I'd be more concerned with who thinks I do look bad that they're deciding you doesn't look as bad as that person's reports? It could just be a parent(?) or someone kind of chivying them to, "pay attention to your sibling!" or something and they don't know what else to say? I'd come up with a stupid/snappy comeback like, "You don't look too bad either! Good to see you; hope I see you again sometime in this life!"