Private equity firms usually create a subsidiary Practice Management Company within their portfolios to acquire and manage dermatology practices and ASCs. Most transactions include some equity ownership in that company, as part of the total consideration sellers receive.
PhysiciansFirst expects several key developments in 2019. Most importantly, we anticipate increased acquisition momentum – both from new entrants and existing companies as they grow and enter new geographies. At the same time, some of the current investor pool will merge. Companies that have been unable to grow at their desired pace will likely combine with larger, more successful enterprises.
These days, many dermatology practices are faced with the challenge of securing their next generation of physician partners. Historically, practices brought in dermatology “associates” soon after residency or fellowship, and these associates immediately set their sights on the path to partnership. Although partnership was never guaranteed, it was expected to both reward physician loyalty and, more importantly, ensure practice continuity.
Many interested physicians ask me how private equity investments in dermatology will play out over the coming years. We now know that consolidation is happening, but how will it work? Why are PE firms interested? What kind of return on investment are they looking for? And what will it take to achieve that objective? This article will look at those items in detail and explore the financial mechanics from a PE firm's perspective.
If you have been paying attention to events in the dermatology world, you are well aware of private equity's increasing interest in dermatology practices and surgery centers across the United States. The details of individual acquisitions are frequently announced. But what does the big picture look like?
The team at PhysiciansFirst Healthcare Partners conducted extensive research to understand where these investors are acquiring and what this consolidation wave looks like across the nation.
The past several years have seen private equity’s tremendous impact on dermatology practices, surgery centers, labs, and aesthetic businesses. We view this consolidation cycle as beginning in 2011 with Audax Group’s recapitalization of Dr. Matt Leavitt’s large Florida practice, which had already been extensively developed on its own. Years 2012 through 2014 saw limited investment activity with other early adopters, notably Candescent Partners and Prairie Capital, acquiring their own platforms in 2012 and 2013, respectively.
PhysiciansFirst expects several key developments in 2019. By the end of this year, we anticipate increased acquisition momentum – both from new entrants and existing companies as they grow and enter new geographies. At the same time, some of the current investor pool (particularly in ophthalmology) will merge. Companies that have been unable to grow at their desired pace will likely combine with larger, more successful enterprises.
ABOUT THE COMPANY
EyeCare Partners is the only major optometric practice management company that is also investing in ophthalmology practices. The company was founded with FFL Partners’ initial 2015 investment in Clarkson EyeCare, a large optometry/ophthalmology practice in St. Louis, MO. Since then, EyeCare Partners has grown quickly and acquired additional platforms and practices in ophthalmology and optometry.
ABOUT THE COMPANY
Total Eye Care Partners was founded in 2017 by a group of individuals with operational and investment experience in optometry and elsewhere in healthcare practice management. With financial backing from Imperial Capital (private equity based in Toronto, Canada), the group acquired its first practice – Gaddie Eye Centers of Louisville, KY.
ABOUT THE COMPANY
MrEyeDr. was founded in 2001 by a group of optometrists and the group’s current CEO, Sue Healey Downes. Dr. Robert Samit had achieved prior success with his Hour Eyes group (sold to Eye Care Centers of America in 1997) and Millenium Laser Eye Centers (sold to TLC). The group approached MyEyeDr. as a different kind of business that was more doctor-driven.