Plastic Surgery Co. Hopes IPO Will Enhance Its Outlook
Rarely does the world of nose jobs and liposuction meet that of initial public offerings, or IPOs.
But here they are in a business called Plastic Surgery Co., which hopes to raise up to $31.7 million through a June IPO. Appropriately enough, the company plans to trade on Nasdaq under the symbol NUYU.
The Santa Barbara firm says it will provide business and marketing services for plastic surgery practices, which in turn will pay membership fees. Plastic Surgery Co. also plans to invest in some practices.
Originally called Better Image Co. when formed in Atlanta in early 1997, Plastic Surgery Co. hasn’t started providing any services, doesn’t have any member firms and reported a loss of $3.2 million last year.
“This is a business plan--not a company,” said Tom Taulli, author and IPO analyst in Newport Beach. “It’s way too early to go public with something like this. There aren’t any revenues or even a Web site. It’s a leap of faith for investors.”
Because it is in the “quiet period” imposed by the Securities and Exchange Commission before and after any stock offering, the company could not comment.
Still, Taulli noted that the market for cosmetic surgery is growing and said many aging baby boomers are likely to seek enhancements.
“I can see where it might work, but I can’t see it being a stand-alone company. It’s more likely something that could be bought,” he said.
With its novel business plan, the company hopes to capitalize on the booming market for cosmetic surgery. Last year, there were 2.8 million such procedures in the U.S., including face lifts and liposuction. The industry has grown to more than $15 billion a year.
Since 1992, face lifts have increased 77%, liposuction is up 265%, and breast augmentation is up 306%, according to a survey by the American Society of Aesthetic Plastic Surgeons and the company’s SEC filing.
The company hopes it will capture investor enthusiasm for Internet stocks with planned Web sites designed to meet the growing demand for information about cosmetic surgery, according to its filing.
One site will feature online imaging technology designed to show people what they would look like with different features and then offering links to practices that specialize in those areas. Online financing applications and approvals will also be available, since this type of elective surgery is rarely covered by a third party, such as insurance. The quickness and ease of online financing approval will open cosmetic surgery to those who think they can’t afford it, the company asserts in its filing.
The company was formed by Jonathan E. Wilfong, 50, once a certified public accountant with Pricewaterhouse in Georgia who is now Plastic Surgery’s chairman. Wilfong moved the company to Santa Barbara in 1998.
In 1996, he started an investment banking advisory firm called Newfound Capital Alliance. He is also chairman of OrthAlliance Inc., a Torrance-based firm that provides management services for orthodontic offices.
OrthAlliance went public at $12 per share in 1997 and now trades at about $7, though analysts at two Los Angeles investment banking firms, Jefferies & Co. and Wedbush Morgan Securities, recently put “buy” recommendations on the stock.
Dennis E. Condon has served as president and chief executive of the company since 1998. Previously, he was with Mentor Corp., a supplier of medical products.
Plastic Surgery says it will use IPO proceeds to pay for debt, future acquisitions and general purposes. Some of the proceeds will be used for investments in practices.
The deal is led by Cruttenden Roth Inc., the Irvine-based underwriter that has completed three IPOs so far this year as lead manager, raising $47 million, according to Securities Data Co., a New Jersey data tracker.
Those deals were down about 1% on average last week from the IPO prices, according to Securities Data. In comparison, the average gain by IPOs priced this year is 72%, according to Securities Data.
Last year, Cruttenden was lead manager on six IPO deals, raising $68 million, representing 0.2% of the U.S. IPO market. By comparison, No. 1 Morgan Stanley Dean Witter raised $7.8 billion in 23 IPOs, cornering 23% of the market.
One last note of caution: Plastic Surgery Co. warns in its SEC filing that because it provides a service, it can’t buy malpractice insurance. That means it could be named as a co-defendant in liability lawsuits against participating practices.
Initial public offerings are highly speculative and unsuitable for many investors. Debora Vrana covers investment banking and the securities industry for The Times. She can be reached at debora.vrana@latimes.com or by mail at Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053.
