Caci Clinics reveals plans to grow riches from wrinkles

By Nick Stride

Friday 3rd November 2000

David Smith

In an Eric Watson-style roll-up, Caci Clinics is aiming to become the dominant player in the fragmented $170 million a year "appearance medicine" market.

The company plans to list on the Stock Exchange's New Capital Market on November 28. Like most NCM companies it is likely to raise cash through a secondary public offering as soon as possible to fund rapid expansion plans.

Caci, with two wholly-owned clinics in Auckland and Wellington and 16 franchised outlets around the country, is looking to harness the rapid growth of the non-surgical cosmetic market.

Its clinics house doctors, nurses and beauty therapists offering treatments ranging from a standard facial to laser hair, vein and blemish removal.

It says cosmetic procedure numbers in the US have doubled in the past two years, fuelled by the vanity needs of ageing baby boomers, quicker and less "invasive" treatments, and increasing awareness and acceptance.

Principal David Smith said growth in demand is just as spectacular in New Zealand. At the Newmarket clinic new customer numbers had grown at 55% a year since 1997.

Caci has about 65,000 customers and is in various stages of negotiation to open a further seven franchises in Auckland and regional centres.

Mr Smith said the money raised by going public would enable Caci to equip all its outlets with the necessary machines.

Listed company status would also add to the strength the company already has as the only national player by boosting brand awareness.

This year the group recorded earnings before interest, tax, depreciation and amortisation of $770,000.

Turnover of $4.3 million equates to about 3.5% of the national market.

The 2003 budget is for turnover of $6 million and a bottom-line profit of $1 million.

Its income is derived from a number of sources. In its own clinics customers pay up to $2000 for procedures and it retails beauty treatment products and medicines.

Franchise income ranges from 8% to 50% of treatment fees. It also sells and distributes medical equipment to outside practitioners. Mr Smith said the ability to buy directly from overseas suppliers, rather than from local middlemen, halved the cost to Caci.

He has a three-pronged growth strategy.

The company has developed sophisticated management information systems aimed at lifting efficiency ratios such as revenue per therapist retail sales per therapist, and rebooking rates per therapist.

As well as expanding the franchise network it aims to increase the range of products and services.

Mr Smith said he wouldn't rule out offering surgical procedures but had no plans to do so.

The NCM vehicle's "key transaction" will be the acquisition of Micromode Medical, the company that holds the Auckland and Wellington clinics and the franchises.

The offer, organised by DF Mainland, opened on Wednesday and closes on November 22. It is the seventh company to list on the NCM.

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