After more than five years as partners, Chicago Pacific Founders is exiting its investment in Pinnacle Dermatology. The private equity firm is selling its dermatology platform to BayPine, an investment firm based in Boston. No purchase price was disclosed in the private transaction, but affiliates of J.P. Morgan, Goldman Sachs Asset Management, and AB Private Credit Investors are supporting the financing of the transaction as lenders. Chicago Pacific Founders will roll a portion of its ownership in Pinnacle post-closing.
Pinnacle provides comprehensive management services to 87 clinical locations across 11 states. Its affiliated clinical practices include board-certified dermatologists, Mohs and plastic surgeons, physician assistants and nurse practitioners, that treat the full spectrum of skincare needs, including general dermatology, surgical, pathology, radiation and cosmetic services, in both physical and telemedicine settings. Since 2017, the company has added over 37 practices to its single integrated platform, brand and culture.
Dermatology groups have been in hot demand for years now. There have been more than 200 deals for dermatology providers in the past five years, with roughly 20 this year alone. Edgemont Partners, one of the most active investment firms and M&A advisors in the sector, published a report earlier in the year highlighting tailwinds in the market driving deal activity. An aging population, the rising prevalence of skin cancer and the increased complexity of managing a physician practice, pushing owners to partner with PE-backed management services organizations (MSOs) to help carry the burden, all have resulted in a very active market. Pinnacle Dermatology is one of those MSOs, so we expect to continue to see the company in the market for some time.
