Dermatology Practice Valuation: 2025 Benchmarks

*Actual pricing varies with each transaction based on many factors. Intended for educational purposes only and not a guarantee of any outcome.

Practices that demonstrate strong utilization of advanced procedures, like Mohs surgery or in-house pathology, show the highest resilience to reimbursement pressure. In contrast, those dependent on commodity medical visits with minimal ancillaries are more exposed to rate compression and payer policy changes. The table below outlines typical revenue contribution and operating margin profiles by segment.

Practices with well-balanced service lines and recurring membership or subscription models can achieve 1–2× higher multiples than peers without these features.

Medicare-heavy practices, while stable in patient flow, face ongoing pressure from rate adjustments and sequestration effects, including the 2.83% Medicare conversion factor reduction enacted in 2025. Balanced books with in-network commercial contracts still trade competitively, but out-of-network or Medicaid-weighted mixes are typically underwritten at discounts due to collection volatility. A strong in-network position remains essential; out-of-network or self-pay-heavy books (outside cosmetics) typically trade at discounts due to perceived volatility.

While 2024 saw a modest dip in overall M&A activity across healthcare, dermatology deals have proven resilient thanks to recurring patient demand and balanced cash flow models. Platform-ready practices often command several multiple turns higher than smaller add-ons, typically structured with a majority cash component and meaningful rollover equity.

Platform buyers-typically targeting $5M+ EBITDA practices—offer the highest valuations and most favorable deal structures, often including 70+% cash at close with meaningful rollover equity. Mid-size add-ons attract attention from existing platforms looking to extend geographic density or service-line capabilities.

Practices that present clear financial transparency, recruiting depth, and repeatable KPIs often clear at the upper end of the range. Conversely, owner-dependent practices, aging partner groups, or those without a documented growth plan tend to experience valuation compression, even if near-term profitability appears strong.

Conversely, owner dependence, aging partner demographics, and limited recruiting capacity remain the most common valuation discounts in diligence.

Florida, Texas, Arizona, and Georgia continue to see outsized platform and add-on activity, while suburban regions around Dallas, Phoenix, and Atlanta draw sustained competition among national consolidators. Coastal urban centers remain liquid markets but can face tighter staffing conditions and higher overhead costs, which can slightly compress EBITDA margins.

Investors remain particularly interested in practices with satellite offices or de novo growth potential in secondary markets, where acquisition multiples can stretch further due to limited local competition.

As consolidation advances, top-performing dermatology practices that combine medical stability with cosmetic growth continue to clear at 8–12× EBITDA, while mature regional platforms can achieve 12×+. The market’s depth, scale opportunity, and recurring revenue profile make dermatology one of the most sought-after segments in 2025 healthcare M&A.