After many years of Private Equity investments focused on single specialty providers, Primary Care and Multi-specialty have proven to be among the hottest areas for private equity investment over the last two years.
Private equity groups are recognizing the ability to create value created when referrals, ancillary services, and patients can be kept within a single network for multiple specialties. Whether practices are taking on risk or have built traditional fee-for-service models, groups that control large patient populations are being rewarded with historically high valuations and interest.
Cardiology is one of the newer sectors seeing interest from private equity. There are just six notable platforms currently active in the space. Compared to other healthcare services verticals such as dermatology, eye care, or pain management, cardiology has remained relatively untouched until recently.
Now more than ever, ophthalmologists and optometrists are considering a partnership with Private Equity due to attractive valuations and significant outside economic forces within the sector. In under 5 years there have been more than 30 platform investments in 40 states by Private Equity, a number that continues to grow. Eye Care remains one of the most fragmented specialties within healthcare with nearly 60 percent of physicians practicing in groups with less than 10 providers
Even with Private Equity investment in Interventional Pain Management (“IPM”) accelerating in recent years, it remains one of the most fragmented areas within subspecialty medicine. Despite the decade long consolidation wave, the majority of physicians in the IPM sector practice in groups with less than 5 providers. Consolidation is largely being driving by the market inefficiencies created by fragmentation.
Dermatology saw its first private equity investment in 2011 which sparked a decade-long wave of national consolidation in the space. Most recently, HEP Fund’s partnership with New York-based MD Alliance Solutions in August of 2020 brought the total PE-backed platforms in the space to over 30.
We’re currently seeing strength in capital markets driving strong activity both in terms of add-on acquisitions (PGP has advised on two dermatology transactions already this year and expects to close two more before year end). At the same time sponsors are seeing an opportunity to transact in the market and currently OMERS-backed Forefront Dermatology is in the market and will soon transact with a larger private equity group to continue its growth trajectory.
While dermatology has been one of the more heavily consolidated specialties (seeing over 15 transactions in the last 6 months alone), there is still significant runway within the market as groups compete for key assets and market share.
Select Recent Private Equity Transactions in the Dermatology Space
Date
Target
Platform
PE Sponsor
State
June 2021
Sperling Dermatology*
Forefront Dermatology
OMERS
New Jersey
June 2021
Goodman Dermatology
Waters Edge/Riverchase
Gryphon Investors
Georgia
May 2021
Village Dermatology
Forefront Dermatology
OMERS
Alabama
May 2021
Spectrum Dermatology
Pinnacle Dermatology
Chicago Pacific Founders
Arizona
April 2021
Ariano Dermatology
Pinnacle Dermatology
Chicago Pacific Founders
Illinois
February 2021
Advanced Dermatology Associates*
MDAlliance
Health Equity Partners
New York
January 2021
Carolina Skin Care
Anne Arundel Dermatology
Ridgemont Equity Partners
Florida
January 2021
Sunflower Dermatology
Epiphany Dermatology
CI Capital Partners
Texas
January 2021
Virginia Dermatology & Skin Care Center
Pinnacle Dermatology
Chicago Pacific Founders
Virginia
December 2020
DeSoto Dermatology
Epiphany Dermatology
CI Capital Partners
Texas
December 2020
Nielson Dermatology
Advanced Dermatology & Cosmetic Surgery
Audax Private Equity
Florida
December 2020
Colorado Dermatology Specialists
Advanced Dermatology & Cosmetic Surgery
Audax Private Equity
Colorado
October 2020
Harkaway Center for Dermatology and Aesthetics
Schweiger Dermatology
LNK Partners
New Jersey
October 2020
Dermatology Associates of Montgomery
Advanced Dermatology & Cosmetic Surgery
Audax Private Equity
Alabama
September 2020
Dermatology & Plastic Surgery*
Forefront Dermatology
OMERS
Florida
September 2020
SkinSmart Dermatology
DermCare Management
Hildred Capital Management
Florida
August 2020
MD Alliance
MD Alliance
Health Equity Partners
New York
August 2020
SkinCare Colorado
Epiphany Dermatology
CI Capital Partners
Colorado
July 2020
Dermatology & Cosmetics Surgery Associates
Anne Arundel Dermatology
NMS Capital
Maryland
June 2020
Skin and Laser Specialists of NY & NJ
Schweiger Dermatology
LNK Partners
New York & New Jersey
*Represented by Physicians Growth Partners
About Our Firm
Physician Growth Partners (PGP) is a transaction advisory firm which represents independent physician groups in transactions with private equity
Differentiated Healthcare Transaction Advisors:
Senior partner involvement at every stage of the process
Extensive dermatology transaction experience
Unmatched relationships with all key private equity and strategic buyers interested in Dermatology
Educational approach focusing on both partnership and cultural fit, while simultaneously achieving a market clearing valuation
A relatively new sector to experience the wave of private equity investment, orthopedics has begun to show signs of being the next ‘hot sector’. Sharing similar qualities to other successfully consolidated specialties such as dermatology and ophthalmology, a mixture of provider fragmentation, high infrastructure costs (surgical hospitals, imaging, etc.), and profitable ancillary services, has orthopedics on the forefront of many private equity minds.
With only 12 existing platforms, the industry is still ripe for groups around the country to capitalize on a first-mover advantage. Many major metro markets remain untouched by private equity, creating an opportunity for forward-thinking orthopods to partner with private equity sponsors to be in the driver’s seat of consolidation in their region.
Select Recent Private Equity Transactions in the Orthopedic Space
Date
Target
Platform
PE Sponsor
State
March 2021
Jackson Anesthesia Pain Center
US Orthopaedic Partners
FFL Partners
Mississippi
March 2021
Oxford Orthopaedics
US Orthopaedic Partners
FFL Partners
Mississippi
February 2021
Orthopaedic Associates of Manhasset
Spire Orthopedic Care
Kohlberg & Company
New York
January 2021
Bluegrass Orthopedics
Bluegrass Orthopedics
Trivest Partners
Kentucky
January 2021
Center for Bone & Joint Surgery of the Palm Beaches
HOPco
Linden Capital
Florida
December 2020
US Orthopedic Alliance
USOA Orthopedic Alliance
Castleford Capital
California
September 2020
Mississippi Sports Medicine
US Orthopedic Partners
FFL Partners
Mississippi
August 2020
OrthoCincy
OrthoAlliance
Revelstoke Capital
Ohio
August 2020
Reconstructive Orthopaedics & Sports Medicine
OrthoAlliance
Revelstoke Capital
Ohio
February 2020
Tallahassee Orthopedic & Sports Physical Therapy
Confluent Health
Partners Group
Tennessee
January 2020
Precision Orthopedics & Sports Medicine
Precision Orthopedics & Sports Medicine
Cobepa
Maryland
December 2019
Florida Spine and Pain
Orthopedic Care Partners
Varsity Healthcare
Florida
November 2019
The Steadman Clinic
Orthopedic Care Partners
Varsity Healthcare
Colorado
October 2019
South Island Orthopedics
Health Plus Management
Investcorp
New York
July 2019
Beacon Orthopaedics & Sports Medicine
Beacon Orthopaedics & Sports Medicine
Revelstoke Capital Partners
Ohio
July 2019
Southeast Orthopedic Specialists
HOPCo
Frazier Healthcare
Florida
July 2019
Orthopedic and Sports Therapy Institute
Cora Physical Therapy
Gryphon Investors
Illinois
July 2019
Orthopaedic & Neurosurgery Specialists
Spire Orthopedic Partners
Kohlberg & Company
Connecticut
May 2019
Citrus Orthopaedic & Joint Institute
Orthopedic Care Partners
Varsity Healthcare
Florida
May 2019
Ocala Orthopedic Care
Orthopedic Care Partners
Varsity Healthcare
Florida
May 2019
James B. Duke, M.D.
Orthopedic Care Partners
Varsity Healthcare
Florida
December 2018
Florida Spine and Joint Institute
Florida Spine and Joint Institute
Trive Capital
Florida
November 2018
Precision Spine Care
Roseland Management
Bow River Capital
Texas
August 2018
OrthoBethesda
OrthoBethesda
Atlantic Street Capital
Maryland
November 2017
The Orthopaedic Institute
Orthopedic Care Partners
Varsity Healthcare
Florida
With new platforms being announced each quarter, PGP expects to see an uptick in add-on transactions throughout 2021 as existing groups look to increase local density and expand into new geographies.
Private equity consolidation in Oral Surgery is very new compared to other sectors. There are currently just five active platforms (the first investment from private equity was Riverglade Capital’s investment in U.S. Oral Surgery Management in 2018). With a focus to replicate the success seen within the dental vertical, we are seeing considerable momentum toward private equity investments within oral surgery.
In just the last 24-months, four out of the five oral surgery platforms have been established. As new platforms are established, the “add-on” market continues to grow as platforms look to establish a presence in new geographies and increase regional density around existing locations.
The success of “first movers” in the market such as Oral Surgery Partners and U.S. Oral Surgery Management has sparked significant interest in this sector and transaction volume has followed accordingly. While deal volume has increased significantly over the last 18-months, this sector is still in the early innings of consolidation with many regions in the U.S. still presenting vast ‘white space’ opportunities for successful private equity partnerships.
Select Recent Transaction in the Oral Surgery Space
Date
Target
Platform
PE Sponsor
State
April 2021
Atlantic Oral Surgery and Implant Center
U.S. Oral Surgery Management
Riverglade Capital/Thurston Group
South Carolina
January 2021
Four California Based Practices
Allied OMS
DuneGlass Capital
California
December 2020
North Valdosta Oral & Maxillofacial Surgery
U.S. Oral Surgery Management
Riverglade Capital/Thurston Group
Georgia
December 2020
Atlanta Oral & Facial Surgery & Bay Area Oral Surgery
