There’s a mad rush of Private Equity into the medical aesthetics space, and no vertical is further along in that growth curve than dermatology. In the beginning, buyers were very flexible about the types of practices they purchased, procedure mixes, and even, in some cases, the level of profitability within the business itself. Often opting to take a chance just to plant their flag in the vertical. As the space has matured, buyers have become more selective and have identified areas of crossover with basic med spa businesses that they like to see in the investments they make. As such, we felt it “apropos” to provide some rationale behind the graying of the lines and, possibly, encourage many of you to further invest in some of them as areas of focus in the coming years.

Why Medical Aesthetic Treatments?

Medical aesthetics treatments like Botox and fillers are long-standing mainstays in derm offices; however, remarkably, laser treatments, microneedling, and non-invasive skin rejuvenation are significantly underrepresented in dermatology offices. Despite carrying, in many cases, significantly higher profitability than your traditional medical dermatology services, or the toxins and fillers already present. Many buyers in the space are specifically looking for this cross-pollination of services that include annual medical checkups, quarterly toxin placement, and regular laser/aesthetician services sprinkled throughout the year. The reasons are clear and for the offices that integrate them successfully, they ultimately yield the following:

– Higher Profit Margins: Cash-based services that are not dependent on insurance reimbursements.
– Recurring Revenue Streams: Patients return regularly for maintenance treatments, creating predictable, repeatable income.
– Broader Patient Base: Expands your clientele beyond those with medical skin concerns, attracting younger and aesthetic-focused patients.

How It Increases Your Practice’s Value

When evaluating a dermatology practice, potential buyers—especially MSOs and private equity groups—look for diversified revenue streams, scalability, and predictable cash flow. Here’s how integrating medical aesthetics enhances your practice’s valuation:

1. Increases Revenue & EBITDA
Medical aesthetic treatments are highly profitable with minimal overhead costs compared to traditional dermatology services. Because they operate on a cash-pay model, they eliminate the challenges of insurance billing, leading to stronger EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), which is a key valuation factor for buyers. Many of these services are also able to be provided by an NP or PA, both of which carry a lower overhead number than a dermatologist would, further increasing profitability for the business.

2. Diversified Revenue Streams
A practice with multiple income sources is more attractive to buyers. A mix of medical dermatology, surgical procedures, and aesthetic treatments creates a balanced, recession-resistant business model. In addition, one of the most commonly cited reasons buyers walk away from a prospective investment is called “key man risk”. The risk of what happens to the business when one super producer in the business leaves, retires, or has something unfortunate happen, minimizing their ability to produce. This risk is hedged by multiple providers across numerous production categories, helping to carry the load of the business, which can only be further diversified by the increase in prospective services offered. Investors and MSOs favor businesses with predictable and recurring revenue, reducing risk and increasing desirability.

3. Enhances Patient Retention & Lifetime Value
Aesthetic treatments keep patients engaged long-term. While a patient might visit for acne treatment or skin cancer screening, offering medical aesthetics encourages them to return for ongoing cosmetic procedures. The higher lifetime value of patients strengthens a practice’s revenue stability. In addition, there’s the added opportunity for your well trained providers to identify potential issues in between your annual visits with the patient. Win/Win.

4. Attracts MSO & Private Equity Interest
MSOs and private equity firms actively seek high-margin, cash-based revenue models. Practices that integrate aesthetic services often command higher multiples in sale transactions because they align with investors’ interests—predictable, scalable, and high-margin business models. By offering services patients already seek from med spas and aesthetic clinics, your dermatology practice becomes a one-stop destination—boosting patient acquisition and retention.

A Smart Move for Growth & Future Sale

Whether you’re looking to grow your practice for long-term profitability or preparing for a future sale, adding medical aesthetic treatments is a strategic move. It enhances revenue, attracts more patients, and significantly boosts the value of your practice in the eyes of MSOs, private equity firms, and strategic buyers.

At TUSK Practice Sales, we help dermatology practice owners position their businesses for maximum value and negotiate the best possible outcomes in practice sales. If you’re considering a sale or want to understand how aesthetic services impact your valuation, contact us today for a confidential consultation.