How to Buy a Dermatology Practice in 2026

Dermatology is one of the hottest corners of healthcare M&A, and it has been for nearly a decade. Private equity sponsors like Harvest Partners (Advanced Dermatology), LCatterton (Schweiger), and Audax (U.S. Dermatology Partners) have been rolling up the space since 2015, and the competition for quality assets has pushed multiples to levels that would have been unthinkable when I started doing these deals. If you're a dermatologist looking to buy a practice in 2026, you are not alone at the table — and you need to understand who else is bidding before you write your LOI.

I've walked buyers through dozens of derm acquisitions, from $1.2M solo general practices in the Midwest to eight-location Mohs-heavy groups that traded to PE at 14x EBITDA. The diligence questions are wildly different depending on what you're buying. Let me walk through the ones that actually matter.

Understand the Revenue Mix Before You Open the P&L

The first question I ask any dermatology buyer is: what percentage of this practice's revenue is medical, surgical (Mohs), and cosmetic? Because those three streams behave like three different businesses.

Medical dermatology — acne, eczema, psoriasis, skin checks — runs on insurance reimbursement. Margins are typically 20-30% after overhead, and volume is predictable because patients return on schedule. This is the bread and butter, but it's not where the value expansion lives.

Mohs surgery is the crown jewel. A well-run Mohs suite can generate $2-4M in annual revenue from a single fellowship-trained surgeon operating two to three days a week, at 45-55% contribution margins. Medicare reimburses roughly $1,200-1,800 per case depending on location and stages. If the practice you're buying has a Mohs surgeon, that single provider may represent 40-60% of the practice's EBITDA. Which leads directly to the biggest risk in the deal.

Cosmetic and aesthetics — Botox, fillers, lasers, CoolSculpting, chemical peels — is cash-pay, high-margin (50-70%), and growing double digits in most markets. But it's also the most fragile revenue stream. Cosmetic patients follow providers, not practices. If the selling dermatologist or the aesthetician who built the cosmetic book leaves, that revenue can evaporate within 90 days.

The Mohs Surgeon Retention Problem

If you're buying a practice that depends on a Mohs surgeon who isn't you, the entire deal hinges on retention. I've seen more dermatology acquisitions fall apart over Mohs surgeon contracts than any other single issue.

Fellowship-trained Mohs surgeons are genuinely scarce — the American College of Mohs Surgery only credentials around 100 new fellows a year in the U.S. They know their value. If the surgeon in the practice you're buying is a W-2 employee with no equity and no long-term contract, assume they will either demand a raise, a partnership track, or walk — and start a competing practice three miles down the road within 18 months.

Before signing your LOI, get answers on three things: (1) what does the surgeon's current compensation look like as a percentage of their collections (anything under 35% is a flight risk), (2) is there a non-compete and is it enforceable in your state (California, North Dakota, and now Minnesota post-2023 won't enforce them at all), and (3) will the surgeon sign a new 3-5 year employment agreement at closing. If the answer to the third question is "we'll figure it out after close," walk away.

What Dermatology Practices Actually Sell For

The multiples in derm have two tiers that barely overlap. Our transaction database shows solo and small group medical dermatology practices trading to individual buyers at 2.0-3.2x SDE, which usually works out to 55-75% of collections. That's the market for a dermatologist buying a practice from a retiring colleague with SBA 7(a) financing.

The institutional market is a different universe. PE-backed platforms pay 7-10x EBITDA for bolt-on acquisitions and 11-15x for platform deals — sometimes higher for Mohs-heavy groups in desirable markets. Schweiger Dermatology and U.S. Dermatology Partners have been particularly aggressive in the Northeast and Texas respectively. If you're competing against a strategic, understand that you are almost certainly going to lose on price. Where you can win is on speed, certainty of close, and the seller's willingness to keep working with a colleague rather than a PE board. For more context on how healthcare multiples stack up across specialties, see our industry multiples guide.

Financing the Deal

Most dermatologists buying their first practice finance it through an SBA 7(a) loan. The program caps at $5M, requires 10% buyer equity (often satisfied through a seller note on standby), and amortizes over 10 years. Live Oak Bank, Huntington, and Byline Bank are the three most active dermatology lenders I work with, and they all want to see at least 18 months of clean financials and a trailing EBITDA-to-debt-service coverage ratio above 1.5x.

For deals above $5M, you're looking at conventional commercial bank debt with a personal guarantee, a mezzanine piece, or bringing on a physician partner to split the equity check. Some sellers will carry back 15-25% of the purchase price as a subordinated note — usually at 6-8% interest over 5-7 years. A healthy seller note is actually a positive signal: it means the seller believes the practice will keep performing after close.

Diligence Items I Won't Skip

Referral source concentration. Pull a report of the top 20 referring providers and what percentage of new patients each sends. If any single primary care group or plastic surgeon drives more than 15% of new medical referrals, that relationship is a risk. Call them during diligence — under NDA, through the seller — and confirm they'll continue referring to the new owner.

Payer mix and contracts. Cosmetic revenue is cash-pay, but medical and Mohs run on commercial insurance and Medicare. Get the current fee schedules for the top five payers and compare them to the state average. I've seen practices with "grandfathered" rates from BCBS that were 25% above market — and those rates don't always transfer cleanly to a new owner. Confirm with each payer in writing before close.

Cosmetic equipment age and lease obligations. Laser platforms (Cutera, Candela, Sciton, Cynosure) cost $80K-$250K new and have a real replacement cycle. Ask for the purchase date and service contracts on every major piece of equipment. And look for equipment leases disguised as operating expenses — I've seen buyers inherit $400K in remaining lease obligations on a fractional laser nobody uses anymore.

Aesthetic provider contracts. If the practice has nurse injectors or a dedicated aesthetician driving cosmetic revenue, those providers are as important as the Mohs surgeon. Get their employment agreements, understand their comp structure, and meet them before close.

State scope-of-practice issues. Laws on who can inject Botox, supervise estheticians, and own medical spas vary dramatically by state. Florida, Texas, and Arizona are permissive; California, New York, and New Jersey are restrictive. A corporate practice of medicine issue can unwind a deal structure entirely.

Structuring the Earnout

Almost every dermatology deal I work on includes some form of earnout or retained equity — especially when the seller is staying on for a transition. The structures I see most often are a 20-30% equity rollover when selling to a PE-backed platform, a 2-3 year earnout tied to EBITDA retention when buying from a solo owner, or a seller note with performance-based forgiveness if collections fall outside a defined band.

My rule: never let the earnout exceed 25% of total consideration, and never tie it to a metric the seller can manipulate once they're no longer in control. Tie it to collections or gross revenue, not EBITDA — because the seller can't control your overhead choices after close.

The Bottom Line

Buying a dermatology practice in 2026 means walking into a crowded, well-capitalized market where your biggest competition is PE money. The individual physician buyer can still win, but only by targeting practices that PE platforms won't or by bringing something the platforms can't — local relationships, clinical fit, and a willingness to keep the seller's name on the door. Run your diligence harder on provider retention than on the P&L, price the Mohs surgeon risk explicitly, and never pay platform multiples for a bolt-on asset.

Before you sign an LOI, run the target through our instant valuation tool to pressure-test the asking price against 25,700+ real M&A transactions.