Dermatology Valuation Multiples and M&A Trends 2025

Will Hamilton
Jun 13
4 min read

The dermatology industry is a fast-growing sector within the broader healthcare market, driven by increasing demand for both medical and cosmetic dermatological services, as well as service line expansion into aesthetic dermatology and the med spa / wellness category. Medical dermatology focuses on the diagnosis and treatment of skin conditions such as acne, eczema, psoriasis, and skin cancer, while cosmetic dermatology includes procedures like Botox, fillers, laser treatments, and chemical peels. The aging population, rising awareness of skin health, and advancements in minimally invasive cosmetic procedures have fueled industry growth. Additionally, the prevalence of skin cancer, particularly melanoma, has heightened the importance of early detection and treatment, further boosting demand for dermatological services. Dermatology practices are traditionally characterized by high margins, recurring revenue streams, and strong patient loyalty, making them attractive investment targets for private equity firms and strategic acquirers.

Dermatology was one of the earliest specialties targeted by private equity, with rapid platform formation and increasing add-on activity between 2015 and 2019. While M&A growth has slowed, the industry is still undergoing consolidation, with private equity-backed platforms and large dermatology management service organizations (MSOs) acquiring independent practices to achieve economies of scale, expand geographic reach, and enhance service offerings.

However, the sector faces challenges, including regulatory scrutiny, reimbursement pressures, and competition for skilled dermatologists. Declining reimbursement for common dermatologic procedures (e.g., biopsies, cryotherapy) has compressed margins and in-office ancillary revenue (like pathology and Mohs surgery) continue to be scrutinized, while payers are tightening networks. Despite these hurdles, the dermatology market remains robust, with continued innovation in treatments, increasing adoption of tele-dermatology, and a growing focus on personalized skincare solutions. As a result, the industry presents compelling opportunities for strategic partnerships, acquisitions, and investments, particularly in high-growth areas such as aesthetic dermatology and skin cancer care.

Key Growth Drivers

Key growth drivers for the industry include the following:

Increasing Prevalence of Skin Disorders: The rising incidence of skin conditions such as acne, eczema, psoriasis, and skin cancer is a major driver. Factors like pollution, lifestyle changes, and genetic predispositions contribute to this increase.
Aging Population: As the global population ages, there is a higher demand for anti-aging treatments and solutions for age-related skin issues such as wrinkles, age spots, and loss of elasticity.
Technological Advancements: Innovations in dermatological treatments, including laser therapies, minimally invasive procedures, and advanced topical formulations, are enhancing treatment efficacy and patient outcomes, driving market growth.
Rising Awareness and Aesthetic Consciousness: Increased awareness about skin health and the growing emphasis on physical appearance are leading to higher demand for cosmetic dermatology products and procedures.
Expansion of Dermatology Services: The expansion of dermatology clinics and the availability of specialized dermatology services in both developed and developing regions are making treatments more accessible to a larger population.
Increased Healthcare Spending: Rising healthcare expenditures, coupled with better insurance coverage for dermatological treatments, are enabling more people to seek and afford advanced dermatological care.

Dermatology M&A Trends

The number of announced dermatology M&A deals exploded in the late 2010s, but has since tapered off and held relatively steady in the 2020s. Many prime targets have already been acquired or aggregated into platforms, reducing the number of high-quality, independent practices available. Additionally, much of the focus has shifted to the related aesthetics and med spa / wellness categories.

There are a number of large dermatology platforms who have announced a large number of deals over the past five years. Epiphany Dermatology leads the way with 39, followed by Pinnacle, Schweiger, and DermCare, each with over 20.

New platform creation has clearly slowed in recent years, whether due to market maturity or regulatory concerns surrounding private equity investment in MSOs.

Dermatology EBITDA Multiples

Solo Practices (typically revenue under $2M):
Single physician practices sell for lower multiples, ranging from 3x to 5x EBITDA. The lower multiple is often due to higher operational risk, lower revenue diversification, and limited geographic reach, as well as a heavy reliance on the owner / operator, which can lead to employer contract retention and business continuity concerns.
Small Group Practices (typically revenue under $2-15M):
Multiples for small, 1-4 location group practices generally range from 4x to 7x EBITDA.

Large and Mid-Sized Groups (revenue $15-50M):
Larger, more established practices with proven profitability, a broader customer base, and often a mix of medical and cosmetic dermatology, may command higher multiples. These can range from 7x to 10x EBITDA, depending on size, local market conditions, service mix, growth rate, and the stability of the cash flow.
Large Integrated Platforms:
Large dermatology platforms with strong, continuing management teams can command multiples in the 12x to 15x EBITDA range, especially if they have demonstrated the ability to grow quickly with favorable unit economics.

Cash Flow Multiples for Small Dermatology Practices

There are a number of one and two physician dermatology clinics listed for sale currently, but it's difficult to glean much useful information from clinics so small where the level of owner involvement is unclear. A clinic making $400k per year in cash flow for an absentee owner is much different from a clinic making $400k per year in take-home for a full-time dermatologist-owner.

Factors Impacting the EBITDA Multiple for Dermatology Practices

Acquisition multiples are a function of perceived risk and growth. Key considerations within the dermatology industry include the following:

Ancillary Services: In-house pathology, Mohs surgery, or cosmetic/aesthetic offerings can boost margins.
Cosmetic Dermatology Exposure: Self-pay services (e.g., Botox, lasers) are higher-margin and reduce payer risk.

Strong Clinical Leadership: A stable group of physicians with succession plans in place reduces post-close risk.
Geographic Density: Practices located in high-growth markets (Sunbelt, suburbs of major metros) with expansion potential attract premium valuations.
Technology & Infrastructure: EMR adoption, central billing, and modern operations infrastructure improve scalability.

About Scope Research

Scope Research compiles a variety of healthcare M&A databases and provides healthcare valuation services. The Scope Research Healthcare M&A Valuation Database currently has financial details for 238 physician group deals going back to 2010, 152 of which include reported EBITDA multiples. The data can be purchased individually, while our affordable annual subscriptions provide access to all of our healthcare M&A databases and segments, updated continuously.