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Q1-2020 Dermatology Update

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Q1-2020 Dermatology Update

Although consolidation activity within dermatology had been fairly muted to start the year, the quarter still saw a landmark transaction take place in Sun Capital’s recapitalization of West Dermatology, previously backed by Enhanced Healthcare Partners (EHP). The multistate, Southwest-focused platform more than doubled its clinic count, executing on 22 add-on acquisitions over EHP’s 5.5 year hold period. This transaction marks the eighth dermatology platform that has traded private equity hands since institutional investment began to take place in the sector and is a sign of increasing market maturity.

The obvious and more pressing development to transpire throughout the quarter was the sudden and unforeseen rise of COVID-19 and its crippling impact in the business and medical world. With state-wide shutdowns and CDC guidance prompting furloughs, cancellations, and an overall massive reduction in volume, independent and PE-backed practices alike find themselves trying to navigate through increasing levels of uncertainty.

Government relief packages and CMS’ expansion of telehealth services will prove crucial over the next few months, with potential further stimulus on the horizon. Provident expects significant delays in transaction volume as buyers and sellers both turn to focusing efforts on managing their existing businesses. Operational preparation to ensure patient, provider and staff retention will be key to capturing pent up demand for services when the pandemic subsides.

To print and download the full Dermatology Update report, please click below…

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Sources: SEC Filings; Company Press Releases, and Reports; IBISWorld; Capital IQ; PHP Estimates and Research. This document has been compiled with publicly available information. Provident Healthcare Partners, LLC makes no guarantee of its accuracy or completeness. No data or statement should be construed to be a recommendation for the purchase, sale, or retention of any security.