FFL’s EyeCare Partners sets sights on deal by year-end

Five bidders were in the mix during the auction's latest round, but it's uncertain who will move forward.

EyeCare Partners, the FFL Partners-backed vision-care company, aims to clinch a deal before year-end, people familiar with the matter told PE Hub.

An interim bid for St. Louis’s EyeCare Partners is due later this week ahead of final bids, two people said. The sellers hope to sign a deal before the holidays, though a potential transaction would likely close in Q1 of 2020, one of the people said.

Five bidders were accepted into the previous round of the sales process, including Partners Group, a buyout group including GI Partners and Thomas H. Lee, TPG, KKR and Ontario Teachers’ Pension Plan, the people said.

Sources were at odds over whether certain parties will move forward or drop from the upcoming round of bidding.

PE Hub initially reported in October that the hybrid optometry and ophthalmology provider was up for sale via Moelis, marketing adjusted Ebitda of approximately $135 million.

Sources placed valuation discussions across a broad range. A low double-digit Ebitda multiple is likely, two people said, while a third said the company ought to fetch a mid- to high-teens multiple of Ebitda, comparable to recent trades in the sector.

Leverage packages are being offered within the 7.25x to 7.5x range, one of these people added.

The process for EyeCare Partners follows Goldman Sachs’ acquisition of the parent company of optometry-focused MyEyeDr, which commanded an enterprise value of approximately $2.7 billion, or about 17x Ebitda, PE Hub reported in June.

The deal concluded a Jefferies-run auction, which drew significant interest due to the asset’s consistent organic growth profile over the last 15 years, sources said. MyEyeDr, which a source said produced an approximately 3.5x return for selling shareholder Altas Partners, also represented private equity’s largest bet in eye care history.

Broadly, sponsors have remained interested in the vision care industry, as both the optometry and ophthalmology markets are viewed to have significant runways for consolidation.

EyeCare Partners to date has been a more complicated asset to price due to its hybrid model and rapid growth, some of the sources said.

EyeCare Partners consists of both independent optometry clinics, which offer prescription glasses, frames, contact lenses and eye exams, as well as ophthalmology practices, which concentrate on medical and surgical eye care through the diagnosis and treatment of various eye diseases and conditions.

Sponsors like what CEO Kelly McCrann is trying to build in terms of a integrated optometry and ophthalmology platform; however, sources said there is risk associated with the pace of acquisitions that EyeCare Partners has executed over the last 12 months. The company will likely need to slow down on the M&A front to digest recent acquisitions, which could require significant investment, one of the people said.

On the other hand, EyeCare Partners has produced same store growth of 5 percent to 7 percent over the last few years, another one of the people said.

Three acquisitions account for the bulk of recent growth: Chandler, Arizona’s Nationwide Vision, Royal Oak, Michigan’s Associated Retinal Consultants and Wichita, Kansas’ Grene Vision Group. 

FFL, a San Francisco-based middle market firm, first invested in EyeCare Partners in April 2015.

FFL, EyeCare Partners, Moelis, THL, TPG and KKR declined to comment, while representatives of Partners Group and GI Partners didn’t respond to requests for comment on Monday.

Action Item: Check out FFL’s latest Form ADV: https://bit.ly/2DAebpQ