Keynote Interview with Brent Saunders at AIS 2022

Dr. Grant Stevens

Brent Sanders is our keynote speaker here in this fireside chat. This is a fire here behind me. And as you all know, Brent is the executive chairman of the BeautyHealth Company. He also was the first speaker at our first AIS in 2018. I remember, and in those days he was running a little company called Allergan, I think, wasn't it?

Brent Saunders

I believe that was right.

Dr. Grant Stevens

I'm pretty sure that was it. And you acquired Allergan when you were running Actavis, right?

Brent Saunders

That is correct.

Dr. Grant Stevens

So Actavis, Allergan.

Brent Saunders

Actually started Forest, Actavis, Allergan. And we had three names.

Dr. Grant Stevens

Yeah. And then you took a little time off.

And then you started this other little company, and then you bought HydraFacial. Before we get to the beauty company and HydraFacial, could you tell us a little bit about yourself? We are here doing a technology of beauty lookalike show. We're being recorded and this will be played.

Many of you have seen the technology of beauty and many of you have been on the technology of beauty. You can see it on YouTube and we have a booth out here and we're filming. And if any of you would like to be on the technology of beauty we're doing that all day and into the evening tonight.

And this will be on YouTube, this interview with Brent. So I'd like to get to know you a little bit. Where are you from, and tell us a little bit before we get into your professional background.

Brent Saunders

Absolutely. First it's a pleasure to be here. Great to be back in person. Thank you, Craig. Thank you Grant.

The technology of beauty is a great podcast. I enjoy it. I've always wanted to be on it, but it has a very west coast bias. You have to be on the West Coast to be on it. So, and I'm an east coaster, so I don't have a problem with that. So this is a this is a great opportunity to be on the, on, on the podcast, so I'm honored.

So I'm I grew up real quick. I grew up in Pennsylvania outside of a town called Allentown. So I grew up in a farming community more or less. Went through the Pennsylvania state school system for college and graduate school, both law school and business school. Then was a consultant and a partner at Pricewaterhouse consultant, and then went to a pharmaceutical company who was a client of mine sharing plow a long time ago.

And really developed my most of my business early experience at Schering-Plough, working for a guy named Fred Hassan, who was a mentor to me and is an amazing man. I'm having lunch with him, I think in a week. So I still stay in touch with him. Which I think proves the value of mentorship. Cuz I still reach out to 'em.

And from there did a lot of interesting things. Was CEO of Bausch & Lomb, it was a go private with a private equity firm in New York. And then sold that to Valiant and that became then Bausch Health today then went to Forest and merged that with activists. Activists with Allergan and. We wound up having a really great transaction with AbbVie almost two years ago now.

And it's did what everybody else did, who was bored in a pandemic and a lockdown. I did a spac and from my, my, my house in Miami and worked out very successfully and we wound up acquiring the HydraFacial and renaming it BeautyHealth. You got to meet Andrew our amazing new CEO at the previous panel.

So it's it's been fun and now I'm just doing some boards and investing and trying to figure out what to do.

Dr. Grant Stevens

So tell us a little bit more about HydraFacial.

Brent Saunders

Yeah, so HydraFacial it was a brand, it was a service that I had always admired. When we were at Allergan we always kept an eye on it.

It's it's you. A democratization of aesthetics. It's good entry point for people coming into the aesthetics market because it's relatively inexpensive. It delivers very consistently high remarks, great NPS scores and it's very good for your skin and no downtime. So it was something that we always kept an eye on.

We had some partnerships with them when we were in elegance. I was aware of the brand. And when I raised the spac, it was, I had a list of companies that I admired that I wanted to acquire a HydraFacial. the first on that list. And fortunately it worked out. Timing in life sometimes is everything.

And so if you recall when I did it, we were in the middle of a lockdown and aesthetics. And Steve Diane talked about this. Aesthetics went to zero for a short period of time, right? Everybody remembers that. Steve talked about his, worrying about his practice and what was gonna happen, but everybody was.

And I had I had studied the data over years and years of what happens during tough times in the aesthetic marketplace. And I knew how resilient this market is. And, '08, '09, the Great Recession was a great proof point of that. And so my bet was that this was temporary and that it would come back and it would come back in force.

And I happened to be right. So I was lucky. So I approached the owners of HydraFacial private equity firm. Chicago and I said, Hey, you want to sell? And they were not sellers, but for that moment, I think because revenue was zero and they were burning cash. And doc, who's the head of sales is laughing cuz he remembers.

And so timing in life was everything. And people thought, are you crazy? Are you gonna spend, I think it was about 900 some million dollars on a company that has gone to zero revenue? I said, it's gonna come back. Don't worry it, it will come back. And sure enough luckily, thank God I was a little nervous.

I have to admit I didn't show my nervous, but I was nervous. It came back and not only came back but record come back and sales and consumer demand and that's true of lots of other services in this area, but timing in life was really well and it's a great product and a great team.

Dr. Grant Stevens

And you doubled the sales and you have a brand new unit. Tell us a little bit about the new HydraFacial.

Brent Saunders

Yeah, so the key to the new unit, which is called Syndeo, is connectivity. There are a lot of functional upgrades from the base. Lot of workflow design, lots of better technology. But the thing that gets me most excited and perhaps I'm not doing the sales pitch that Doc would do, but is the connectivity.

Ultimately we will have a connected ecosystem with our providers and our consumers. We'll be able to customize the HydraFacial experience for each patient wherever they may be. We'll be able to interact with those patients. And then of course, we'll also be able to get analytics and data for the providers to understand how they're using the machine, how they could better use the machine, how they could better train around the machine and deliver a better experience.

So it's really a win-win across the entire continuum if done correctly. Just launched a few months ago off to, far exceeding our expectations. But very excited about the enthusiasm for the new machine.

Dr. Grant Stevens

I know we have the new machine in the marina and love it.

Anything more in terms of HydraFacial you can share with us in terms of either serums or other things that you're going to be adding to the line and then we'll move on to BeautyHealth?

Brent Saunders

Yeah, absolutely. I think the key for us is continuing to innovate. One of the things that, makes this one of my favorite meetings is it's all about innovation.

And as someone who's deeply passionate about this one of the things that I, that gets me so excited is when I see real innovation, not me too innovation or incremental, but real innovation coming into the marketplace. Now there's a role for me too, incremental innovation.

But there's a tremendous need for breakthrough innovation. And we have to continue to challenge ourselves through more. And that's what we're doing at BeautyHealth. We're looking at new ways of using the technology, like the scalp and the acidification of. We're looking at new serums and boosters and technologies to put in the skin or the scalp as we go, and we're looking for more democratization ways of delivering that to bring more people, more consumers into the funnel for all the technologies that everybody's talking about here today as well.

Dr. Grant Stevens

Thank you. Now looking forward, BeautyHealth in particular, BeautyHealth company, are you in the buying mood?

Brent Saunders

Yeah. So one of the things that that probably separates us from other companies that started in our genre of launched a year and a half ago is we did a a convertible security several months ago when the markets were very and we raised close to a billion dollars, 900 and some million dollars of cash, which we now have on our balance sheet.

And so we're, we are inquisitive, we are looking for other brands, other technologies, other innovations to add to the portfolio. And as Andrew mentioned during his presentation our center of the universe is the esthetician. And when I came from Allergan, our center of the universe was the board certified dermatologist or plastic surgeon as you know.

We call that our core customer here. Our center of the universe is a different provider who has largely been, somewhat ignored by the industry because of, they're at the bottom of the food chain in terms of education and training, but we're really committed to that training and really committed to bringing, mostly, I'll say her, because they're mostly female.

We're bringing her new innovations, new tools to support. Medical office, their spa, whatever it may be. And we view her really as the entry point for the category. And so if we can expand that funnel, everybody does well. And that's why we call ourselves an and company. We really don't view ourselves as competing with anybody, but really supporting the entire industry.

Dr. Grant Stevens

Couple questions In terms of acquisition, what's your appetite? Is it device, is it topical, transdermal? We've heard about some exosomes. We've heard about different technologies here.

Brent Saunders

I'm super, super excited about the exosomes and the future and the gene editing and then cell therapies and everything else that is out there.

But look, I think for us it's about a proven brand. It's about real innovation. We, again, we're looking for things that can add to that and story. We're not looking to, compete with the next, let's say, energy device that plugs into the wall and you. Is just incrementally better in some facet versus something else that's out there.

We want something that's truly differentiated and we're looking at big, small, and everything in between. Very open-minded about it but want something truly novel.

Dr. Grant Stevens

So since your primary thrust now is aestheticians, how do the physician fit into your plan? Are you gonna ignore us?

Brent Saunders

No, never. Look, the aesthetician works for you, right? How many do you have? But look, I think the way we see it is, our biggest customers, frankly, are plastic surgeons. They own the most machines. And they're, thank you. I was looking for that. No and they're and they're, they are the incredibly important customer base.

But let's be fair, how many plastic surgeons actually do a HydraFacial? None. This is about extending your practice, extending your ability to build your funnel, to bring more people in and give more satisfaction into your, your surgery. And I always think about it as the funnel is as a plastic surgeon. And you guys are really good at it that, other medical professionals need to learn. , the extender, the use of the aesthetician, the nurse, to do the, whether it be cool sculpting or mirror dry, we were just talking about with session or HydraFacial, and then migrate them back into injectables and then back into surgery is the best way to run that practice.

And so we're at the very front of it and we want you to be the best at the very back of it. Operating in the room where you've been trained to do it. Same with the dermatologist. We'd love to see them extend. They are starting to do it. And that's great for everybody because not everybody can come in and.

I'm gonna say Botox cause I'm loyal to Botox, but, a $2,000 or $2,400 Botox session, right? They wanna start with $150, get comfortable with the provider, and then move into, the injectables perhaps a year or two into their experience.

Dr. Grant Stevens

And that's where HydraFacial has been so terrific in terms of patient acquisition. And as you say, the funnel upwards, right on through the process, culminating for the plastic surgeons with surgery and the dermatologists, the things that they're doing the best.

Brent Saunders

Absolutely. So we all have a role to play. We wanna play our role exquisitely well, but we wanna stay in our lane at that front end.

Dr. Grant Stevens

I agree with you very much. Before we get to your predictions, first of all, wasn't Steve Diane's talk extraordinary? Let's hear it for Steve Diane. Boy Steve, you crushed it. And I couldn't agree with you more, and we saw, we all lived through that. And just as you said we came back way stronger and we didn't know if it was pent up demand, if it was warehousing, if it would peter out, but not at all.

It just continues to g to ramp up the curve as actually escalating and accelerating. And we're seeing not only non surgicals, but surgicals consumption. Just unbelievable. Having said that, and I know you said you agree with that and you studied it and predicted it good for. I also saw it after nine 11, so nine 11 and two seven.

That's another one. Seven and eight. We saw this surge and now we have a surge, but I think it's going to continue because we also have the younger patients utilizing the services. We have extra cash in the system and a lot of reasons for it accelerating and growing.

Having said that, every time we do a technology of beauty, I always ask the guests to look in their crystal ball that they brought, and you've been in this industry long enough now, and I see it sticking outta your coat pocket there. Pull that crystal ball out, and please tell us what you see for our industry.

This is Aesthetic Innovation Summit, not just for you as your company and so forth, but give us some insight. You've studied this. Give us a sort of a 1, 5, 10 year picture if we're here 10 years from now, five years from now, which I hope we are.

What type of innovations are we gonna be looking at? What's the market going to look like? The consumer, the device, whatever. Give us some insight.

Brent Saunders

Yeah, my, my thought is, and I see it happening, I see the green shoots, just even in some of the presentations we just saw from the great innovators, companies that, that were here is science is really converging into this space.

And, there was a time there were just a handful of companies that were really committed to true R&D and novel science solutions to issues that we face in the aesthetics world. And now there's lots of it. There are lots of private equity, there are lots of venture funding.

The big companies are supporting it. Doctors are behind it. Physicians are inspired by it. And my sense is the development cycle for real science to solve some of these problems is several. And we're at the very beginning of it. And I suspect over the next five, 10 years, we'll see a bunch of those fail because that's the way science works and we'll see a bunch of them succeed.

And that's gonna be great for patients, that's gonna be great for physicians to have better tools to provide solutions. And it's be better. It's gonna make the market bigger, stronger, better. So we have some great products today. We have some mediocre products today. I think, Steve, you said 90%. Was your threshold?

I actually think it's even higher as someone had to sell 'em. You just had to deliver 'em. Aesthetic medicine is cash pay and people want it to work every time. They're not sick. And so I used to say to pharma CEOs all the time this, because they laughed about aesthetic medicine.

I said, our standards higher. If you have a drug that works 30% of the time it gets approved and it's a, it could be a blockbuster. You can't have an aesthetic drug that works 30% of the time, you'll get you, you'll piss off 70% of your patients, will never come back. And we have very high standards in this industry.

I'm super excited about where the science is leading us. It's great to see that really come to the forefront more than it ever has. And the market will just continue to expand and grow if we all do our jobs to, to continue to promote real innovation and real science in this.

Dr. Grant Stevens

Every week I get a chance to interview the movers and shakers of the beauty business and clearly today with no exception. Thank you, Brent. Appreciate all your insight and your friendship.

Brent Saunders

Yeah, likewise.