The complex business structures of some private equity-backed dermatology groups allowed them to receive millions in COVID-19 funds intended for small businesses, federal disclosures reveal.
Lawmakers and regulators structured the Paycheck Protection Program so that most private equity-owned businesses would not qualify. Only companies with 500 employees or fewer are eligible for the program, which offers loan forgiveness if the loans are spent on qualifying expenses.
If a business is majority owned by a private equity firm, the employees of all the firm’s portfolio companies count toward its total employee tally, thus disqualifying many companies.
However, a variety of factors have allowed some dermatology groups backed by private equity to receive millions in forgivable loans.
At least six groups that received publicly disclosed PPP loans are private equity-backed dermatology groups.
- DermCare Management, which has 32 practices in Florida, California and Texas, is backed by Hildred Capital Management and Gemini Investors.
- Soderstrom Dermatology Center, which is part of a group that has eight offices in Illinois and Iowa, is backed by H.I.G. Growth Partners.
- Oliver Street Dermatology Management is the parent management company of U.S. Dermatology Partners, which has more than 94 offices across the country, and is backed by Abry Partners.
- Sanova Dermatology Management, which has 13 offices in Louisiana and Texas, is backed by Spindletop Capital.
- California Skin Institute Intermediate Holdings, which has 44 offices in California, is backed by Goldman Sachs.
- United Skin Specialists, which has 10 offices in the Midwest, is