Podcast - Navigating the Rapid Growth of the Med Spa Industry

Morgan Ribeiro: Welcome to Counsel That Cares. This is Morgan Ribeiro, the host of the podcast and a director in the firm's healthcare practice. Today, I am joined by Morgan Ivey, a partner in the firm's Healthcare Transactions Group and Annie Robertson Hockey, president and head of consulting at Skytale. And today we're going to discuss the evolving and rapidly growing medspa and aesthetics space. And just to set the stage before we really dive into the details here, I want to provide some interesting statistics and facts about the med spa and aesthetics sector. So medspas, these are clinics and centers that offer a wide range of non-surgical treatments, anything from laser treatments to injectables, such as Botox or fillers, and really any other aesthetic procedure such as facials, etc. So for med spa and aesthetics, the market value in 2023, it was estimated at $16.5 billion, and it's projected to reach $45 billion. And between 2022 and 2023, the number of med spas grew from around 9,000 to over 10,000. So very rapid growth just in a 12-month period. And as the number of medspas continues to grow, it remains a highly fragmented industry. And the category continues to grow despite some of these other economic headwinds that we're seeing. And of course, I think one of the things that we've seen just as consumers and looking at the market as injectables, of course, are one of most in demand services. Today, we're going to dive a little bit deeper into some of these trends and how investors and medspa owners should be thinking about these trends, any legal and regulatory issues to consider and much more. So with that introduction, I want to turn it over to Annie and Morgan to share more about their practices and the work that they do in the medspa space. Annie, I'll start with you 

Annie Robertson Hockey: Wonderful. Well, thank you so much for the introduction. And it's a pleasure to be here. So as you mentioned, I am president and head of consulting at Skytale Group, which is a investment banking and management consulting firm focused in healthcare. On the investment-making side, we do both buy-side and sell-side work. Although in the medical aesthetic space, we do a lot of sell-side work, often representing owners, founders who are looking to raise outside capital or sell, right, to financial sponsors such as private equity or family offices, etc. On the management consulting side of the house, which is the side of the house that I oversee more directly, we do engagements all the way from a startup founder or owner with an idea through, all the way through private equity, financial sponsors who are looking to invest in this medical space, and platforms. So with owners and providers who perhaps own medical spas, financial sponsors who are looking to invest in this space, as well as those platforms, whether or not they're private equity backs that are looking for just help with strategy, you know, pricing, go-to-market, corp. dev, etc. So, happy to be here and dive into one of my favorite topics.

Morgan Ivey: So thank you Morgan and thank you Annie. It's a pleasure to be speaking with you both today. So as Morgan mentioned, I am a partner with Holland & Knight. I sit in our Nashville, Tennessee, office and I, similar to Annie, work with a lot of the same clients. So I work often with founders, owners of healthcare companies, as well as investors, private equity firms, family offices, independent sponsors and their investments, their portfolio companies in the healthcare sector. And I do spend a lot of time with medical spa clients or clients who are interested in that and adjacent spaces. We're primarily in the middle market and lower middle market. That's a very broad category. And we enjoy working not only on the M&A side, so we help people transact, but we're also sort of an extension of your business thinking arm. So we are sort of like outside general counsels and advisers. We help keep in mind your operational needs, your RCM needs, your payroll and HR needs as they arise, in addition to how that may impact both your more imminent transactions and future liquidity events when working with sponsors and investors in those transactions. So it's a pleasure to be speaking with you both. One of my favorite topics as well.

Morgan Ribeiro: Wonderful. Thank you both for those introductions. Obviously, our listeners can tell that you both have a lot of experience working in this sector of healthcare. As I mentioned in my introduction, we've seen a lot of growth in this space. Investors and advisers like yourselves tracking medspas say that there's ample opportunity for expansion and building platforms in a highly fragmented market comprised of smaller clinics. And the medical aesthetics industry is experiencing significant growth. And a lot that is driven by, you know, as I mentioned earlier, the increasing consumer demand for non-invasive procedures. But, and I think there's a number of other drivers that we're seeing. So would love to hear from both of you just more background on some of the factors that are driving the growth of the space. Annie, I'll maybe look to you first to maybe mention a few of the drivers that you're seeing in your work with medspas.

Annie Robertson Hockey: Yeah, this is a question I'm asked about a lot, especially in light of sort of, you know, current macroeconomic factors, and one of the things that I always come down to is the pursuit of youth and beauty and health has been a pursuit that is, sort of proven that it is maintained over time. It's always been here, and it will always be here. And so, I think there continues to be growing interest in sort of more of the non-invasive types of cosmetic procedures and preventative aesthetics care. And I think there are many factors as to why kind of consumer demand is continuing to grow. And, you know, I think social media and other platforms are really normalizing aesthetic procedures and driving awareness there. It's also becoming something that is not just limited to older folks, wealthier folks, but is really becoming a lot more sort of socioeconomically accessible across the socioeconomic spectrum.

I think that a few of the things that we're seeing really expands that TAM or that total addressable market is just the expansion of demographics. We're seeing shown interest in this space. Men have historically been a small but now very much growing segment. Their estimated share of the market was about 5 percent previously. I think we're expecting it to be over 10 percent by, say, the end of 2025. We're also seeing more and more younger folks entering the industry, even from, say, a preventative perspective. I think in 2023, 42 percent of patients were millennial or Gen Z sort of age range, and that compares to 25 percent in 2017. So, you know, think about that type of growth in the recent years is pretty remarkable. And I would just say that the kind of addition of longevity and weight loss and functional wellness into this space, we really think is only increasing that addressable market or a number of folks who would be potentially interested in exploring some of these services. I will also say just in terms of money flowing into the space, the industry has the three characteristics that are just very compelling to private equity and other financial sponsors. You know, one is there's recurring revenue. It is deemed to be sort of recession-resilient, if you will, or resistant. And it's also private-pay cash-pay model. So if you think about those three things, in terms of recurring revenue, what we tend to see is that once someone starts a procedure like a neurotoxin — say, that would be say Botox or a Dysport or a Letybo, one of those neurotoxins or even dermal fillers — it tends to be something that they come back to. We will see folks stretch out their treatments if financials are tight, but we do rarely see folks stop altogether. So, you know, recurring revenue, good. We like that. The other piece being, you now, this cash-pay model. One of the features of healthcare that can be so tricky is your receivables and knowing when money is coming in and how can you predict that. And sometimes when you treat a service, you actually don't know what you'll be compensated for that service. And this is all-cash pay, which of course is incredibly compelling, either for the consumer or the healthcare segments of a private equity firm. So again, just capital coming into the space is really expanding and upleveling the market from our perspective. Morgan, I'm not sure if there's anything else you want to add there.

Morgan Ribeiro: Yeah, and I think too, I mean, Morgan, I know we're going to get into it later, but just on the private-pay model, I know that that then of course bleeds into, from a regulatory standpoint, some of the, you know, lighter on the regulatory front given, you now, the lack of government pay here. But any thoughts on the pay model or other kind of drivers of this growth in the space?

Morgan Ivey: Yeah, thank you Annie and Morgan. On the private pay, you're exactly right. There's certainly an attraction there because historically investors in the healthcare sector have gotten accustomed to operating in a regulated industry, and when there's government receivables involved and even commercial receivables in certain areas in certain states — but especially when there's government receivables involved — you have to operate under a higher standard of compliance and really make sure you're paying very close attention to your billing and coding protocols. That's not as applicable here. I say "as applicable" because there are certain exceptions where a state may have, for example, an all-payer statute. Florida has the Patient Brokering Act as one example where it doesn't matter who the payer is, even for patients, they still are subject to heightened scrutiny. But that aside, not exposing the company to potentially troubled damages. So under Medicare, they can seek three times whatever the overpayment may be. It is automatically just introducing a lower risk category. And so not only does that impact investors, but it indirectly impacts investors because now you have lenders who are more comfortable with this. You have LPs who are comfortable with this. And you also have insurance carriers. So a rep and warranty insurance perspective, carriers historically have shied away from underwriting healthcare deals primarily because of the government reimbursement risk and the travel damages, potential exposure. They did not want to underwrite that higher risk. That's not applicable here. And so we're seeing more of an appetite because they're able to more easily get the support from their lenders, their investors and their underwriters to the extent RWI is applicable. So that certainly can grease the wheels, so to speak, for investors in the space.

Another couple of areas or I suppose bases for increased interest in this space would be the technological advancements and the promulgation of the MSO, the management services organization model. With technological advancements, we're seeing a stronger and stronger interest on the employee front in working in a practice or a space with high technology and having an industry or a practice where an investor has come in and ensured that there is, even if it's not the top of the line technology, but if it is just good technology, perhaps better than something that perhaps a single founder owner may be able to have in place. It's more attractive, and they're able to combat some of the headwinds that are faced by the labor industries and labor challenges that healthcare operators and investors are facing. So if you can create an environment that has some of these technological advancements, that puts a fresh coat of paint on the walls and has the support staff and the business acumen to help the practice operate more seamlessly, it's just more attractive for an employee, especially young employees in medspas. You're looking at injectors and nurses, RNs. It's comforting to come to work in an environment where you know you have to support the tools and the camaraderie of the other people and personnel that just foster a really happy culture and a culture of retention. And then lastly, the MSO structure that we are very familiar with in more regulated healthcare industries that the medical spa industry historically is less familiar with is really helping whet the appetite for more tried and true healthcare investors in this space because it is sort of preemptively structuring in a manner that will pass muster under these new healthcare laws coming into effect on a state-by-state basis. From a regulatory perspective, it's a little bit like the Wild, Wild West right now, and we are seeing states rapidly adopt laws, statutes and even put in place FAQs on medical board websites that have caused these medical spas to have to retroactively adjust their operations. And so to preempt that, if you implement an MSO structure, it doesn't matter if these laws come into effect. You are structuring this in a conservative manner that allows an investor to come in and know that, even if, for example, Pennsylvania were to mirror Ohio laws that have come into effect impacting supervision ratios, scope of practice requirements or, even from a corporate practice perspective, come out and said that a management company cannot employ physicians because there's some ambiguity in Pennsylvania as to whether or not that's permitted. And so some operators in the medical spot industry are having, for example, management companies employ licensed providers. And so I think preemptively adopting an MSO structure is making this a more attractive, conservative investment for investors, lenders, LPs, carriers.

Annie Robertson Hockey: And that's even — I'll just chime in really quickly — that's actually something that we've seen shift over the past few years with our consulting. Entity structuring used to never really be a topic or a concern that was brought up to us when we had newer medspas, you know, either just beginning or seeking help with us, you know in terms of preparing to go to market for some sort of transaction, and that has very much entered the dialogue as a question that folks are asking sooner rather than later, kind of understanding that there might be implications down the line in terms of how they structure their entity, their businesses earlier on. And we love that, we welcome that, we connect them with incredible legal counsel to make sure that they are set up for success and really just keep their options open, should they want to do anything with their business later.

Morgan Ribeiro: Great. And, you know, I think framing this just a little bit differently, we talked about the drivers of growth, but we're obviously, you know, looking at how this market is very right for consolidation. I mentioned obviously the growth of the number of clinics and medspas that we've seen over the last few years. But Annie, maybe you could kick us off with this, but just like, why are we seeing that kind of consolidation? And why is it still right for that kind? Where are we in the evolution of this market?

Annie Robertson Hockey: No, it's a great question. I mean, I think we've just spent some time talking about how, you know, first of all, this is just a really attractive asset. You know, we've seen a huge rebound since the COVID-19 pandemic. To put it in perspective, estimates show that revenue, there was revenue decline of sort of, I think, approximately 25 to 26 percent in 2020. But the industry really bounced back in a significant way in 2021, increasing by a rate of almost 70 percent, right? So just showing that resilience. And I should mention, those are stats from the American Med Spa Association, AMSPA, which we may refer to during this podcast a few times. Yet it's still so fragmented, right? We are still really at the early innings of what this could look like. Just to put it in perspective, approximately, I think we think about 81 percent or 80 percent are still single locations. And over 95 percent of medspas are not owned by private equity sponsors. And 68 percent of practices are owned by one single owner. And just to put those numbers in perspective, I think, depending on who you talk about, I think the thought for dental, a corollary industry, is that we're about 30 to 40, somewhere in there, percent consolidated. And if you think about how long dental has been sort of within the ecosystem of private equity consolidating, that means we have years, if not decades, to get nearly to that number. And so for us, this is really exciting. To Morgan's point, it's a little bit of the Wild West, but what that means is there's so much opportunity if you do things the right way. And we're excited to see how it continues to pan out.

Morgan Ribeiro: Awesome. Morgan, anything you'd add to that? I mean I think obviously you know we have a lot of clients that are investing in the space, are interested in investing in this space, as well as, you know, on the sell side as well, and I think there are certainly, you know, some other kind of investment trends. Maybe you could touch on that, Morgan.

Morgan Ivey: Yeah, certainly. A couple come to mind that I encounter pretty often, and one is the growth strategy, organic versus inorganic. And I think I usually see a combination of the two. I think there's a thesis around both that makes sense in this industry. Finding an attractive geography and really developing some density in that area and building some Danobos around it, is a thesis that I've heard and seen clients execute on very well. So that's one trend that I have seen in this industry specifically. And a related point, I think, is that we're seeing investors often say that they will dip below their typical floor just to tap into this industry if they find a good asset. So to Annie's point about how 80 percent is a single location and 68 percent is a single owner, these medical spas often do not have much size to them. And that makes it all the more ripe for consolidation. And so I think investors are viewing this industry with an eye towards willing to dip below, find some geographically complimentary areas, find some really good assets with good operators, good people, where there's a lot of opportunity for improvement in the areas, where those with business acumen are really primed to do well and bolster the success of a company. So marketing, bookkeeping, recruiting, HR, and finding those assets that are attractive for that type of consolidation, we are seeing investors dip below their typical floors when it comes to medical spas.

Morgan Ribeiro: As we work in different sectors across healthcare, I think there's different variables that then dictate the type of deal structures that we're looking at in these transactions. Morgan, are there any kind of deal structuring trends that you're seeing in the medspa space?

Morgan Ivey: Yeah, I might have touched on it earlier, but it's the MSO structure is really sort of taking over in this industry from what I'm seeing. Every now and then someone will ask about deploying a franchise model, which is historically been the dominant structure for medical spas. But I think people in the space — investors, owners and operators — are all recognizing that if they want to position themselves for growth and potentially future liquidity events and investments, capital raises, whatever that may look like, it's just a more flexible, more common denominator for just to implement and deploy the MSO model. It allows for physician oversight. You don't have to worry about whether or not a state requires a physician or an APP. You can have that physician ownership there. And it just is a more flexible conservative structure. So we are seeing that not quite universally, but almost universally, from a transaction structuring perspective.

Morgan Ribeiro: And Annie, I'm curious, I mean, you guys, outside of the deal context, like when you're being brought in by these practices, particularly on the consulting side, like are there, we've kind of touched on HR operations, are there kind of main buckets where you're getting a bulk of the questions or where they need outside advice?

Annie Robertson Hockey: It's such a good question. I mean, folks will come to us all the time really to get support kind of putting their lipstick on, essentially, before going to market. I think the metaphor I sometimes use is, if you're planning to sell your house, typically folks will paint the walls, maybe organize, maybe use a stager, and there's an outsized return when you do certain things to signal a level of quality. So a very fundamental basic one is the state of your finances in your books. If you spend a little bit of time earlier on getting those organized, not only is it nicer for the buyers to look and to see what's actually happening in the practice, but it signals competency of numbers, it signals data-driven decisions, it signals a degree of professionalism that will merit more times than not, again, a premium on the purchase price. And the other thing I'll mention is, there are a few areas that we do know that buyers tend to really prioritize looking at. And I personally think that there are kind of two areas that signal a lot about just the overall operations and health of a practice. And those are, provider retention and patient retention, right? And so if you are running a successful, profitable, efficacious medical spa, hopefully that means your providers are happy, they have productive compensation structures that are serving them as well as the business and therefore staying. Similarly speaking, if you have happy providers and are delivering quality services, hopefully your patients stay as well. So there's some key metrics that we also really like to focus on to get within benchmark range before we, you know, we'll encourage folks to go out to market if that's their goal. Again, because that little bit of investment earlier on tends to be well worth it.

Morgan Ribeiro: Awesome, I want to come back in a minute to a couple of the things that you mentioned, but just as we think about kind of the overall operations of these practices, Morgan, from a legal standpoint, outside of the deal context again, like are there certain legal considerations that either investors or current medspa operators need to consider?

Morgan Ivey: Yeah, certainly. And I might have mentioned it briefly earlier, but we see oftentimes when we are working with a medical spa, be it a founder or an investor, they're often asking a lot of questions about supervision and scope of practice. Those are two of the areas that are ripest for foot faults and mistakes because they also directly impact margins. And so it can be tricky to find that balance of both maximizing margins, but also not ignoring the appropriate supervision ratios that are required. And the difficult aspect is — or one of the challenges is — that there is no black and white answer to what is appropriate supervision in every single state. It's not as if the same ratio of APP to nurse or physician to nurse is the same in every single state. And sometimes it's, usually it is silent. It's wonderful when we find a ratio in black and white, but usually it's not there. And so, we're often getting questions about can the physician be remote in another state and provide a telehealth good faith examination, and then can the RN perform the rest of the procedure? It depends on a lot of things. It depends on what the contract says. Is telehealth permitted? Are you billing under the physician's number, or are you billing under somebody else who's on site? How accessible is the supervising person, physician or mid-level? And what procedure is being performed? Is it an ablative laser or is it a non-ablative laser? Those types of things. So we are often stepping in to help clients navigate those issues because they don't just impact regulatory compliance, they impact the bottom line. So those are two of the most critical issues that we see and often come in to help clients assess.

Morgan Ribeiro: So we talked about this earlier, Morgan, you were touching on the technological advancements, and obviously from a recruitment standpoint, not only from the folks that are working in the clinics, but also patients and otherwise, they want to be somewhere that's innovating and has the latest and greatest treatments. And we're seeing that from anywhere from new injectables coming on the market to new types of facial procedures, everything, as well as technology. And as the market becomes more competitive and more and more practices are popping up, what are some of the ways that you have seen practices, Annie, kind of keep up, and how do they market to patients as well? Because I think that's a huge piece of this, is not only do you have those latest and greatest procedures or technologies, but how do you communicate that and share that with your patients to be able to pull it in as more of these clinics are popping up? Like Morgan and I sit in Nashville, and it seems like every day there's a new one coming up on the corner. And so how do you kind of stand out in this crowd, if you will?

Annie Robertson Hockey: Yeah, I mean, I would say first of all, how fun is it that as part of my job, you know, it's a requirement for me to stay apprised of the latest and greatest in medical aesthetics procedures, right? And it is such a fast-paced industry in terms of both new treatments, right, new lasers, new types of pharmaceuticals, but also new techniques. I think something that we often forget to talk about is that aesthetics is both an art and a science. So, you know, filler, for example, I think we have seen in the past year or so, folks veer more towards a natural look versus the plump lips that we saw a few years ago. That doesn't mean that folks are not using filler, it means that folks are using filler in different ways, maybe a little less pronounced, right? So there's different areas and techniques by which the same services are even delivered, and, you know, in terms of keeping up, I mean, there are the traditional ways, you know trade shows in this industry are big. I'm getting ready to go to Vegas in a few weeks. And it's been interesting in that we're seeing more and more trade shows actually purchase medical aesthetics types of conferences just to show the increase, again, attention to investment in the space.

Another really unique aspect of this industry is that vendors are also much more involved in education than they often are in other industries. So I'll give you an example, which is that, again, I mentioned neurotoxins earlier, Botox, which is an allergen product, Dysport, which a Galderma product. What we see is those companies are directly responsible for going into practices and training providers free of cost. And so, you know, if there's a new product to market or a new technique to market, what's happening is those companies are investing in huge training fleets and sales forces to come in and educate. So there's lot of kind of ground up education that's happening at the provider level. That's really fascinating to see. That said, you know, all of those kind of traditional mechanisms aside, you know, I think the best practices in my experience are what they do best is listen. So they are listening to their providers and they're listening to their patients and have the appropriate feedback channels built in to say, wow, I've heard patients ask for this one laser time and time and time again, how has that surfaced to me as a decision-maker at the practice to look into whether or not that's something that we should invest in? Again, that might be keeping up with the latest trends. That might be more recently focusing on the interplay between inner and outer health. So adding new modalities like hormone replacement therapy, HRT, weight loss, etc. And really making sure that those are incorporated into the practice, in the practices, and, you know, in terms of marketing, right. So let's say I've listened, I've brought in these new services, of course, what you need to then focus on is bringing folks in the door. And I think in this changing evolution of consumer behavior, really meeting folks where they are is so crucial.

So patient acquisition techniques 10 years ago really aren't where we're acquiring patients today. TikTok is a very large patient acquisition channel. Even booking, really interestingly, we're seeing more and more, the higher and higher percentage of patients booking on their phone versus booking even on a desktop or calling a practice. And so how do we make sure we're there? And also how do we make sure that our systems are set up in a way that we are mobile friendly, right? That we're not just relying on spreadsheets and calls and voicemails to get those appointments booked. The last thing I will say though, because I can't help myself, is I think a very easy way to have a practice sort of go underwater unnecessarily is to actually get too many. And so one thing that we do see is folks will get really excited about the new laser, the new cool kit on the block, and purchase lasers that tend to be exceedingly expensive. And what we always say is having one quality laser with multiple modalities — having facial, hydrofacial and having micro-needling — that's really the fundamentals of what you need for a practice. And so I would actually caution folks from always making sure they always, always have the latest and greatest because that CapEx can be really, really burdensome if you're running a lean business.

Morgan Ivey: I'll echo that. I just was having a conversation with a medical spa on that very topic last week, and they had the insight to recognize it themselves and recognize the need to correct course, so to speak, which actually makes them an attractive investment for somebody to turn this around and improve margins because they can simplify, or perhaps if they have other locations, they can move those lasers, for example, to a different location. There's just many more opportunities for an investor or an existing portfolio company to come in and find those opportunities. So I completely agree, it can burden the CapEx heavily if somebody is always looking to purchase the latest, greatest, most expensive thing and piece of technology and device, and then have to train people on that new device every single time, or the new technique every single time, which means they're spending time training instead of treating. And those can really hurt the bottom line, but that also can mean there's a lot of opportunity for improvement on the other end, when somebody else can come in and help course correct.

Annie Robertson Hockey: Yeah, the training, that's a really great point. The training piece being so expensive, in many ways, on a practice. And then just finally, even from a patient perspective, it can be so overwhelming. I was on a website today, and I toggled down and there were a million services, all of which had fancy names. And you know I spend a lot of time in this space and even I was overwhelmed. So the analysis paralysis effect can be really real, and having really clear services that you're really clear about what they treat, why they're efficacious and how they're delivered, I think, even from just a patient consumer experience perspective, can be much more straightforward.

Morgan Ribeiro: Yeah, and I think, you know, one of the things that we've talked about earlier, but obviously from a healthcare standpoint, right, this is a lower acuity setting, but these businesses still have very complex challenges, particularly as they're expanding, or if you are a consolidator or an investor and you're looking to expand across various, geographic areas, there's added complexities that come with that. So we're seeing only really a handful of these kind of larger businesses or platforms emerge so far. Why is that, and what are those kind of barriers to the growth?

Annie Robertson Hockey: I'm happy to chime in and then, of course, curious, Morgan, if you have any thoughts there as well. You know, I think, just to answer, you know, in a really straightforward way, I do think part of it is that we're still early. I do think that we will continue to see larger and larger practices, and my guess is that we will see some of the platforms start to transact in a year, a year or two, and that will be really exciting for the industry to see how those trends act, what those multiples end up looking like. And again, that will sort of open the industry up to a certain tier of investor that really just can't go below a certain check size, even though to Morgan's point, we are seeing them come down. But I think, you know, to your point, Morgan, we also have learned, sometimes the hard way, that what doesn't work is to buy a bunch of medical spas and slap them together, right? It's a really operationally complex business, and so there are a lot of logistics and regs and people involved in this type of business. A few that come to mind in terms of challenges, all of which can be surmountable, right? But just challenges to rapid expansion, you know, providers, I think recruiting and retaining quality providers at this point, there's no central accreditation program or system, right, that is training providers and certifying providers. And so — some might say not enough — and then also making sure you retain them can just be, again, something that's a little bit more challenging for this type of business. I also think, and Morgan alluded to this earlier, what can be difficult about expanding beyond state lines is that it's an alphabet soup of regulation, and it is very different state by state. And oftentimes, the main challenge isn't knowing the regulations, just the regulation isn't clear. And so it becomes kind of a gray area. And that's where relying on your legal counsel and your advisors to help you navigate those waters can be really, I think, important, in terms of risk mitigation. But oftentimes we'll see folks will try to kind of limit their complexity by staying away from certain states or even staying in a similar MSA or region to just have one protocol. The last thing I'll say is there's this kind of question I think that tends to be universal in those that I talk to, which is brand, right? Do I consolidate brands across all of my locations? Do I keep regional brands? Do I keep individual brands? And so just thinking through what makes sense from a marketing perspective in terms of your practices and your patients, rebranding is really difficult. And so as you expand, folks are making that tradeoff in terms of what brands in an M&A type of context, what they keep consistent and what they end up street mining.

Morgan Ivey: I agree with all of that. I won't echo too much of what you said, but I agree from a legal perspective, just the ambiguous and the different regulatory schemes that apply and the difference regulatory landscapes that apply in different geographies make it difficult for a founder to navigate multiple states and to manage a medical spa in multiple states. And then the marketing is also spot on. It's very difficult to consolidate and have a unified marketing approach without having that business acumen, that support, from some form of investor. It just is very difficult for a founder to both run the clinic and also manage the marketing at a macro level and execute on that seamlessly. And also to Annie's earlier point, as we saw in the dental industry, I think it's just early on, and there's a lot of fragmentation, just as there was in dental. And there still is in dental, I think you're right, Annie. We're at around 38 percent consolidation for dental, and it's been decades. So there just is a lot a fragmentation. There has not been a lot of private investment yet. A lot of entrepreneurs are out there catching onto this medical spa trend, so to speak, and wanting to start them. And I think we're seeing more and more mid-levels decide that a medical spa environment is more attractive than, for example, an emergency room. And so they may be electing more so now than ever before, that more pleasant, calm environment than something that may just be a little bit more stressful where they have less control over their hours. So I think it's a combination of all of those things you touched on.

Morgan Ribeiro: Awesome. Well, I think we've really hit on the kind of high points in terms of growth, the opportunity in this sector. Of course, some of the challenges that are inherent in this space and where we see the market heading over the next few years. Appreciate both of you joining me today, anything else you wanna, to add? Fantastic. Well thank you both!