Enhanced Healthcare’s West Dermatology heads to auction block

  • Enhanced Healthcare investment dates to Dec. ’14
  • West benefits from strong leaders, recruitment
  • Derm group spans California, Nevada, Arizona

New York’s Enhanced Healthcare Partners is evaluating the sale of West Dermatology, according to three people familiar with the matter.

Jefferies has been engaged to advise the Newport Beach, California, dermatology-practice-management group, the people said. The process is expected to launch imminently.

West Dermatology posted just north of $20 million in pro forma adjusted Ebitda for the trailing 12 months ended June 2018, two of the people said.

The company is expected to be marketed off an adjusted Ebitda figure of $25 million-plus in the auction, they said.

West Dermatology is likely to command a low- to mid-teen multiple of Ebitda, one person suggested.

Enhanced, the healthcare-exclusive firm formerly known as Enhanced Equity Funds, invested in West Dermatology in December 2014.

Today West Dermatology is composed of more than 100 physicians and clinicians. The group provides medical, cosmetic and surgical dermatology across California, Nevada and Arizona.

Led by CEO Chris Cane, West Dermatology is viewed as having a strong management team and other senior leaders, two of the people said.

That includes Mitchel Goldman, who as medical director for West Dermatology is known for his ability to recruit doctors and dermatology groups to the platform, one of the people said.

While the sponsor community has proven eager to invest in the dermatology segment, achieving fast growth has become more challenging as rollups have grown more expensive than other verticals. Thus, Goldman himself is viewed as a valuable asset and growth driver at West Dermatology, this person said.

Goldman, considered a leading medical authority worldwide, joined West Dermatology in August 2016 when he merged his practice, Cosmetic Laser Dermatology, with the Enhanced Healthcare platform.

He also co-founded SkinMedica and is a former president of the American Society for Dermatologic Surgery and American College of Phlebology.

In recent platform investments in dermatology, Gryphon Investors in June 2018 invested in Water’s Edge Dermatology, while BelHealth Investment Partners formed NavaDerm Partners  by merging various Northeast groups.

Other PE-backed dermatology companies include NMS Capital’s Anne Arundel Dermatology, ABRY PartnersU.S. Dermatology Partners, Chicago Pacific FoundersPinnacle Dermatology, OMERS Private Equity’s Forefront Dermatology, GTCR’s Riverchase Dermatology, Goldman’s California Skin Institute and Schweiger Dermatology Group, a portfolio company of LNK Partners and Crestline Direct Lending.

Representatives of Enhanced Equity and Jefferies declined comment, while those with West Dermatology didn’t immediately return requests for comment.

Action Item: Reach out to Enhanced Healthcare at +1 212-207-3386