (Further Verita plans in accompanying breakout-box.)

Post-War Quest For Eternal Youth

Forty years ago revered plastic surgeons traditionally repaired major facial injuries for car crash victims, and harelip/cleft palates for unfortunate birth defect patients. Meanwhile specialist dermatologists treated teenage acne and annoying skin irritations such as eczema and psoriasis.

In that clearly defined age of medical expertise, the local GP often provided the referral to the recognised expert for such specialist treatments, while nurses at the practice assisted mainly with dressings and bandages.

Then the post-War affluent classes in the US and Europe – following tremendous advances in surgery techniques and infection control developed during World War II and the Vietnam conflict – discovered they could routinely pay for the latest ‘elective surgical treatments’ to significantly enhance their natural assets and assist in the quest for eternal youth.

Jump forward to 2018 and Barry Lazarus, managing director of Austramedex (an Australian company specialising in the manufacture and supply of medical devices for operating theatres and plastic and cosmetic surgery) summed up today’s cosmetic zeitgeist: ‘The aesthetic medical market is cyclical, for both the latest instruments and newest products.’

Lazarus reported the ‘entire market is currently moving toward two things’:

• natural results – ‘there is still lots of fear of 1980s ‘wind tunnel’ look’; and
• minimal or non-invasive procedures – ‘I call it Star Trek medicine: What can we do without cutting? Patients don’t have the downtime (four to six weeks off work); it’s not a reality for the vast majority of people.’

And Lazarus summed up his industry’s key future trend: ‘Corporatisation and amalgamation is the direction all big business is going these days.’

From Individual Clinics To Corporate Sites

In Australia, the initial moves towards corporatisation in the aesthetic medicine industry ‘started in the 1990s with GPs wanting to see less patients and make more money,’ commented Rob Gregg, managing director of Mondeal Aesthetics (a leading independent distributor in the aesthetic enhancement industry in Australia and New Zealand).

‘Initially a few doctors started individual clinics; then they would take in a partner; then they’d hire nurses to do some of the work.
This was in contrast to what had happened in other elds of medicine, like cardiology and orthopedics, where big corporations entered the field long ago.’

The first major amalgamation saw Laser Clinics Australia (LCA) mushroom from a single site in Drummoyne in Sydney in 2008 to now boasting over 90 locations nationally (NSW 44, QLD 20, VIC 17, ACT ve, SA ve, NT one).

‘It quickly grew to become a giant in a very small industry,’ noted Gregg. ‘Where there had been two multinational pharmaceutical companies (Irish-headquartered Allergan and Swiss-based Nestle subsidiary Galderma supplying skin disease solutions and aesthetic and corrective products) and
largely individual doctors, the success of LCA in tapping into multi-million dollar private equity nance triggered a rush of similar plans and proposals.

Major Challenge 1

Find & Keep Successful Management

An immediate benefit for company- owned clinics is they tend to go to the big suppliers and negotiate better prices and bundle products. That makes it hard for smaller players
to compete, unless they can o er
a product which is ‘unique and pro table – and that’s the pot of gold’, noted Rob Gregg.
However he also cautioned that the overall success of corporate clinics to date has been ‘varied’. The key di culty ‘is nding and keeping experienced management to run them – especially to keep all the doctors happy, while dealing with the inevitable transformation problems’.

In addition, Gregg noted: ‘All this movement and manoeuvring and transformation is coming to a relatively new industry which is not regulated well – and that leads to problems.

‘The regulators are constantly trying to shut the gate after the horse has bolted. For example, last year’s death in a clinic in Sydney focused attention on several major issues:
• there are currently three levels of regulation – Therapeutic Goods Administration (TGA) (products); State Government Health Departments (safe practice of clinics); Australian Health Practitioner Regulation Agency (AHPRA) (licenses practitioners)
• how products are stored; how they are used; how they are labeled; doctors acting as wholesalers of products. ‘Meanwhile a lot falls through
the cracks. And so there is a lot of political pressure across the industry right now.’

At the same time there is the ongoing debate about the role of various professional bodies representing plastic surgeons, cosmetic surgeons, cosmetic physicians, dermatologists, GPs and so on. The bottom line, summed up Gregg, is that if – and it’s a substantial ‘IF’ – the amalgamators can overcome the signi cant management challenges and ‘become well-run organisations, the trend will de nitely be for corporatisation and amalgamations to increase.’

Major Challenge 2

Is a Clinic a ‘Business Proposition’?

Mondeal Aesthetics general manager Richard Arnott agreed ‘corporatisation is the way it is going to go in Australia.

‘It has been that way for decades overseas. It started with Harley Medical Group and Transform in the UK – they are now massive organisations.’
Arnott summed up: ‘Currently in Australia a lot of individuals are trying to band together and sell.

‘They’ve realised their major problem comes when they think about retirement or an exit strategy. Suddenly they nd they can’t get out, because the business was totally marketed around their own name – there was a lot of ego and arrogance – and so all they have to sell for the future business is a database.

‘They have not thought about their o ering as a business proposition.’

Arnott explained for the largest potential client demographic, ‘lasers and injectables will continue to attract those seeking the best price – because anyone can inject a toxin.

‘But for fillers, the treatment is bespoke – and so the patient will look for someone who is: artistic; well trained; experienced; and has ‘an eye for it’. Patients are going to seek out these specific experts.

‘Hence in the laser market – mainly hair removal and skin treatments – it is okay to seek the best deal to save dollars. But when the patient progresses to llers, they will then search for the proven individual expertise.’

Major Challenge 3

Govt & Insurers Tighten Eligibility

Business growth consultant David Staughton (principal at Big Hat Professional Services) is business manager for Cosmetic Surgery For Women – self-described as ‘Australia’s largest and fastest growing plastic surgeons group’ – which is headed by Melbourne’s Craig Rubinstein and includes Doug McManamny, Geo Barnett, Rebecca Wyten, Tom Robbins, Richard Maxwell and Benjamin Burt, plus NSW and Queensland plastic surgeons.

Staughton noted that at a recent conference, Medibank Private Health Insurance chief medical o cer Linda Swan held up Harvard Professor Michael Porter’s seminal book Rede ning Health Care: Creating Value-Based Competition on Results and declared ‘this is the bible!’ (Porter’s value-based healthcare delivery is a framework for restructuring healthcare systems around the globe with the overarching goal of ‘value for patients’.)

Staughton explained: ‘The clear message was that for many procedures, where doctors previously relied on the Medicare system for much of their income involving elective aesthetic/cosmetic procedures, that was all in the past.

‘And it’s already happening on a dramatic scale. For example, two years ago abdominoplasty (removal of excess esh from the abdomen) cost the patient just $630 with Medicare covering the rest; now it costs between $5,000-$10,000 after pregnancy (the only exception is when it is part of a massive weight loss program). Similarly breast augmentation coverage is in the past. They are all being reviewed: blephoplasty (upper and lower eyelids); breast reductions; rhinoplasties.

‘Put bluntly, I see the Australian industry is 10 years behind the USA and five years behind New Zealand in terms of where this industry is heading.
‘In the new order, Australian doctors will no longer be able to charge whatever they like. It is all going to become increasingly transparent and this year is the best year plastic surgeons will have.

‘My predicition is, in another three years prices will have tumbled, the government will increasingly refuse to fund any elective cosmetic procedures and the burgeoning competition from cost-conscious Thailand will become increasingly popular.’ (See breakout-box: Thailand Boom ‘Elephant In The Surgery’.)

Key Factors to Influence how Industry evolves Several key factors will influence how the Australian aesthetic medical industry will evolve in coming years.

Traditional plastic surgeons are currently under ever-increasing pressure from other practitioners in the arena – particularly because in recent years these have generally proven more adept at marketing their latest o erings to today’s more cost- conscious and readily technology- embracing potential consumers.

Another factor is the current cultural and sociological trends are away from the plastic surgery procedures of ole, and are more in keeping with the ‘less is more’ mantra of less invasive procedures.

David Staughton notes the potential success of corporatisation/ amalgamation IPO plans – like those of Costa Koulouris and SAH – may appeal only to ‘the older surgeons trying to exit the industry’.

But even then, ‘generally plastic surgeons don’t play well together.

I have found it very difficult to attract surgeons to join a group – even despite offers to those in the 65-75 age group of working only three days a week and earning $1 million annually.’

Staughton asserted that in his expereince’ most plastic surgeons, by their nature, simply refuse to work with each other.’

Plus, the small number of groups that do start – usually a partnership of two to three doctors, with an older ‘bigger name’ surgeon, plus smaller name younger partners – inevitably shrink again as the younger members gain experience and leave to start their own clinics.

Another factor is the market ‘is flooding with toxins and fillers’, explained Staughton.

Originally the toxin market boomed with Allergan’s introduction of Botox, and, along with fillers, these soon became the most popular procedures on the market. Staughton summed up: ‘There are now 290 different fillers and toxins in Europe and prices are coming down. They are all desperate for market share and Australia is following suit.

‘To that end, it appears the pharmaceutical manufacturers want to train all doctors to go into the aesthetics business – by arguing that the government will increasingly cut their traditional fee base. In addition, where originally these companies trained only doctors to administer their products, the net is now cast much wider to nurses and dentists.’

Meanwhile, traditional beauty salons ‘are also adding injectables and llers to their menus – and in some cases, even laser options’. These are usually administered by visiting doctors or nurses, but presently Queensland is the only state that has legislation in place on who can inject Schedule 4 products.

So the big issue becomes: how much of injectables and fillers will surgeons do in the future?

Alarm Bells: Staff retention & growth by acquisition

Some observers of the rapid move towards amalgamation and corporatisation caution that ‘you need people with the right personalities and attitude towards the of medicine is still medicine. So responsibility, especially for a proper consultation, is very important. It should never become just ‘walk in off the street for a procedure’.

‘The great dilemma for those trying to corporatise cosmetic medicine is how to ensure you do not take the key responsibilities out of the doctor’s hands. And for the doctors, it is to ensure they do not jeopardise their registration and insurance.’

When Are a ‘Patient’s Best Interests’ Compromised? Austramedex managing director Barry Lazarus, while noting ‘corporatisation/amalgamation is the way all big business is going these days’, also warned this ‘may not necessarily be a good thing for the market’.

He emphasised: ‘First and foremost a doctor is a doctor, charged with always making the best clinical decision. That imperative may be compromised if:

• treatment decisions begin to be influenced by business owners – and a patient’s best interests are compromised; or
• business owners and/or drug companies brook potential trouble by offering ‘incentives’ for ordering treatments.’

In considering patient safety and ‘best interests’, Lazarus is also concerned about the ‘influx of illegal imports of both medical devices and products’.

He said the TGA and Australian Customs ‘do not work together. Anyone can simply mark something as ‘cosmetic’ and Customs lets it through. Anyone can jump online and order prescription medicine from Asia and have it delivered to your door. Who is doing anything realistic about it? No one!’

Player One


In November 2017 Total Face Group (TFG) announced it was expanding further into ‘Queensland’s booming cosmedical and aesthetics market’ by acquiring Brisbane’s non-invasive Artisan Cosmetic & Rejuvenation Clinic from Dr Linda Williams.

TFG Managing Director and CEO Jo Hannah (who joined TFG from global pharmaceutical company Allergan) declared: ‘We have three clinics in south-east Queensland – in the Brisbane suburbs of Kenmore and Ascot and at Maroochydore – but adding another location in Fortitude Valley, which is part of Brisbane’s city centre, will enable us to extend our services to far more clients.’

Dr Williams said the move would pay dividends for her business, staff and clients, allowing the clinic ‘to tap into the efficiencies and cost-saving benefits of a larger, established brand.

‘To have the resources, skills and excellent reputation of Total Face Group behind us means that our clients will experience the same personalised service, while benefiting from the latest in dermal technology. It can only be a positive for everyone.’

The move brought the number of TFG clinics around Australia to 15, with a staff of 20 doctors and 43 highly trained aestheticians. TFG described itself as ‘an exciting and innovative new player in the facial aesthetics market and brings a highly experienced team of doctors, aesthetic nurse consultants and dermal therapists to Australian consumers’. It added TFG offers clients ‘the ability to create a personalised, long-term treatment plan with our cosmetic consultant’.

However the industry sceptics who caution about the longer- term success of the ‘growth by acquisition’ model are now highlighting the shockwaves which reverberated across the industry in early March when TFG’s half- yearly financial report to the ASX (for the year ended 31 December 2018) revealed a ‘net loss for the period’ (consolidated statutory loss) of $3.399 million – an increase of 367 per cent on the previous year’s same period loss of $90,137.

It also revealed that ‘net tangible assets per security’ were $0.002 – a decrease of 106 per cent.

Directors Paul Fielding, Joanne Hannah, Dr Naveen Somia and Lynda Adler noted that in the loss is an ‘impairment charge’ to goodwill of $1.555 million ‘based on an assessment of the carrying value of prior acquisitions against their operating performance’.

Player Two


Strategic Alliance Health (SAH) has been acquiring a number of plastic and cosmetic surgery, dermatology and cosmetic physician clinics nationally and in Los Angeles to create a ‘diverse aesthetic group’ for its proposed listing on the ASX before 30 June 2018.
CEO Costa Koulouris said there are many benefits in capitalising on the potential for Australia’s first national aesthetic brand of plastic and cosmetic surgeries.
‘The plastic and cosmetic surgery industry is fragmented in Australia,’ he summed up. ‘No single clinic has a strong national brand, with most branded around its key doctor.’

Koulouris explained that ‘previously if a patient had a jaw smashed in an accident, he or she went to see a plastic surgeon and was a captive client.

‘In contrast, today if someone wants an elective procedure, they first go onto a website and choose four to five possible doctors and then spend time visiting each to eventually choose the one whose ‘message’ they like the best.

‘But most plastic surgeons don’t know how to ‘sell’ themselves.

For them, our model is all about supplying many more elective patients for them, without having to ‘sell’ their skills.’
He emphasised: ‘The whole industry is largely focused on the politics of ‘turf wars’ at the moment. But there is enough work to go around for everyone.’

Koulouris confirmed: ‘We are currently refining our business model and clinic mix pre-IPO to ensure we have the right number and mix of clinics in the major Australian cities. We are also establishing a Centre of Surgical Excellence in Los Angeles.

‘Our plan is to expand around Australia and internationally quickly – and also focus on Asia, to capitalise on the strong demand for Australian medical procedures.’

He emphasised that in SAH’s model ‘doctors will retain their own clinic brand and their unique way of doing things. We are not in the business of telling them how to practise medicine or what products to use, or how.’

Rather he noted ‘clinics can achieve up to six times their profitability, and share in the ongoing profitability, with our generous incentive scheme’.

In addition, other benefits would include:

• putting in place a successful succession strategy for a clinic while maximising its value;
• centralising administration and marketing services, allowing surgeons and doctors to focus on medicine and surgery rather than running a business;
• providing a support network – ranging from doctor colleagues to administrative staff, HR and operations managers – to ensure smooth clinic function;
• offering a network of ‘knowledge sharing’ among doctors, with internal training and collaboration on new techniques and ideas;
• facilitating a locum network of surgeons and cosmetic physicians to support doctors taking leave;
• acting as a lobby group and adviser to Federal and State Governments on matters relating to the aesthetic medicine industry.

Koulouris summarised his key offerings: ‘We will establish succession and exit strategies for clinics where they didn’t previously exist. And we will provide universal quality of service and product offerings across Australia, because doctors will be able to focus on the patient and not running a business. Our Medicine First philosophy means our doctors are only involved in administering medicine, surgery or treatments.’

However it is also important to note some industry observers remain sceptical that a model which has been tried with veterinarians and dentists will smoothly translate into the market for ‘elective’ aesthetic/cosmetic procedures.

Put bluntly, they argue veterinary work is 100 per cent non-elective (‘the animals have no say’) and most dentistry procedures are 80 per cent non-elective.

Player Three


Primary Health Care, founded in 1994 by Sydney GP Edmund Bateman, provides services and facilities to general practitioners, specialists
and other healthcare providers who conduct their own practices and businesses at its medical centres, licensed day surgeries, specialist and dental clinics.

Frustrated by the prohibitive costs and heavy administration that came with running a private practice, in 1985 Bateman opened his first 24-hours, seven-days-a-week bulk-billing practice in Brookvale on Sydney’s northern beaches. His model was based around bringing more doctors into a practice so it could operate longer hours and see patients outside office hours.

In 1998 Primary listed on the Australian Securities Exchange with market capitalisation of $50 million. A decade later, the 2008 acquisition of Symbion Health for $1.23 billion was a major game changer, instantly doubling the size of Primary.

Primary has subsequently grown from a single bulk-billing practice to an operation with 76 medical centres, 109 pathology labs (plus 2,271 collection centres) and 141 diagnostic imaging sites.

In essence, Primary’s model accepts that only limited pro ts can be generated from a basic General Practitioner medical practice; to increase potential pro ts, a wide spectrum of medicine is optimal under the one roof.

To that end, in 2017 Primary set up a wholly-owned subsidiary Health & Co (described on its website as ‘a connected network of engaged health professionals united by the common goal of delivering patient-centred care’) which industry observers note is strategically placed ‘to enter the growth area of skin care and protection plus associated cosmetic treatments’.

Player Four


In October 2017 Vita Group (publicly listed on the ASX) announced it would enter Australia’s non-invasive medical aesthetics (NIMA) market by acquiring non-surgical cosmetic treatment business Clear Complexions for $9.5 million.

Brisbane-based Vita (operator of 105 Telstra stores, 21 Telstra business centres, its own ICT brand, a technology accessories brand Sprout and men’s athleisure wear brand SQDAthletica) declared it was ‘expanding into a new growth category worth $1 billion per annum and demonstrating double-digit annual growth’ which encompassed ‘non-surgical cosmetic treatments such as anti-wrinkle injectables, chemical facial peels, dermal llers, laser and light- based therapies, body sculpting, and tattoo removal’.

Vita noted the move followed ‘extensive research into a range of market sectors, after which NIMA was highlighted as an attractive category due to its alignment with Vita’s criteria for expansion, which includes: high margins; ownership of the brand; an attractive market with a clear growth trajectory; and the opportunity to consolidate what is currently a fragmented space.

‘It is a market in which Vita’s ability to manage operations at scale, coupled with expertise in consultative selling and retailing, will provide a point of differentiation and add value.’

Clear Complexions (established in 2005 as a single clinic) had grown to a network of six clinics across Sydney and Canberra with a team of 60, including 35 registered nurses.

The sale announcement added: ‘The sellers will receive an option to obtain a ve per cent interest in the new NIMA business for nominal consideration, as well as the potential to receive earn-outs should the business exceed earnings targets over the next two years.’

Vita summed up the deal: ‘The acquired business is anticipated to deliver annual revenue of around $10 million, and earnings before interest, tax, depreciation and amortisation (EBITDA) of over $1 million in the year post acquisition, with further growth anticipated in the future.’

Vita Group CEO Maxine Horne emphasised the opportunity for Vita – with 22 years in retailing ‘including a strong focus on consultative selling and execution’ – to ‘apply its core competencies to drive further growth, scale and profitability.

Both organisations are rmly focused on meeting customers’ needs, and on delivering an exceptional customer experience.’

Clear Complexions’ founder Suzie Hoitink commented: ‘We’re really excited about this new phase for our business. The team and I are looking forward to delivering excellent results for shareholders as we continue to grow. We will do this by taking advantage of Vita’s well-established business practices, and of course, a continued focus on delivering even better experiences to our clients.’

Maxine Horne summed up: ‘The end game is to deliver a premium service, at scale.’

Player Five


Verita Healthcare Group describes itself as ‘at the forefront of ‘next generation’ healthcare based on personalised, integrative, regenerative and functional medicine designed to prevent and reverse disease and extend overall human potential’.

The Group philosophy ‘is to place the patient first, bringing together the latest technologies and products with industry leading medical doctors, professors and scientists to provide the highest standards of modern healthcare’.

Verita’s Medical and Scientific Board includes prominent Sydney plastic surgeon Dr Michael Zacharia, and its current Australian operations include the AcPharm sites at Caringbah in southern Sydney and Mermaid Waters on the Gold Coast.

Verita’s Chief Scientific Officer Daryll Knowles confirmed the group’s latest corporate timetable ‘is aiming for an IPO on the Singapore stock exchange in August’.

Knowles emphasised the benefits which attach to Verita’s ‘vertically integrated’ business model – investment in not only clinics, but also distribution and manufacturing facilities – and noted the group was now replicating that structure at a second site in Jahore in Malaysia.

In addition, the Group has announced research collaborations with a number of regional and international hospitals and universities on a range of clinical trials and projects including Harvard Medical School, Massachusetts Institute of Technology (MIT), Sydney University, Melbourne University and St Vincent’s Hospital.

With the company’s head office based in Singapore and operations in seven countries in Asia Pacific and Europe, the business derives income from four scalable verticals:

• cancer care and longevity clinics;
• manufacture and distribution of supplements, nutraceuticals and pharmaceuticals;
• practitioner training and medical services; and
• proprietary and licensed technologies.

Player Six


In late 2016, Gold Coast-based laser and skin rejuvenation franchise network Australian Skin Clinics merged with Ella Rouge Beauty
(the hair and beauty franchise group acquired earlier that year by Hairhouse Warehouse) to ‘double ASC’s franchise footprint in Australia and New Zealand overnight’.

At the time, ASC managing director Deb Farnworth-Wood declared: ‘Hairhouse Warehouse, Ella Rouge and Australian Skin Clinics all share the same target market, which will afford our brands the opportunity to provide enhanced services and offerings to our loyal customers. It is this customer-focused culture that has aligned the businesses so well.

‘Ella Rouge Beauty (then 25 outlets – nine corporate-owned, 16 franchised) has been looking after millions of Australian women and their beauty needs for more than 17 years. Aligning the two companies will provide benefits such as the utilisation of consumer databases, buying and trading upsides with common suppliers, and the ability to have robust negotiations with most of the mainstream landlords.

‘The rebrand will see Australian Skin Clinics (established in 1996) grow from 25 stores to 50 stores, with further growth plans in the pipeline including more than 20 new clinics in the 2016-17 financial year and another four clinics in New Zealand over the next 12 months.’

Since launching in 1992, Hairhouse Warehouse had grown to over 145 outlets across Australia and network sales over $200 million.

Hairhouse Warehouse co-owner Gavin Nixon said: ‘We see the move as a great strategic step forward. When deciding on this merger, the alignment of key corporate goals was of the upmost importance. The like-mindedness of our franchise networks is an absolute strength, with all brands being customer-centric and offering high quality services at affordable prices.

‘The Hairhouse Warehouse growth strategy includes a focus on the expansion of our suite of brands in the hair and beauty sector over the next three to five years, with a firm goal of an IPO Listing.’

Player Seven


In August 2017, US private equity giant Kohlberg Kravis Roberts (advised by Macquarie Capital) paid $650 million to buy Laser Clinics Australia (LCA) – which The Australian Financial Review (AFR) noted ‘represents an earnings multiple of between 13 and 15 times’.

The AFR added the ‘pitch to potential investors’ from owners The Growth Fund (a mid-market Australian private equity firm) and founders Babak Moini and Alistair Champion (advised by fellow corporate heavyweights Luminis Partners and King & Wood Malleson) ‘has been about making laser hair removal, botox and other cosmetic treatments more affordable and accessible by slashing prices by negotiating with suppliers and investing in technology’.

Trade buyers and private equity were told LCA ‘makes about $50 million in annual earnings, is the biggest player in a fragmented market, and is the only service provider of its kind and scale worldwide’.

The newspaper also revealed:

• European buy-out firm Permira (advised by Credit Suisse) and US-based spa services provider Steiner Leisure had been running the numbers on the business, but neither submitted a binding offer’ by the sale deadline; and
• Listed health and beauty retailer Australian Pharmaceutical Industries (API) – parent company of Priceline Pharmacy, Soul Pattinson Chemist and Pharmacist Advice – ‘had started wall-crossing investors as part of early-stage preparations for an equity raise relating to its bid’, but the KKR team tabled an offer marginally ahead of API.

LCA opened its first site in Drummoyne in Sydney in 2008 before expanding interstate. The founders formed their partnership with The Growth Fund (previously Archer Capital’s growth investment) in 2014 and opened their 80th clinic in April 2017. (Observers noted the massive $650 million purchase price valued the 80 clinics around $8+ million each).

At the time of the sale, Laser Clinics Australia announced its key statistics included:

• Revenue: $118 million
• Growth: 204.4 per cent
• Employees: 800
• Aust-wide franchises: 65

Explaining their business model, Moini and Champion declared: ‘Beauty salons no longer meet the consumer needs, in terms of range of services or efficacy of treatments. Additionally the ability for customers to access both laser hair removal and cosmetic injectable treatments (eg. Botox, fillers) was price prohibitive, inaccessible and intimidating.

‘We saw a huge gap in the market for accessible, results-driven cosmetic treatments at affordable prices.’

They noted the goal ‘is to double the size of the operation over the next few years’, but conceded building scale into a business from its inception is a huge challenge and ‘every detail must be planned. Although we were confident we had an exciting model, we were conscious of the fact that we couldn’t scale without driven and passionate partners as owner-operators.

‘For this reason we devised a unique franchise joint venture model, where we share the risk and returns of ownership with the franchisee.’

Each clinic is half-owned by the franchisee and half-owned by LCA, and Champion and Moini summed up: ‘This model creates more engaged employees, while the shared risk and shared return better align the franchisee’s goal with the business’ own.’

Most recently in February 2018, The Australian Financial Review reported KKR ‘is putting its stamp’ on its recently acquired asset by ‘trapping former Myer and Medibank Private chairman Paul McClintock to chair LCA (which performed more than 3 million treatments last year) and Luxottica Group executive Anthea Muir as chief executive officer’.

KKR Australia head Scott Bookmyer commented: ‘Together they bring a wealth of complementary experiences across the healthcare and consumer services sectors. Their appointments reflect the board’s commitment to sustainable growth and to furthering LCA’s industry leadership position.’

McClintock is chairman of privately-owned NSW Ports, radiology business I-Med and Broadspectrum and a former chairman of Myer, Medibank Private and Thales Australia.

Muir (a qualified optometrist) held a number of management positions at Luxottica Group (which owns a number of Australian businesses, including spectacles retailer OPSM and Sunglass Hut).

Today LCA operates 92 locations across Aust – NSW 44, QLD 20, VIC17,ACT five, SA five and NT one.

Player Eight


One of the main threats to the continued expansion of Australia’s aesthetic surgery industry is the booming popularity of medical tourism trips to Thailand for cost- conscious clients.

Industry insiders estimate the number of Australians travelling to Thailand for cosmetic procedures has skyrocketed from 10,000 to over 20,000 in the last three years.

A key trigger has been the Thai government’s strong support. After the 2008 global financial crisis, Thai authorities recognised both the severe pressure on their domestic economy and the opportunity in tourism – and specifically medical tourism. Thai medical tourism now attracts over 200,000 visitors annually (10 per cent from Australia) and is viewed in a similar vein as the mining industry to Australia’s economy.

As a result (and despite derogatory commentary from some Australian practitioners) Thai surgeons are internationally viewed as both proficient at their specialties and increasingly expert in their field – because they are generally well- trained are ‘doing lots of it’.

In addition, in this market: price matters. Hence Thailand is also a huge threat to the Australian industry because it offers great value for money.

For example, what industry operatives describe as a ‘big surgery’ – a patient who wants to lose 50 kilos – involves up to six related operations and three weeks in hospital. That combination would cost $50,000 in Australia, but only $20,000 in Thailand.

Among the popular Thailand choices by Australian travellers are:

• Greg Lennon’s CosMediTour;
• Gorgeous Getaways (acquired in 2017 by Silicon Valley start-up TaqTik Health Inc); and
• Destination Beauty.

CosMediTour (established in 2009) offers cosmetic plastic surgery (breast augmentation, rhinoplasty and tummy tuck procedures) and dental treatments in Thailand (Bangkok and Phuket) and Australia. It advertises a ‘proven partnership at our four key hospitals (World Medical Center; Bangpakok 9 International Hospital; PPSI at Bangkok Hospital China Town; and PPSI – Phuket Plastic Surgery Institute).

CosMediTour ‘organises everything, from the initial medical assessment to preliminary and final surgical evaluations, selection of hospital and preferred surgeon, booking surgery procedure/s and dates, booking accommodation, flights if required, payment, transfers, follow ups, tours, and companion or family travel arrangements’.

CosMediTour boasts it ‘lets over 2,000 of our clients tell their stories on our three international websites and social media pages, with reviews, testimonials and images’.

Gorgeous Getaways (founded in 2004) was one of the original pioneers of the medical travel sector and sells cosmetic and plastic surgery holidays in Thailand (Bangkok and Phuket) and Malaysia.

Thailand-based Destination Beauty (established in 2009) offers ‘breast implants, tummy tuck, liposuction, facelifts, nose jobs and dental’ in Bangkok and Phuket. AMP

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