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  • Private Equity Trends in Eye Care

    By Arthur Stone
    Selected By: Stephen D. McLeod, MD

    Journal Highlights

    Ophthalmology, April 2020

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    Chen et al. set out to identify temporal and geographic trends in private equity (PE) acquisitions in eye care in the United States. They concluded that PE-backed acquisitions of ophthalmic and optometric practices have rapidly in­creased since 2012, with some platform companies having already been sold or recapitalized to new investors.

    For this cross-sectional study, the authors used PE acquisition and investment data from Jan. 1, 2012, to Oct. 20, 2019. They identified 228 oph­thalmic and optometric practices that had been acquired by 29 PE-backed platform companies during that time. Of the 228 practices, 127 were com­prehensive/multispecialty practices, nine were retina practices, and 92 were optometry-specific practices; they were associated with 1,466 clinical locations and involved 2,146 clinicians.

    Acquisitions increased rapidly between 2012 and 2019: From 2012-2016, 42 practices were acquired; this grew to 186 from 2017-2019. Financing rounds of platform companies paral­leled temporal acquisition trends. Three platform companies, comprising 60% of platforms formed before 2016, were subsequently sold or recapitalized to new PE investors by the end of the study period, with a median holding period of 3.5 years. Acquisitions occurred in 40 states, with a majority of PE firms developing mul­tistate platform companies.

    Of note, the authors found a slight decline in acquisition numbers in 2019 and a lower rate of platform formations. They speculate that this decline in PE in­terest may be due to expectations of limited profit potential due to current health care and market trends. Finally, they emphasize that future research should assess the impact of short-term PE investment on patient, provider, and practice metrics. (Also see related commentary by David W. Parke II, MD, in the same issue.)

    The original article can be found here.