Eye Care Private Equity
Amidst a global pandemic, 2020 saw private equity firms continue to flood the Eye Care sector with attractive alternatives for private practice physicians. Now, more than ever, ophthalmologists and optometrists are considering a partnership with Private Equity due to attractive valuations and relief from significant external forces. Success stories such as Eyecare Partners, Eyecare Services Partners, and MyEyeDr. have created a domino effect in the industry for private practices. In under five years there have been more than 30 platform investments in 40 states by Private Equity, a number that continues to grow. This is even more impressive when compared to Dermatology, a specialty which has been consolidating for over 10 years and has a similar number (~30) of platform investments.
Eye Care remains one of the most fragmented specialties within healthcare with nearly 60 percent of physicians practicing in groups with less than 10 providers. Physicians are faced with two options: growing their practice organically or partnering with an existing Private Equity backed platform and reaping the benefits of scale in the proven Private Equity growth model. As the U.S. population continues to age, the demand for Eye Care services will only increase. Given favorable tailwinds, we see consolidation continuing to occur at a rapid pace for years to come.
Patient demand for Eye Care is projected to increase exponentially in the coming years. By 2029, 20 percent of the U.S. population will be over the age of 65. This shift in age demographics will result in an increase of age related eye diseases such as cataracts, glaucoma, and macular degeneration. Simultaneously, the supply of Eye Care doctors is diminishing rapidly. This increase in demand supplemented by a dwindling supply has opened the door for a solution in the form of Private Equity consolidation that is just getting started.
Source: Statista, Projected prevalence of vision problems United States by type 2034, Statista, Number of eye care professionals in U.S.
How are Independent Physicians Impacted?
Independent sub-specialty physicians have found partnerships with Private Equity attractive since the early 2000’s. Over the years this interest has grown into the hyperactive market we see today. Experienced leadership allows Private Equity firms to provide the operational support needed for day to day administrative work,enabling the physicians to spend more of their time on direct patient care, an attractive proposition for independent doctors drowning beneath a non-medical workload and having a harder and harder time producing at the same level year over year. The current macro environment, driven by low interest rates and high levels of uninvested capital, has led to a significant rise in both platform and add-on acquisitions over the last decade. We expect this heightened level of transaction activity to continue into the future if not further accelerate. With the market for “Platform” acquisitions largely saturated, independent physicians and groups of all sizes are now drawing the eye of Private Equity.
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