Believe it or not, a lot of people thrived financially during the pandemic. Unless you were a low-wage worker, you probably came out ahead.
Americans definitely did better than most experts predicted. So, what are people doing with that extra money? While some Americans are buying new consumer goods, others are heading to medical spas so they can look terrific as they return to their social lives.
As an investor, this could present an opportunity for you to generate handsome returns. It raises a question that few have asked before, “Are medical spas a good investment?”
What Are Medical Spas?
Medical spas, also called medspas, look like boutique salons where you might get your hair or nails done. Medical spas, however, offer aesthetic treatments from certified doctors, nurses, and other trained professionals. Some of the services you might find at a medspa include:
- Laser hair removal
- Tattoo removal
- Nonsurgical fat reduction
- Lip fillers
- Laser skin retouching
- Stomach flattening
- Botox injections
Medical spas often have branded services that they offer clients. They might also partner with medical companies to offer exclusive lines of services.
As long as a procedure doesn’t require invasive surgery or staying at a facility overnight to recover, you can probably find a medical spa that offers it.
More People Are Interested in Medical Spa Treatments
Medical spa treatments have become increasingly popular over the last couple of decades, largely because people can recover from procedures quickly and the prices have become relatively affordable.
Practically anyone can visit a medspa to reduce wrinkles with Botox injections. Celebrities have also brought aesthetic treatments into the mainstream. It’s no secret that a vast number of celebrities get a little “medical assistance” when needed. This makes medspa treatments seem more normalized for the average person.
You can see the growing acceptance in the amounts of money people spend on treatments each year. In 2019, North Americans spent about $2.5 billion on injectables like Botox. That amount dipped to $2.3 billion during 2020, probably because people didn’t want to risk exposing themselves to COVID-19. In 2021, North Americans spent $3.2 billion on injectables. Researches expect the market to reach $5.7 billion by 2026.
Why did spending on medspa treatments increase so drastically in 2021?
It’s possible that people wanted to improve their looks before returning to work and social events. The pandemic also put a lot of stress on people, which could have contributed to signs of premature aging. A few visits to a medspa could mask those signs, giving patients the self-confidence they needed to reenter their social lives.
It’s too early to know how much money people will spend on medical spa treatments in 2022. There’s a good chance, though, that it will increase as more people decide that it’s safe enough to return to their normal lives. That means more in-office meetings, parties, restaurant meals, weddings, and other social gatherings.
Should You Invest in Medspas?
Should you invest in a medical spa? There’s no doubt that putting your money into a medspa has the potential to earn significant returns. Worldwide, the industry is expected to reach $25.9 billion by 2026.
Whether you can make money in this sector depends on several factors, though. It’s important to consider:
- How you will find a location that fills a local need and doesn’t already have too many competitors.
- The amount of money it costs to open or invest in a medspa.
- Whether you can join an existing medspa as an investor.
- How you can find a staff that meets licensing requirements for medical procedures.
How To Invest in Medical Spas
The medical spa sector has enormous earning potential. Unfortunately, none of the medical spa companies are large enough to trade stock on public exchanges. That means you can either invest in the companies that research and develop products for the industry or invest in a medspa location.
Investing in a Medspa Location
This approach will probably take a lot of time and money because you need the capital to start the business, which means paying for real estate, equipment, staff, and insurance. All of these things cost a lot of money, so you can expect to spend at least hundreds of thousands of dollars before you can open your medspa and start generating revenue.
Alternatively, you can partner with other investors to share expenses. The more partners you add, the less money you need to commit to the business. While that helps lower your expenses, it also means you will get a lower percentage of the potential profits.
Investing in Medspa Technology Companies
The average investor doesn’t have enough money to open a medspa, even with assistance from partners. That doesn’t mean you can’t benefit from growth in the medspa industry.
Cutera makes a variety of devices for:
- Acne treatment
- Body sculpting
- Skin revitalization
- Pigmented lesions
- Vascular lesions
- Hair removal
- Tattoo removal
It’s one of the largest research and development companies for the industry. Cutera has had a good year. In May 2020, shares sold for about $12.50. On April 1, 2022, it reached its highest value at $71.31. A discounted cash flow forecast reveals a fair market value of $52.68 per share.
El. En. SpA
El. En. Group specializes in developing lasers for medicine, industrial applications, and environmental conservation. Several of the medical lasers serve the medical spa industry.
El. En. SpA has been trading publicly since December 2000. Like the medspa industry, El. En. SpA has thrived since 2020.
In April 2020, you could buy a share for about $4. By the end of 2020 it had reached $7. The company peaked on October 22, 2021 at $17.58. Since then, the price has come down a bit, potentially putting the company on sale.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.