Over the past decade, the consolidation within the aesthetics and dermatology market has been increasing. Many factors have contributed to this trend, such as the increasing number of mergers and acquisitions, the resilience of the market, and the increasing number of growth opportunities.
Despite the increasing number of transactions, some members of the community are still skeptical about the long-term impact of financial sponsors and private equity groups on the healthcare services provided by independent physician practices.
Despite the various factors that may prevent a physician owner from selling their practice, the M&A activity in the aesthetics and dermatology market is still expected to continue. Here are some ways that M&As have impacted plastic surgery practices.
Growth market
While the aesthetics and dermatology market is worth a significant amount of money, multiple practice owners have shown that the industry as a whole is still thriving. The players’ strong growth potential and the community’s positive influence are some factors that attract return-oriented financial sponsors.
According to Dan Rodgers, the President of Skin and Aesthetic Centers of America, the number of Americans over the age of 65 is expected to double over the next few decades. Also, the anti-aging market is expected to grow significantly. The rates of skin cancer are increasing exponentially.
Durable Market
Financial sponsors are usually focused on protecting their capital. During times of economic uncertainty, they tend to gravitate toward industries that are insulated from the effects of the storm. The resilient nature of the aesthetics and dermatology industry was also evidenced by the quick response of the industry to the pandemic.
Daniel Kobb, the Chief Development Officer of Golden State Dermatology, noted that the company’s business continued to grow in 2021 even though the pandemic had a brief impact. He said that the company’s patients started returning to their practices after a few months.
Consolidation Opportunity
Despite the significant consolidation that has occurred in the dermatology industry over the past decade, there are still many independent physician-owned practices that are still operating. To provide a more comprehensive view of the industry, approximately 50% of the physicians in this sector are working in practices that are solely physician owned. Many of these practices are likely to consider a recapitalization or sale at some point in the future.