DX / Differentials / DERMATOLOGY GROUPS

D-05 — PREPARING FOR SALE · DERMATOLOGY GROUPS

Growth has to read as a system — dermatology

How much of this survives the surgeon leaving the room?

DIFFERENTIAL — LIKELY CAUSES, MOST LIKELY FIRST

1. 01

   Key-person concentration in the highest-fee line, which is physician-only by construction

   A buyer prices delegable revenue differently from non-delegable revenue. In dermatology the split is unusually clean and unusually severe — the specialty's highest-fee work legally and practically cannot be handed to an extender, so it prices as key-person risk unless a succession structure exists.

   PAs and NPs render 18 of 934,948 Mohs first stages nationally — essentially zero — while rendering roughly a third of biopsies and destructions. There are 1,900 fellowship-trained Mohs surgeons in the country. The fee gap is what makes the concentration matter: Mohs first stage allows $581.52 in office, an additional stage $405.86, and a destruction of a premalignant lesion beyond the first $6.22.

   CMS, Medicare Physician & Other Practitioners PUF by Provider and Service and by Geography and Service, CY2024; American College of Mohs Surgery (member count, fellowship requirement — "at least 500 Mohs surgery cases" during fellowship).

   NOT THIS IF — Your surgical volume is spread across multiple fellowship-trained surgeons under contract, with terms that survive the transaction. Then this is priced and you should be arguing about the cosmetic line instead.

2. 02

   Growth was bought with doors, and a buyer discounts inorganic growth to near zero

   Total revenue growth and same-site growth are different assets. A platform that added locations reports growth; a platform that improved sites reports a system. Diligence separates them in the first week, and everything after that is priced off the second number.

   Across medspa platform data for CY2025, total revenue growth ran 8%, "fueled primarily by new locations rather than same-location gains (2%)." New guest visits declined 11% and existing guest visits fell 2%. The category's headline growth was almost entirely door-opening.

   Zenoti, 2026 Beauty & Wellness Benchmark Report — medspa edition, CY2025 platform transaction data, North America.

   NOT THIS IF — You can already produce 24 months of same-site growth separated from new-site contribution. Then this is documented and you are ahead of most of the market.

3. 03

   The cosmetic line has no documented funnel, so it diligences as luck

   Where there is no stage-level record of how demand becomes revenue, a buyer has to assume the demand belongs to the people rather than to the system — and prices it accordingly. In dermatology this is compounded by the fact that no external benchmark exists to argue against, so your own instrumented numbers are the only evidence available.

   No dermatology consult-to-treatment conversion rate is published anywhere. The only published aesthetics funnel — lead to booked consult 42%, consult to close 58%, end to end 24% — explicitly excludes dermatology and plastic surgery from its cohort. There is no AAD practice benchmark survey: the AAD's data assets are the DataDerm clinical registry and a Burden of Skin Disease study built on 2013 data; any citation to an "AAD Practice Benchmark Survey" is fabricated attribution. And the industry's actual volume currency — units and syringes — does not publish free at all; every credible US brand-share figure routes through Guidepoint Qsight, a paid subscription named by Revance in an SEC filing as its share source.

   CorralData Research, Q1 2026 Aesthetics Industry Benchmark (cohort excludes dermatology and plastics); AAD published data assets; Revance Q1/Q2 2024 earnings releases (8-K Ex-99.1) citing Guidepoint Qsight Aesthetics Sales Measurement. The absence is the finding, and it cuts both ways: a buyer cannot benchmark you, which means the instrumented seller sets the terms of the comparison.

   NOT THIS IF — You already hold 12+ months of stage-level funnel data. Then this is an asset in the process rather than a gap in it.

4. 04

   Cosmetic revenue quality is thin — recurring share is small and the manufacturer moves the price

   Not all cosmetic revenue prices the same. Membership and package revenue is contracted and forecastable; injectable revenue is transactional and its realized price is being set by third-party loyalty economics the practice does not control.

   In published aesthetics service mix, neurotoxin is 22.9% of revenue and filler 9.6%, while membership is 7.2% and retail skincare 5.2% — and 47.5% is uncategorized, which disqualifies any precise mix claim (CorralData says so itself). Medspa membership sales grew 13% year over year. On the price side, AbbVie attributes an 11% decline in US Botox Cosmetic net revenues to "unfavorable pricing due to customer loyalty program changes, lower market share and decreased consumer demand," and US Juvederm fell from $519M to $385M in two years. Evolus reports an approximately 70% repeat treatment rate across roughly 1.5 million Rewards members — the cleanest published cosmetic retention figure with a named denominator.

   CorralData Research, Q1 2026 Aesthetics Industry Benchmark (medspa cohort, dermatology excluded); Zenoti 2026 Benchmark Report (CY2025); AbbVie Form 10-K FY2025 MD&A; Evolus Q1 2026 earnings release. Manufacturer revenue is not units — no manufacturer publishes unit volume.

   NOT THIS IF — Membership and package revenue already carries a substantial share of your cosmetic line, with contracted terms. Then revenue quality is a strength to lead with.

5. 05

   Device capital sits on the balance sheet in a contracting equipment market

   Aesthetic capital equipment was sold into this channel on subscription and lease structures whose economics have deteriorated badly. A device that is under-utilized, still financed, or from a manufacturer that no longer exists is a diligence line item, and it does not price as an asset.

   US aesthetic capital equipment has contracted sharply across independent filers: InMode US revenue fell from $307,818K (2023) to $198,652K (2025), down 35% in two years. Cutera filed Chapter 11 in March 2025; Cynosure Lutronic filed Chapter 11 the same month; Venus Concept was taken private at $0.04 a share in March 2026. The channel evidence is in the filings — Cutera's first-day materials: "Over half of installed systems were located at medical spas which typically do not treat acne." Venus's published financing terms: 36-month subscription, approximately 40–45% of total contract payments collected in year one, implicit interest 8–10%. No manufacturer publishes an aesthetic device ASP.

   InMode Ltd. Form 20-F FY2025, Note 15; Cutera 8-K Ex-99.1 Chapter 11 first-day materials, 2025-03-05; Venus Concept Form 10-K FY2024; Sisram Medical FY2025 annual results.

   NOT THIS IF — Your energy and laser line is a small share of cosmetic revenue, the equipment is owned outright and substantially depreciated, and utilization hours per device are documented. Then it is a footnote.

HOW TO TELL THEM APART

How to tell these apart in your own numbers

Each of these is a measurement you can run yourself, without us.

WHAT RESOLVES EACH

What resolves this, and how you will know it resolved

Key-person concentration in the highest-fee line, which is physician-only by construction	Rx 05 · preparing for sale →	The marketing-side contribution is narrow and honest: demonstrating that demand attaches to the practice rather than to the individual — branded search, referral source, and review attribution split by provider. The succession and contracting work is legal and clinical, and belongs to your advisors.
Growth was bought with doors, and a buyer discounts inorganic growth to near zero	Rx 05 · preparing for sale →	Build the decomposition before the process, not during it. If you are already inside six months, the honest answer is that a 24-month same-site record cannot be manufactured in six — document the funnel you actually have instead.
The cosmetic line has no documented funnel, so it diligences as luck	Rx 04 · marketing attribution →	This is the highest-leverage pre-exit item in dermatology, precisely because no external benchmark exists. Twelve months of stage-level data is an asset nobody else in the process can produce.
Cosmetic revenue quality is thin — recurring share is small and the manufacturer moves the price	Rx 05 · preparing for sale →	Membership and package design is a pricing and product decision with a marketing surface — we can build the presentation, not the economics. Sequenced with Rx 02 so the offer is visible before the room.
Device capital sits on the balance sheet in a contracting equipment market	— →	Not a marketing problem in any part. Surfaced in the pre-exit readout and handed to your financial advisors. We would decline any framing that treats an underused device as a demand-generation opportunity.

HOW THIS DIFFERS BY SCALE

How this differs by scale

Single site	A single site largely sells on the physician, and pretending otherwise wastes the twelve months you have. The realistic pre-exit work is documenting the recall panel, the referral sources, and the cosmetic rebooking rate — evidence that demand is attached to the practice.
Group	Provider concentration is the diligence question, and the comparison set is small enough that buyers know it well: only 17 US dermatology groups have 40 or more physicians, and the largest, at 339, has nearly twice as many as any other. In a thin comparison set, documentation is the differentiator.
Platform	Same-site growth is the entire conversation, and no public benchmark covers your tuck-ins — Bain's dataset excludes add-ons below $250M, which is essentially all of them. That means the platform's own instrumented same-site record is not just the best evidence available; it is the only evidence available.

OTHER PRESENTATIONS — DERMATOLOGY GROUPS

• The schedule is full and the number stopped moving
• Cost per consult is climbing — and cost per encounter was never measured
• The demand is already in the building
• Same brand, same fee schedule, four-fold spread