Bridging Med Aesthetics & Traditional Beauty through Connected Tech

Dr. Grant Stevens

Hello everyone and welcome back to the Technology of Beauty, where I have the opportunity to interview the movers and shakers of the beauty business and today is no exception. Today with us in the studio is Andrew Stanich and he is the CEO and President of the BeautyHealth Company. He's also a very good friend of mine, full disclosure. Welcome Andrew. Thanks for coming and joining us.

Andrew Stanleick

Grant, thank you for having me on the podcast. It's something I've been looking forward to and we've talked about it for over a year. So it's really great to be here. Thank you.

Dr. Grant Stevens

I love it. I love it. So I always like to start to get to know my guests. You have a distinctive accent, so this is gonna be really fun. Where are you from? Where'd you grow up?

Andrew Stanleick

Great question. You can tell by my accent, I was born in the UK, but I consider myself a truly global citizen. I've lived in eight, nine countries across four continents, including seven years in Asia.

But home, if we go back to the start, I grew up in rural southwest England on the River Dart. Had a really fabulous, very sheltered childhood, shooting, fishing, boating, and I was one of four with three older sisters. So that was a…

Dr. Grant Stevens

So you were the baby and the boy? Oh man. You had three older sisters. I bet you were spoiled rotten.

Andrew Stanleick

Absolutely. Four mothers. So no, it was a really great experience growing up and I think in some way growing up with four women, the house shaped the career trajectory which I ultimately took.

Dr. Grant Stevens

Absolutely. Where did you go to college, or university as you say.

Andrew Stanleick

I finished my master's degree in economics at Cambridge University. And back then I, there was two routes. There was the investment banking route already into marketing and. I chose the marketing and beauty route and I'm so happy I did. I've been blessed to have a really interesting and varied career.

Dr. Grant Stevens

I bet. So what was your first job out of university?

Andrew Stanleick

Well, my first job before university, I used to work on a fishing boat. Me too. It was just as a great experience. I grew up in a, in a fishing community, and it taught me a lot of things actually. But I think. It really gave me this opportunity to work with people from more different backgrounds and I think was a great skill in life, which I've always taken through.

I enjoy meeting and working with people and I used that opportunity to fund myself through university and then out of college I was really blessed to get an opportunity to work for Unilever. And that's just such a wonderful school of learning in marketing. And after four years there, I had the great opportunity to go and work for L'Oreal and I spent ultimately 13 years working for L'Oreal all over the world.

And they really are the very best school of beauty. And it was a great opportunity to work across different divisions consumer products division, the mass division, luxury products and skincare. Of course professional skincare and also their dermatology, skincare division. So wonderful experiences and obviously had the opportunity to live in many different countries, including Russia, Poland, the uk, as well as Southeast Asia.

Dr. Grant Stevens

Wow. And that was for 13 years? What an experience that must have been. I bet you learned a ton.

Andrew Stanleick

Yeah, absolutely. They really are the very best school of beauty and all things marketing. So I had a really wonderful experience. And yeah, during that time living in Asia, I wanted to stay longer and I wanted to get a new opportunity and learn at this time, direct to consumer and retail.

So then I had a five year stint working for Coach, the handbag and accessories company. First running their business in Southeast Asia and Pacific and then running their Amir business. And I also took a lot of great experiences there. I learned a lot about DTC and e-commerce as well as retail and all skills, which have really helped me later on in my career.

But Grant, I really missed the beauty industry. And after five years with Coach to have the opportunity to work for Cody again, a wonderful, a multinational beauty company and first of all, started in running a Europe region out of Geneva, and then very quickly moved to the US to run the America's business really for the last five years, which is a great experience.

And also during that time, Cody acquired Kylie Jenner in Kim Kardashian's beauty business, and a joint venture. And I was very fortunate to be the CEO of Kylie Jenner's business and helped Kim Kardashian run her beauty business. So it was a really wonderful experience and I learned a lot during that period.

Dr. Grant Stevens

And how long were you in that role?

Andrew Stanleick

Overall four and a half years.

Dr. Grant Stevens

And then, was the next role Brent Sanders giving you a call?

Andrew Stanleick

Yes. I feel that all of the experiences I've had with this wonderful career and these fabulous companies and international has really led me to this point at BeautyHealth.

So when Brent approached me in q4, I think it was 2021, I was really intrigued. And truth be told, I'd never heard of HydraFacial.

Dr. Grant Stevens

I was gonna ask you if you ever had one.

Andrew Stanleick

And then I asked my, my wife and of course three sisters who are very interested in all things, beauty and aesthetics, and they'd never heard of HydraFacial.

Dr. Grant Stevens

So are they in the uk? Your three sisters?

Andrew Stanleick

They're in the uk. They have lived internationally, but now they've gravitated back to the UK. And so I was intrigued to find out more. So granted, Brent arranged for me to trial, try a HydraFacial. And you really have to get it, to get it. As soon as I had it and had this wonderful non-invasive confidence building experience in a three steps, 30 minutes, I left the office with wonderful glowing skin, but best skin of your life.

Best skin of my life. But I more important, I think it, inner inner glow of confidence and a spring in my step and I. I think it was something that I really wanted to be part of. And Brent is just such a fantastic leader and guy, and honestly we've become good friends that it was something I was very happy to have the opportunity to join BeautyHealth just over a year ago, and I couldn't be happier leading the company.

Dr. Grant Stevens

So since you took the helm in the reigns of BeautyHealth and thus HydraFacial, you've made a number of changes. Can you elaborate on some of the things you've done in one year? That's amazing to me. I thought it was a couple years.

Andrew Stanleick

No, we've achieved. You'll like it. I'm really proud of what the team and I have achieved.

You should be. Share that with our guest please. Absolutely. First of all, coming in, I took some steps to fortify the team and I really brought in some really great people to compliment the strong team already had. I was really happy to bring in Brad Hauser, who you know really well.

Dr. Grant Stevens

He's been on the program.

Andrew Stanleick

Exactly. And of course we have Dr. Jwala Karnik, who's our Chief Medical Officer.

Dr. Grant Stevens

She's been on the program. The only guest that ever brought Mocktails. Did you know, she'd mix mocktails right there and gave them to me during the interview.

Andrew Stanleick

I'll remind her of that, to do that at the office. We've bought in some really top talent, Maria Maciejowski leads our marketing team, and I think we've really set up the team for success in my first year.

But moreover than that, we launched our biggest innovation to date, which was HydraFacial Syndeo, which is our fully connected next generation device. It really is a leap forward in technology in this space. We launched that last March. It's been a tremendous success, Grant. The rollout, we achieved more sales and system placements than we would've ever dreamed of.

And also it's really helped us drive our consumable revenue sales. So that really contributed to a, we grew last year despite the macroeconomic backdrop across the world, and the war on the Ukraine and Russia and the lockdown in China, our business grew 46% last year. Year over year, 366 million.

You know, the businesses doubled really in the last two years. And moreover, we delivered adjusted EBITDA profit of 47 million. So it's an incredible journey, which the company's been on in the last couple of years, but at the heart of it has been the launch of Syndeo, and it's just that, really Brent, myself and the board's vision of BeautyHealth is that we become the world's leading beauty health platform company.

We have HydraFacial. We have Keravive. There's another acquisition, SkinStylus, we're going to talk about shortly. But we envisioned to create a interconnected group of brands all with a backend of one shared technology platform and data and that will become very powerful for us. My vision is, will become one of the world's leading sources of skin and scalp data.

And that's a really powerful proposition. We can leverage that data as we are doing today through consumer insights to improve our existing products and services, but we can monetize that data in many other ways. So, That is the vision. But the first step, of course is globalizing Syndeo, our the new HydraFacial device.

Dr. Grant Stevens

Could you tell us a little bit more about Syndeo as it as it relates to the original HydraFacial? What are the key differences?

Andrew Stanleick

Absolutely. Roger and Bill are founders and I'm very close to them. Innovation is really at the core of the DNA of the company, which they founded.

And Syndeo, we've just taken that inspiration from their original HydraFacial device and just moved it from an analog device to a next generation fully connected device. So it's got a number of enhancements. First, just from a functional, for the consumer. The experience for the consumer is better in terms of the delivery system, in terms of the consistency we give.

For the provider, the machine is beautiful. It enables them to capture all the data on the consumer buildup profile to ensure they get the same service time after time. Also, it's jest. So these days, post Covid more and more. If people are concerned about hygiene, so you can operate the sheen without actually touching it, you by waving and doing gestures, which in many consumers really respond well to.

And of course there's many other features which the data enables to unlock in terms of building up profiles on consumers and tailor making and personalize, personalizing. The HydraFacial service to their specific skin type through different boosters and different serums, which we're able to offer.

So it's been a huge success. And of course for us, it moves us from an analog business where we really didn't know once we sold it to a provider, what we're selling out and not selling and of course, now with Syndeo, we are fully connected to every device around the world, so we know how many times it turned, what service was given, what boosters were used.

And of course then also we're capturing the data on the consumer. And also on different providers. We were able to benchmark providers in a specific channels, which providers do certain services better than others? Who do we need to train? What, who can we learn from? It's a multitude of factors, how we can leverage that data.

Dr. Grant Stevens

If I go to a different office for a HydraFacial because I'm on holiday, can they pull up my data?

Andrew Stanleick

Yes, absolutely. So really the first step you'd come into a provider they diagnose your skin and then prescribe you the HydraFacial you'll have if you download the app. And we'll launch a new one this summer, even more improved.

You have your own QR code. And on that QR code is your profile with details about you, your skin type, and what boosters you have to give you the optimum personalization from the HydraFacial. And with that, wherever you go in the world, to have a HydraFacial be it in your local dermatologist or maybe on the way to work at the Equinox gym, or if you're at the Four Seasons in Hong Kong, you'll just scan your barcode from the app and it has your profile ready to go.

So you have that very, very consistent service. It's, it's extremely powerful and consumers and providers really enjoy it.

Dr. Grant Stevens

I bet for consistency and so forth. I knew when I haven't had a HydraFacial for a while. I said I'm an addict to them and I look for them. And I didn't know what you just told me. I did not know the, cuz I'm asked, what serums do you use?

And I and so forth. Now it seems like I just flash my QR code. So I'll, will I have the QR code on my phone?

Andrew Stanleick

Yes. If you download the app, you could do it today. Although we are in the middle of enhancing it ,which we'll launch that at the end of H1 of 2023. But you download, create your profile, you'll have a QR code or we scan it, and then with Syndeo, we are ready to go.

Dr. Grant Stevens

So we have Syndeo and I'm a big fan of it. Now you mentioned Keravive. Could you tell everybody what Keravive is, as I certainly know what it is. Describe Keravive please.

Andrew Stanleick

Yeah, I think HydraFacial is the best kept secret in beauty, but Keravive is another one I think we all know.

If we take a step back, the hair and scalp market is a hundred billion opportunity globally. And it's growing. And with Keravive we have an outstanding formula with clinical results as we do on all of our HydraFacial products. And just as with the HydraFacial device, it cleans your pores to the, three steps. The hydro, the cleaning, the extraction, and the hydration.

Keravive does the same with your hair follicle. So we use the same HydraFacial system. So providers love it, one system, multiple uses and revenue streams. So it's really great for our providers and we obviously clean your scalp, extract and then infuse it with a serum, a vial, a booster of Keravive.

And then we give you a leave-in conditioner. Leave-in to take home, which over, which you use over a three month period. We recommend. And we have studies to show deliver stiller, thicker, fuller hair. And we launched it just before the lockdown of Covid lockdown in March, 2020.

Where it performs today, it does extremely well, but I believe it could be as big, if not bigger actually, than HydraFacial. And I think we also need to consider different channels of distribution where we could play with Keravive. So it's a hugely exciting opportunity.

Dr. Grant Stevens

Absolutely. Okay so, HydraFacial Keravive, and you mentioned something else.

Andrew Stanleick

So we announced the acquisition of SkinStylus. It's a microneedling device cleared by the FDA on indications for the abdomen. And it's a really fabulous device, Grant. I can't wait to.

Dr. Grant Stevens

Is it it different than microneedling?

Andrew Stanleick

It's a microneedling device. But we feel having studied very carefully the market that this one is new, better, and different than anything else on the market in terms of the functionality, in terms of the use of the provider experience, the, even the ergonomics is much easier for the provider to use than other leading pens on the market and the cartridges.

And just like HydraFacial, it's a recurring revenue stream unit. There's a consumable.

Dr. Grant Stevens

Yeah, there's a consumable. Is it for the body only or body and face?

Andrew Stanleick

Today we have FDA clearance for the abdomen, the body and of course we'll be working with Dr. Jwala Karnik to do clinical studies, to seek approval for other indications and of course to launch internationally.

But microneedling was something where Brent and I and all the team really wanted to get into. It is the most complimentary service for our providers for HydraFacial. When we, I spend most of my weeks meeting and engaging with our providers, that HydraFacial Nation, as we call them.

When I meet providers, I think what they have been telling me that microneedling is the most complimentary service. So many of them prescribe the HydraFacial to ensure the skin is clean and its most optimum condition before they do microneedling. So it's very complimentary. It also leverages exactly the same core point where we call today with our reps and the aesthetician in most states is the person in the medical channel who's delivering the microneedling service.

So we are very excited. It's our first step really in our strategy to build out the BeautyHealth platform. And we have this strategy of a build and buy. Build, of course, with our existing growth of HydraFacial globally, and Grant, we have so much ahead of us. Even in the US we are just beginning the journey.

And then of course, Buy, with, we're very well capitalized to buy other products to plug into our platform. And SkinStylus, of course, is the first one. So we're very excited about that acquisition.

Dr. Grant Stevens

So it's microneedling. Does it infuse a serum also?

Andrew Stanleick

No.

Dr. Grant Stevens

Just the pure microneedling. And then you can put something topically or not, correct?

Andrew Stanleick

Yes. So it's it's microneedling and it's a recurring revenue stream. You have the device. In that model of the razor blade. The device, the razor and the recurring revenue stream is the array of needles of different depths.

Dr. Grant Stevens

That's use it and discard it.

Andrew Stanleick

The one lease and it's an emerging technology. It's just doing today, just a few million dollars, growing very fast, but it's all very profitable and accretive to our margin for BeautyHealth. So we really feel good about this acquisition.

Dr. Grant Stevens

And it sounds complimentary to the HydraFacial experience.

Andrew Stanleick

Extremely complimentary. Yeah.

Dr. Grant Stevens

What else is on the horizon? Can you tell us any other acquisitions or buildouts you're doing? Or is it deep, dark secret?

Andrew Stanleick

Yeah, I think the key priority if we talk about our strategy of build and buy. Of course, launching Syndeo globally is the number one priority for the company. And of course thereafter expanding Keravive, we really believe that's gonna be a really strong second pillar for our company.

And thirdly, of course is really maximizing the recent acquisition of SkinStylus Going forward, though in terms of our acquisition strategy, yes, we are actively looking at different targets all the time. We have quite a strict criteria. It's something Brent and I work very closely on, but we want something which is accretive top and bottom line.

It needs to be very complimentary to our existing call point so we can add immediate leverage. And if our rep sales representatives are calling on an office, they have HydraFacial today, Keravive and now SkinStylus, what else can we put in their bag? And that is what we are focused on.

And it needs to have a high net promoter score. Just like HydraFacial has one of the highest net promoter scores in the aesthetics industry. We want something which is not a fad and what consumers and providers will respond well to. And yeah, we've been actively looking at targets. I think what we've found is whilst valuations in the public markets have come down quite significantly in the last 18 months, the private markets are a little slow to follow.

So we continue to to look, but always as a public company, we want to make sure that we are getting the greatest value for our shareholders. So we remain prudent and very diligent in our choices always.

Dr. Grant Stevens

Now in the microneedling device, remind me the name of it again?

Andrew Stanleick

SkinStylus.

Dr. Grant Stevens

SkinStylus. Is that anything that a consumer could take home and do on themselves?

Andrew Stanleick

No.

Dr. Grant Stevens

Is that only in the medical facility?

Andrew Stanleick

Only in the medical facility.

Dr. Grant Stevens

And is that by law or by your own policy?

Andrew Stanleick

By law, yes. This is an FDA Medical Device II. And today just to be, as I said, it's just for approval, indication of the abdomen scars. We would apply for other indications, but it needs to be administered in FDA approved offices.

Dr. Grant Stevens

Okay. Now you mentioned outside the United States, and I've noticed that your growth has been phenomenal, just in general. You talked about the increase in the sales and so forth. What could you let the crowd know? What countries are you in besides the US?

Andrew Stanleick

Yeah, we're in 17 countries, including the US .So 16 international markets, which make up about 85% of the world's beauty and aesthetics markets.

So we're in all the big ones, of course, in Europe, the UK, Germany, France, Spain, of course China, Japan, Korea, Australia as well as just to mention a few overseas. So, very exciting. And as you saw from our last earnings call, we had tremendous growth last year and that was before Syndeo. And particularly proud of our growth in Europe.

We grew 46% and we were hit very hard, like many companies last year in Europe, with the, sadly, the war in the Ukraine and Russia. We lost significant business there. The currency headwinds were very tough to absorb as well, which we did. And the economic situation, although has been improving, was quite tough in Amir last year, but we still grew 46% year over year.

Likewise in Asia as well. Slightly slower. Growth in Asia was still growing double digit. But of course China was locked down for us for, for much of last year and it's a significant part of our Asia-Pacific business. So we're very excited now with China's beginning to open up.

We see that as a real key market for us and future. We really do have the gold standard of the device market with HydraFacial in China and excited to, you know really grow there.

Dr. Grant Stevens

And you've also started, well, not started, but you continued with and really promoted installations in spas and hotels, as you just mentioned, Four Seasons, and luxury brands all around the world, I've noticed not just if you will, doctor's offices or medi spas. Is that correct?

Andrew Stanleick

That's a great point. I think one of the reasons I was so excited to join this company is that the unique partner strategy it has, we work with everyone. Indeed, even some of our competitors.

We've created this unique ecosystem, an omnichannel business model that we have, 60% of our business is in the medical channel, non-medical channel is 40%, and both channels growing very fast, but non-medical channels, of course, non-medical spas. Hotels, gyms, cruise ships, many different channels where we grow and we're able to differentiate our, our products by channel.

Some of our products are only available of course, in the physician office, particularly some of the chemical peels, et cetera, more invasive. But so truly omnichannel business model and very proud of our retailer presence. We're in 550 Sephoras across the US and Canada. We're in 10 Ultas, 10 Nordstroms.

And we've grown internationally last year with the launch of John Lewis in the UK and Galeries Lafayette in France. So a truly omnichannel business, which is very unique in the beauty and aesthetics market. Moreover only really beauty, health and HydraFacial. With the ecosystem we've created, we get to work with all these wonderful skincare brands and partners.

So from the medical side, we work with Dr. Paul Nassif, Murad, Alastin, Epicutis. But then on other sides we work with premium beauty brands such as Omorovicza, or we announced the Dior partnership just two weeks ago, as well as celebrities such as Jennifer Lopez. And that's been a huge success, the Jennifer Lopez Booster, which we launched last fall.

Dr. Grant Stevens

Fantastic. Well, I noticed that in your jacket there, you brought a crystal ball today. Could you pull it out, look into it, and tell me what we're gonna be looking at in one, three and five years in this beauty business?

You've been at your whole life, your whole professional career, you've been in the beauty business and after all, this is the technology of beauty. So looking at that crystal ball, what are we gonna see in a year, in three years and five years, either for you and your company or just in general out there? Tell me what you see.

Andrew Stanleick

Oh, to have a crystal ball.

Dr. Grant Stevens

I saw you bring it in.

Andrew Stanleick

Exactly. Look in my personal opinion, I think the next five to 10 years we're gonna be incredibly dynamic, but also I think transformative for beauty and aesthetics. And there's probably three or four factors in my point of view driving this. I think one of the key drivers we are seeing at the moment, we're calling it the medicalization of beauty.

I think more and more consumers are seeking out products which have clinical database efficacy. I think fewer the days now ahead where consumers are willing to shell out. Hundreds of dollars on skincare, et cetera, without that really clinical claims underpinning.

I think this could be a real Kodak moment for traditional beauty companies where consumers are looking for products and services like HydraFacial, which deliver that skincare, deliver that efficacy, which are non-invasive. And I think if you look at the broader aesthetics market, the affordability now of neurotoxins, of HydraFacial, of clinical skincare, of lasers products which deliver immediate results and are becoming very affordable. I think that medicalization of beauty is a key driver and will be really transformative.

I think the second key driver we see is this destigmatization of beauty and aesthetics. It feels like wherever I go around the world, dinner party and cocktail conversation is dominated by people talking about their treatments, something which was taboo not many years ago. And it's bringing younger people into categories, it's bringing more men into the category. So again, I think that's gonna fuel significant growth in innovation.

I think thirdly as well, post covid, it's really transformed how consumers view health and wellness. I think it's really changed. It's not just about looking good, it's feeling good. It's a broader definition, including mental health, wellness. I think, again, this is gonna fuel innovation and growth in these categories in the coming years.

And I think finally, perhaps most importantly, it's just fueling a broader definition of beauty. I think when I started my career 25, 30 years ago now, beauty was very much a European aesthetic, a very one size fits all cookie cutter approach. I think now consumers and companies are embracing a much broader definition of beauty. And I think that again, that's fueling the growth of different brands, different services.

I think again, BeautyHealth is really well positioned to capture that growth.

Dr. Grant Stevens

Excellent. Well, thank you very much for joining us here today. And educating us and giving us a look into the future. I've been a loyal consumer of HydraFacial for many, many years, and I look, and Keravive, and I look forward to more growth on the part of the BeautyHealth company and then working with you and using your products. My consumers, my patients love it.

And as you know, we also have them at OrangeTwist, which is offices that have HydraFacial also, which is the mainstay of our treatments. So thank you very much.

Andrew Stanleick

Thank you for having me. And thank you for your partnership. It's been great to be on.

Dr. Grant Stevens

Yes, absolutely. And thank you all for joining us today on this episode of The Technology of Beauty. We'll see you every Tuesday. See you next week.