Medical spa and massage therapy is ripe for M&A activity
Across the United States, medical spas and massage therapy locations are gaining popularity and they’re growing rapidly as consumers seek out alternative forms of healthcare. Given the highly fragmented nature of this market, both strategic and financial investors are making investments in these spaces.
U.S. medical spa landscape
Medical spas are a convergence of traditional day spas and medical clinics. They’re increasing in popularity as both men and women seek treatments and services that enhance their appearance. Medical spas, (“med spas” or “medispas”), offer day spa services like facials and waxing along with noninvasive, cosmetic dermatological and surgical treatment including laser and light-based therapies, and cosmetic Botox and fillers.
They offer consumer the benefit of a spa-like experience while receiving procedures and treatments that are traditionally found in a licensed doctor’s office. While not every procedure is conducted by licensed healthcare professionals, they are usually performed under their supervision while estheticians handle the more routine day spa therapies.
Growth in the medical spa market
The U.S medical spa market has grown rapidly and is currently worth close to $4 billion. From 2013-2018, the number of medical spas increased by CAGR of 16.6 percent. This is due to an increase in disposable income, a growing contingent of younger clients, new technology, and desire among consumers to avoid surgery. Baby boomers, trying to retain their youth, make up the majority of spa customers, but future growth is expected to come from millennial consumers.
Factors driving growth:
- Technology is boosting industry growth. Advancements in nonsurgical treatments have increased availability and affordability.
- Demand for treatments that make people look and feel better. Botox injections, laser resurfacing, and body contouring align to these needs.
- Social media influencers are lessening the stigma around cosmetic treatments. Online videos of procedures and treatment feedback are helping these offerings become more mainstream.
- More than a medical spa. To create consumers for life and increase revenues, medical spas are now selling skincare products that boost the results of the treatments they provide.
U.S. medical spa market – an overview
Growth in the massage therapy market
As more Americans seek out massage services, the market is expected to grow in the coming years. The U.S. massage therapy market was estimated to be valued at $18 billion in 2018, growing at a CAGR of 8.9 percent from 2010-18. 19 percent of adult Americans received at least one massage between July 2017 and July 2018, and 31 percent received a massage in the last five years.
Factors driving growth:
- Millennials. This group has a strong earning potential and makes up a significant and stable market for massage services.
- Health benefits. The benefits of massage therapy in treating a variety of symptoms and conditions are becoming more accepted.
- Preventive care. As consumers seek to lower their healthcare costs, preventive measures are increasing in popularity. Consumers are using alterative care therapies like massage therapy, medication, yoga and relaxation to relieve stress and perform self-care.
- Hospitals and medical centers are also promoting these therapies by building luxurious, spa-like wellness centers for mind-body healing.
Leisure & Wellness M&A
Overall deal volume increased by 1.6 percent in 1H’19 to reach 25,404 compared to 1H’18. Disclosed deal value saw a decline of approximately 2.4 percent over the same period to approximately $1.86 trillion. Deal making in the U.S. L&W industry sustained its momentum, outpacing the previous quarter both in terms of deal volume and value.
Factors that are impacting deal making in the United States include trade tensions, persistent qualms about the future of Brexit and increasingly delicate global economic growth. Nonetheless, large U.S.-based companies continue to take advantage of opportunities created by supportive financials markets to negotiate transformational deals in Q2’19.
M&A activity in the global L&W industry increased in the second quarter of the year, both in terms of volume and value. Disclosed deal value witnessed a significant improvement on a quarter-over-quarter basis, supported by the announcement of some large deals.
L&W deal activity in the U.S. increased by ~29%, with 99 deals in Q2’19, compared to 77 deals in Q2’18. The U.S. contributed 43% to the global deal volume in Q2’19, compared to 40% in Q2’19.
