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
