Even though the Physician Medical Group (PMG) market is a busy sector, the last several quarters have seen less deal activity than previous quarters. In 2023, 519 PMG acquisitions were reported, which is 16% less than the 620 PMG deals announced in 2022. Throughout the year, we spoke to several experts who have weighed in on why activity in the PMG space is slowing down. Their input can be summarized as high interest rates, increasing labor costs and a consolidated market.
Yet, while there was a decrease in reported transactions, there were still several buyers and their deal activity that are worth looking into. Here are five of the most active PMG acquirers in 2023.
- The most active PMG acquirer in 2023 was MB2 Dental Solutions, backed by private equity firm Charlesbank Capital Partners, with 46 transactions. MB2 Dental Solutions offers general dentistry services, orthodontics, cosmetic dentistry and oral surgery services. The company added 54 practices and more than 90 physicians to its network. Across the transactions, each practice had an average of two physicians on staff. The practices are located across the country in 22 states. With its acquisition of Highland Creek Family Dental – South in August, MB2 Dental expanded to 600 locations. MB2 Dental’s activity highlights how active the dental industry is dental accounts for roughly 32% of the PMG market in 2023. Dental’s high demand comes down to several factors including the fact that it is highly fragmented with substantial opportunities for consolidation.
- Aside from Charlesbank Capital Partners, the most active private equity buyer was Webster Equity Partners, which completed 18 transactions in 2023. Webster completed two transactions directly, and 16 roll up transactions through portfolio companies: Cardiovascular Associates of America completed nine acquisitions; One GI completed four transactions; and MyTown Health Partners completed one deal. Webster’s activity is slightly unusual for the PMG field as most PMG investors tend to stick to one specialty whereas Webster has a diverse portfolio across the gastroenterology, internal medicine and cardiology specialties.
- Another private equity group that spread itself across several specialties is Chicago Pacific Founders that announced 10 transactions in 2023. Its active portfolio of companies, in 2023, were Ascend Vision Partners (six transactions), Marquee Dental Partners (two deals), Qoros Health (one acquisitions) and SightMD (one deal). Between Ascend Vision Partners and SightMD, Chicago Pacific was the most active in the eye care specialty, expanding its reach by 26 eye care providers. Six of the company’s transactions involved practices based in Florida, alluding to the fact that areas with an older population need more care. Additionally, the eye care specialty was the second most active specialty of the year with 47 transactions announced in 2023, or approximately 9% of PMG acquisitions. The specialty’s demand is due to the increase of eye-related conditions amongst the public.
- While private equity groups dominate the PMG market, they are not the only buyers making a splash. Premier Care Dental Management was the most active non-private equity group buyer in 2023, totaling seven transactions. Premier Care Dental is a dental management company that offers support services to dental specialty offices across the Northeastern United States. Through its seven transactions, it added seven practices and 15 providers to its network.
- While most of the buyers in the PMG space have been private companies in 2023, public buyers account for 2% of the acquirers with 12 transactions. Apollo Medical Holdings, Inc. (NASDAQ: AMEH) completed two acquisitions in 2023 and was the only publicly traded company to make more than one deal throughout the year. It purchased Texas Independent Providers, LLC, a primary care practice with 120 physicians, as well as assets of the Community Family Care Medical Group, which has more than 350 providers on staff. While Apollo was not the most active in terms of quantity of deals, the size of the practices it acquired is certainly impressive.
