(Bloomberg) -- Payment company Cherry Technologies is sounding out investors for a bond that would be tied to "buy-now, pay-later" loans for cosmetic surgery and other aesthetic treatments, as demand for medical debt surges, according to people with knowledge of the matter.
The San Francisco-based startup is working with Barclays Plc on a potential health care asset-backed deal in the broadly syndicated market and has started lining up investor meetings for the coming weeks, said the people, who asked not to be named as the details are private. The bond would be backed by consumer loans that Cherry hands out for anything related to cosmetic surgery, dental or medical aesthetics, the people said.
The conversations are preliminary, and the firm may decide to not go ahead with a transaction, they added.
Representatives for Barclays and DCM Ventures, one of Cherry's venture capital backers, declined to comment. Kleiner Perkins, which also backs the financial technology firm, didn't respond to requests for comment, and Cherry couldn't be reached.
Any potential bond sale would come as demand for cosmetic procedures keeps growing in the US, despite having somewhat normalized after the pandemic boom, according to a June report from the American Society of Plastic Surgeons.
"While the explosive growth seen during the pandemic may have stabilized, the demand for aesthetic procedures remains comparatively robust when set against pre-COVID data," the organization said in its report, which noted procedures were up in 2023 from the year prior.
That could be a boost for Cherry, which breaks down treatment bills ranging from $200 to $10,000 into smaller installments for customers, according to its website. Payment plans can range from three to 60 months. Buy-now, pay-later programs have become popular among younger customers, given the payments are often interest-free and sometimes don't require credit checks.
If a deal were to happen, Cherry would be tapping a booming asset-backed securities market. Sales of asset-backed securities in the US are up about 20% compared to this time last year, according to data compiled by Bloomberg.
More stories like this are available on bloomberg.com
