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Private Equity Investment in Dermatology and Medical Aesthetics

Private Equity Investment in Dermatology and Medical Aesthetics. January 9, 2017 Bruce S. Maller. This material is for information purposes and internal use only. Review of Current Market Activity. Advanced Dermatology and Cosmetic Surgery (ADCS).

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Private Equity Investment in Dermatology and Medical Aesthetics

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  1. Private Equity Investment in Dermatology and Medical Aesthetics January 9, 2017 Bruce S. Maller This material is for information purposes and internal use only.

  2. Review of Current Market Activity

  3. Advanced Dermatology and Cosmetic Surgery (ADCS) Feb 2012: Audax Group acquires ADCS with 53 clinics in FL and OH; ADCS formed Ameriderm™ to provide billing and coding management services Sept 2016: Over 155 clinics in AL, AZ, CO, FL, GA, MD, MI, NV, OH, PA, VA, and WY; over 330 providers 2012 2013 2014 2015 2016 2017 May 2016: Harvest Partners, LP and Audax complete recapitalization of ADCS

  4. ADCS Acquisition Activity Source: Advanced Dermatology and Cosmetic Surgery website; advancedderm.com

  5. ADCS Location Map Source: Advanced Dermatology and Cosmetic Surgery website; advancedderm.com

  6. 2012 - 2014 Acquisition Activity Practice Name Date Location(s) No. Providers 2012 2013 2014 2015 Source: Advanced Dermatology and Cosmetic Surgery website; advancedderm.com

  7. 2015Acquisition Activity Practice Name Date Location No. Providers 2015 2016 Source: Advanced Dermatology and Cosmetic Surgery website; advancedderm.com

  8. 2016Acquisition Activity Practice Name Date Location(s) No. Providers 2016 2017 Source: Advanced Dermatology and Cosmetic Surgery website; advancedderm.com

  9. DermatologyAssociates of Tyler Jan 2013: Candescent Partners acquires Dermatology Associates of Tyler; MSO: Oliver Street Dermatology Holdings (dba Dermatology Associates) May 2014: Dermatology Associates acquired Dermatology & Skin Cancer Center (KS & MO) Sept. 2016: 15 locations in TX, KS, and MO; 31 MDs/DOs, 10 PAs, 4 NPs 2012 2013 2014 2015 2016 2017 June 2016: ABRY Partners acquires majority interest in Oliver Street Dermatology Holdings Source: Candescent Partners, http://www.candescentpartners.com/

  10. Forefront Dermatology May 2014: Varsity Healthcare Partners acquires Dermatology Associates of Wisconsin/Forefront Dermatology; Varsity formed Forefront Management Holdings; practice management services Feb 2016: OMERS Private Equity acquires Forefront Management Holdings 2012 2013 2014 2015 2016 2017 Sept 2016: 82 clinics in 11 states in the Midwest and Mid-Atlantic; 90 MDs/DOs, 10 PAs, 10 NPs Source: Varsity Healthcare Partners, http://www.varsityhealthcarepartners.com/News.htm; and Forefront Dermatology, www.forefrontdermatology.com

  11. Anne Arundel Dermatology June 2015: New Mainstream Capital acquires Anne Arundel Dermatology; AAD Dermatology Management, Inc. provides practice management services and capital Sept. 2016: 12 clinic locations and 3 surgery centers in Maryland; 26 MDs/DOs, 5 PAs, 3 NPs 2012 2013 2014 2015 2016 2017 Source: New Mainstream Capital, www.nms-capital.com/news and Anne Arundel Dermatology https://aadermatology.com

  12. Acquisition Activity Practice Name Date Location No. Providers Source: New Mainstream Capital, www.nms-capital.com/news and Anne Arundel Dermatology https://aadermatology.com

  13. Other Acquisition Activity Practice Name PE Firm Date Locations Providers

  14. Other Acquisition Activity Practice Name PE Firm Date Locations Providers

  15. Why the interest in the space?

  16. Business Rationale for the Sector Demographic changes Disparate specialties seen as ripe for consolidation Physician supply/demand imbalance Increasing complexity of the business Availability of multiple profit streams “Cash pay” opportunities

  17. Case Study

  18. Anatomy of a Sale Transaction Mo 2 Mo 3 Mo 4 Mo 5 Mo 6 Activity Mo 1 Evaluation Phase Negotiate Business Terms Closing Process

  19. Anatomy of a Sale Transaction Mo 2 Mo 3 Mo 4 Mo 5 Mo 6 Activity Mo 1 Evaluation Phase Negotiate Business Terms Closing Process

  20. Anatomy of a Sale Transaction Mo 2 Mo 3 Mo 4 Mo 5 Mo 6 Activity Mo 1 Evaluation Phase Negotiate Business Terms Closing Process

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