Ontario Teachers’ Pension Plan is close to sealing a deal for Northeast Dermatology Associates, according to people familiar with the matter.
The transaction would mark the conclusion of a Browns Gibbons Lang-run process that got underway about four months ago. The auction for the New England dermatology group drew significant interest from sponsors, sources said.
NEDA is set to command an EBITDA multiple of about 13x, according to one of the people.
The Lawrence, Massachusetts, network of skin-treatment clinics was marketed off just under $10 million in EBITDA, as Buyouts initially reported in early May. That implies NEDA commanded a valuation of close to $130 million.
As one of the few remaining independent dermatology groups of scale, NEDA was viewed as an attractive opportunity for firms seeking a platform in the space.
By and large, the sector’s largest players traded hands in 2016. That includes Forefront Dermatology, which Omers Private Equity bought from Varsity Healthcare Partners; Harvest Partners’ recap of Advanced Dermatology & Cosmetic Surgery; and Abry Partners’s deal for Candescent Partners’ Oliver Street Dermatology.
NEDA’s clinics offer general and surgical dermatology treatments, as well as cosmetic services like Botox and laser hair removal.
They also offer dermatopathology, or skin biopsies to detect diseases or tumors. Skin-cancer treatments include Mohs surgery, chemotherapy and radiation therapy. Through its clinical-trial division, the company investigates new and emerging treatments for skin diseases.
The dermatology group encompasses 14 clinics, primarily in Massachusetts and New Hampshire as well as one location in Maine.
NEDA’s geographic presence was one factor deterring some potential suitors, one source previously said. Non-competes in physician contracts are not enforceable in Massachusetts and New Hampshire, which makes it trickier for firms to guard their investments, this person explained.
For Ontario Teachers’, NEDA will join existing healthcare-services investments including BayBridge Seniors Housing, Heartland Dental and PhyMed Healthcare Group.
Representatives of Northeast Dermatology Associates and Ontario Teachers didn’t immediately return requests for comment. A Browns Gibbons Lang representative declined to comment.
Update: The headline has been updated with the word ‘expected’ to better reflect the situation.
Action Item: Ontario Pensions’ investments: https://www.otpp.com/investments/asset-groups/private-capital/portfolio
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