Health-Care Transactions Update – November: Dermatology Practice Deals Remain Hot

Deals involving Physician Practices/Services dominated the healthcare transactions announced or closed in November, which saw a decrease in total transactions from October. Compared with November 2016 numbers, the month and year-to-date data compiled by the Bloomberg Law Health Care Transactions Editorial Committee shows that health-care dealmaking in general, and in the physician practice arena in particular, remains robust. In addition, November saw a number of deals focused on orthopedic practices, one reflecting distressed provider survival strategies, and a number of mega-health system deal proposals that likely presage the future of acute-care hospital survival initiatives in an unpredictable and uncertain legislative and regulatory environment.

Physician practices and services is always a very active category for transactions. In fact, in November it was the category that saw the highest number of transactions. Of the 53 transactions reported in November, 15 were in this category. However, what is even more significant is that 7 of those 15 Physician Practices transactions involved dermatology practices. These acquisitions all involved private equity companies or dermatology platforms associated with private equity companies.

This demonstrates that dermatology practice acquisitions, which have been going on for a few years, are still “hot” and very much a continued target for private equity investment. Interest in dermatology acquisitions is predicated on growth factors, such as an increase in skin cancer incidence, skin health awareness, and favorable reimbursement mix dynamics. In addition, revenues can be significantly increased with the introduction of ancillary services, such as cosmetics, surgery centers, and laboratory services.