Ophthalmology practices have become an attractive investment for private equity firms, with the number of PE-backed vision platforms growing from roughly 10 to 30 since 2017.
That was one key takeaway shared by three panelists at McGuireWoods' 16th Annual Healthcare and Life Sciences Private Equity and Finance Conference, Feb. 20-21 in Chicago. Partner Holly Buckley moderated the discussion.
The panelists were:
- Brett Skolnik, managing director at Robert W. Baird & Co.
- Andrey Vakhovskiy, principal at HIG Capital
- Andrew Welch, managing director at Revelstoke Capital Partners
Five additional insights they shared:
1. A solid foundation attracts investors. When considering ophthalmology investments, PE firms look at a practice's local market, management, infrastructure and subspecialties. Another compelling feature of the specialty is that ophthalmologists tend to be more interested than other physicians in having equity.
2. Opinions about geography vary. Some firms focus on core regions where they want to make investments, but for others, geography is near the bottom of the list of considerations.
3. Ophthalmology's ASC component stands out. Ophthalmology has an ASC component that doesn't exist as much in other specialties, such as dermatology. In investors' eyes, the ASC helps ophthalmology practices scale more quickly.
4. Retina is driving activity. Now that there aren't as many general ophthalmology practices left to acquire, the retina specialty has high investor interest. However, retina groups require a management approach tailored to their unique drug spend, specialist compensation and operating style, making these deals more challenging.
5. PE firms follow the pack. When there's one successful PE-backed vision platform, others follow. Early successes spur more investments, which partially explains why ophthalmology has seen a "staggering" number of investments in the past few years.