Consolidation and Investment in Dermatology
Dermatology has been one of the fastest growing subsectors within physician services in recent years. The $13 billion market is expected to grow at 5.8% to upwards of $16 billion through 2019, making it the second-fastest-growing provider specialty, trailing only Physical Therapy, in terms of top line revenue growth. Volume growth of this nature, coupled with significant fragmentation in the marketplace, has created a robust investment and acquisition environment, as evidenced by more than 30 transactions executed over the last 24 months. We are expecting this trend to continue as practices continue to draw interest from the private equity community, as well as from private equity backed consolidators. Due to the significant fragmentation and scarcity of larger practices in the sector, private equity groups are increasingly coming downstream to act on their investment theses. Strategic consolidation has also gained traction due to the absence of larger practices as private equity backed platforms have executed add-on acquisition strategies in order to realize synergies, expand into new geographies and accelerate growth. Scalable companies with robust infrastructure, fitting the platform mold, have commanded some of the highest multiples within healthcare services due to pent-up demand and the ability to quickly expand.
• Consolidation Drivers
• Private Equity Investment
• Concluding Thoughts
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