IPO Report: Aesthetics plc (GCAA)

Francis Gaskins |

Aesthetics plc (GCAA) is a leading pure-play female aesthetics company committed to becoming the trusted brand and partner for women seeking to look healthy, youthful, vibrant and beautiful, and to feel confident about themselves throughout their lifetime. The company is based in Sandyford, Dublin 18, Ireland,GC.

Six other companies are scheduled for the week of Aug. 3. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: BofA Merrill Lynch, Deutsche Bank Securities, Cowen and Company
Co-manager: William Blair

End of lockup (180 days): Tuesday, February 2, 2016
End of 25-day quiet period: Monday, August 31, 2015

GCAA scheduled a $75 million IPO with a market capitalization of $242 million at a price range midpoint of $14 for Thursday, August 6, 2015 on Nasdaq.

Aesthetics plc Summary

GCAA is a leading pure-play female aesthetics company committed to becoming the trusted brand and partner for women seeking to look healthy, youthful, vibrant and beautiful, and to feel confident about themselves throughout their lifetime.

To date, GCAA has generated significant growth by focusing on the development, manufacturing and commercialization of one of the broadest ranges of implant products, principally silicone breast implants.

Aesthetics plc Valuation

Glossary

Accumulated deficit (mm)

.

.

-$257

     

Per share dilution

.

.

-$11.96

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

GC Aesthetics plc (GCAA)

$242

4.7

-0.8

4.2

4.0

31%

             

Aesthetics plc Conclusion

Neutral

Breast implants, no patents

Q1 rev +30% to $13mm

Loss of -$74mm

P/E of -.8, meaning huge cash drain relative to market cap

Price to book of 4.2

Aesthetics plc Business

GCAA is a leading pure-play female aesthetics company committed to becoming the trusted brand and partner for women seeking to look healthy, youthful, vibrant and beautiful, and to feel confident about themselves throughout their lifetime.

To date, GCAA has generated significant growth by focusing on the development, manufacturing and commercialization of one of the broadest ranges of implant products, principally silicone breast implants.

GCAA believes that through its two brands Nagôr and Eurosilicone, which have a combined 60 years of market presence, GCAA has (i) a strong reputation for safety, quality and reliability, as evidenced by the five-year data from its ongoing Eurosilicone safety study, (ii) strong competitive advantages based on its innovative product design features—the result of GCAA’s focused approach to research and development, which integrates feedback from women and surgeons, and (iii) a differentiated marketing and customer service approach, focusing on the needs of women.

GCAA has developed and marketed its comprehensive range of products, comprising over 1,100 SKUs, to address the different needs and preferences of women and surgeons.

All of GCAA’s implants are manufactured with medical-grade silicone supplied from either NuSil or ASC, both of which are U.S.-based, ISO 9001-certified sources. GCAA has manufacturing facilities in the United Kingdom and France and sell its products in 75 countries, with direct sales activities in six countries, including Brazil, the world’s largest medical aesthetics market by total number of plastic surgery procedures.

Aesthetics plc Market

The global aesthetics products market in 2014 was estimated at $6.5 billion in total sales and is expected to grow at a CAGR of nearly 12%, reaching almost $10.2 billion in total sales by 2018, according to Medical Insight.

GCAA believes the overall market growth is driven by multiple factors, including a growing middle class in emerging markets, an increase in women’s disposable income, increasing awareness and acceptance of aesthetics procedures, as well as continuous innovation and improved accessibility to aesthetics procedures.

While the United States has historically been the largest market for aesthetics products in terms of total revenues, a significant number of markets outside of the United States have been growing faster in terms of revenues and plastic surgeon numbers,

For example, Brazil, Mexico and China have experienced faster revenue growth than the aesthetics products market in the United States, providing attractive growth opportunities, according to industry sources.

The global breast implant market is forecasted to reach nearly $1.3 billion by 2018, with some estimates forecasting the market will reach nearly $1.5 billion by 2019, growing at a CAGR ranging from approximately 4% to 6% from 2014 to 2018.

Aesthetics plc Intellectual Property

GCAA owns trademarks and service marks that have been registered with various jurisdictions in which GCAA operates, including, but not limited to, COGEL, DREAMXCELL, EUROSILICONE, GC AESTHETICS, GCA, GCA BUSINESS BOOST, NAGOR and SILGEL.

GCAA has made application to register various trademarks and service marks in a number of additional countries and expect to continue to do so in the future. However, there can be no assurance that GCAA will be able to obtain the registration for the marks in every jurisdiction where registration has been sought or that GCAA will be able to maintain registrations in the jurisdictions where GCAA currently has them.

GCAA also relies upon trade secrets and know-how to develop and maintain its competitive position. GCAA protects its intellectual property rights through a variety of methods, including trademark and trade secret laws, as well as confidentiality agreements with vendors, employees, consultants and others who have access to GCAA’s proprietary information.

GCAA also owns domain names, including gcaesthetics.com, and one patent related to the manufacturing process for texturing on the exterior or surface of breast implants.

Aesthetics plc Competition

GCAA’s primary competitors include Mentor Worldwide, LLC, a division of Johnson & Johnson, and Allergan plc.

These companies are well-capitalized and control a majority share of the breast implant products market. These competitors also enjoy several competitive advantages over us, including greater financial and human resources for sales, marketing and product development, larger and more established distribution networks, greater ability to cross-sell products and more experience in conducting research and development, manufacturing and obtaining regulatory approvals and clearances.

GCAA also competes with these companies for personnel, licensing and development partners, complementary businesses and technologies GCAA may seek to acquire and exclusive distribution arrangements.

In addition, GCAA competes with Silimed, a leading Brazilian supplier of breast implant products. In certain of the countries in which GCAA operates, it also competes with several other breast implant manufacturers, including Groupe Sebbin SAS and Establishment Labs S.A., which sell their breast implant products at significantly lower prices than those of GCAA’s Nagôr and Eurosilicone breast implant products.

Aesthetics plc 5% Shareholders Pre-IPO

Montreux Equity Partners IV, L.P. and affiliates 48.0%

Oyster Technology Investments Limited  21.9%

Barry’s Tea Holdings and affiliates         8.7%

Royalty Opportunities S.À R.L.              8.2%

Daniel K. Turner III         48.0%

William McCabe            21.9% 

Aesthetics plc Dividends

No dividends are planned.

Aesthetics plc Use of Proceeds

GCAA expects to receive $65 million from its IPO and use it for the following:

(i) approximately $5.7 million to expand its sales and marketing activities in new countries,

(ii) approximately $5.8 million to expand its sales and marketing activities in existing countries, including efforts related to the global launch of IMPLEO and pre- and post-breast implant surgery products,

(iii) approximately $4.2 million to expand its product portfolio and

(iv) approximately $5.0 million to expand its manufacturing capabilities. In addition, GCAA intends to use the net proceeds of this offering to fund potential future acquisitions. GCAA will use any remaining proceeds for working capital, debt service and other general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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