What is a dermatology practice worth?
Dermatology practice valuation is the enterprise value assigned by a buyer to a dermatology practice based on EBITDA, growth, and service mix.
Quick answer
Dermatology practices typically sell for 7x to 10x EBITDA for single-location and add-on acquisitions, and 12x to 15x EBITDA for multi-location platforms, with cosmetic-heavy practices commanding the highest multiples.
The detail
Dermatology has been among the most consolidated outpatient specialties since 2015. Single-location and add-on acquisitions typically trade at 7x to 10x EBITDA. Multi-location and platform-scale dermatology groups trade at 12x to 15x in recent PE recapitalizations. Practice mix matters enormously: high cosmetic mix (Botox, fillers, laser) trades at higher multiples than pure medical dermatology because of cash-pay revenue and higher margins. Mohs surgery practices command premiums for the same reason. Dermatopathology lab integration adds value because labs trade at higher multiples than the underlying clinical practice. The biggest valuation drag is heavy reliance on a single retiring physician owner with no successor.
AAD Practice Profile Survey tracks dermatology ownership and practice trends annually.
Source: AAD
Pitchbook reports dermatology PE-backed platforms have been actively consolidating since 2015.
Source: Pitchbook Healthcare Services
Cash-pay cosmetic procedures typically generate 60 to 75 percent gross margins versus 40 to 55 percent for medical dermatology.
Source: MGMA Cost and Revenue Data
What this means for clinic owners
From Sorso
If you own a dermatology practice with strong cosmetic and Mohs revenue, you are sitting on one of the highest-multiple specialties in outpatient medicine. The right time to start preparing for a sale is at least 24 months before you want to close.
Related questions
What is a med spa worth?
Med spas typically sell for 4x to 7x EBITDA for single-location and add-on acquisitions, and 6x to 9x EBITDA for multi-location platforms, with valuations heavily weighted toward recurring membership revenue and provider retention.
How do PE firms value medical practices?
Private equity firms value medical practices primarily on a multiple of trailing twelve-month adjusted EBITDA, typically 5x to 12x, with the multiple driven by scale, growth, payer mix, and provider retention.
What are EBITDA add-backs in practice valuation?
EBITDA add-backs are non-recurring or owner-related expenses added back to reported EBITDA to show normalized earnings, typically increasing reported EBITDA by 10 to 30 percent in owner-operated practices.
How do I evaluate a PE offer?
Evaluate a PE offer on six dimensions: enterprise value multiple, cash at close percentage, rollover equity terms, post-close compensation structure, earnout conditions, and platform exit timing assumptions.
Founder of Sorso. 19 years in corporate finance. Managed a $450M loan portfolio before building a fractional CFO firm exclusively for healthcare clinics.
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