December M&A activity hit over 200 deals, and we were struggling to remember a time when numbers hit that high, let alone in a historic pandemic (and more deals are expected to float to the surface in the next few weeks). Part of that surge in deal volume can be attributed to M&A in the Physician Medical Group sector, which hit 28 deals so far, based on search results in our Healthcare Deals Database.
All but seven deals were committed by a private equity firm or its portfolio company, showing private equity’s continued influence on the Physician Medical Group market. No one particular company dominated as a buyer, but a few different firms reported multiple deals. Advanced Dermatology and Cosmetic Surgery Inc., a portfolio company of Audax Private Equity, purchased Colorado Dermatology Specialists (five physicians) in Denver, Colorado and Nielsen Dermatology (one physician) in Boynton Beach, Florida. No terms were disclosed, but the deals give Advanced Dermatology and Cosmetic Surgery a presence in a diverse array of markets.
US Radiology Specialists, a portfolio company of Welsh, Carson, Anderson & Stowe (WCAS), also announced a pair of transactions. The company purchased Windsong Radiology Group, the largest outpatient diagnostic imaging provider in Western New York, and ImageSouth, the largest outpatient imaging provider in Birmingham, Alabama. WCAS formed US Radiology in April 2018 with the acquisition of Charlotte Radiology in Charlotte, North Carolina.
As for the breakdown of target types, the trends reflect a few we’ve seen throughout the year. There were four deals for optometry practices, which were hot targets in 2020, and interest in dermatology remained high, with four deals on the books.
Only one deal disclosed a price in December. Skylight Health Group Inc. (CSE: SHG), a Canadian healthcare services and technology company operating a multi-state health network comprised of multi-disciplinary medical clinics in the U.S., acquired Healthcare Resources Management LLC in Tennessee for $800,000, representing a 2.6x EBITDA multiple. The acquisition of Healthcare Resources Management expands Skylight’s bricks and mortar and telemedicine services to 15 states and will add 12,000 new patients to its current roster of 120,000.