H.I.G. snaps up Arizona eye-surgery companies

In the latest in a slew of eye-care transactions, H.I.G. Capital on Monday said it acquired SouthWestern Eye and Barnet Dulaney Perkins to create a regional ophthalmology platform.

The announcement confirms a Feb. 23 Buyouts report that the Miami firm was negotiating transactions for the pair of Arizona vision-treatment providers.

SouthWestern was advised by Intrepid Investment Bankers on the transaction, while BDP did not retain an outside financial adviser, Buyouts has learned.

As Buyouts reported, the two assets account for close to a combined $10-million-plus EBITDA. Both BDP and SouthWestern, which are about the same size, commanded a multiple of EBITDA approaching the double-digit level, a source familiar with the matter said. That suggests a combined valuation just south of $100 million.

SouthWestern, for its part, has held serious discussions with several sponsors in the past and came close to partnering with another firm about two years ago, the company’s founder, Lotharie Bluth, told Buyouts Monday.

“We have always felt that the big organizations are the ones that are going to succeed,” said Bluth, who will be chairman of the combined company. “There are a lot of practices right now that realize that this [consolidation] is what needs to happen. … We don’t have the ability to speak with one voice until we become larger, more integrated organizations.”

Achieving greater scale is important in an increasingly complex healthcare environment, Bluth said. Size helps overcome regulatory challenges such as meeting electronic-medical-record requirements, and it creates a better opportunity to negotiate pricing with insurers.

SouthWestern in the past held talks with PE groups including Waud Capital Partners and Excellere Partners, Bluth said.

Waud is among those to strike recent deals in the sector, surfacing as the winning suitor for Minnesota Eye Consultants in February. The deal marked the conclusion of a Provident Healthcare-run auction for the Minneapolis network of ophthalmology-focused surgery centers generating about $4 million of EBITDA.

BDP also came close to a deal with another sponsor before advancing discussions with H.I.G. The company had entered into exclusivity with another PE firm in 2016 following a formal process but the deal never closed, one of the sources said. Provident advised BDP on the previous process, the other source added.

BDP CEO Mark Rosenberg will be CEO of the combined H.I.G. platform company, while SouthWestern CEO Shane Armstrong was named COO.

BDP, with a statewide presence in Arizona, offers a range of services including Lasik surgery, advanced cataract surgery, glaucoma treatment, ophthalmic plastic surgery, and retina and cornea surgery.

Mesa’s SouthWestern offers Lasik, optometry and ophthalmology services in the Phoenix, Mesa and Sedona areas. SouthWestern differentiates itself from many ophthalmology players in the fragmented sector by flying its surgeons around the country for treatments, one of the sources noted.

H.I.G.’s deal for BDP closed about a week ahead of the SouthWestern deal, the sources said.

Other recently created regional platforms include Riata Capital Group’s formation of Acuity Eyecare Holdings. The firm on March 31 disclosed the simultaneous acquisitions of Crown Vision Center, St. Louis; Eyetique, Pittsburgh; and International Eyecare Center, Quincy, Ill.

Ongoing processes for other medical-focused vision companies include those for New England’s Chesapeake Eye Care, Annapolis’s Claris Vision and Atlanta’s Woolfson Eye Institute. Lincoln International is running the auction for Claris, while Coker Capital is advising both Chesapeake and Woolfson.

Coker Capital’s auction for Chesapeake, with about $6 million of EBITDA, drew bids in the double-digit range of EBITDA in its second round, one of the sources noted. Woolfson, Atlanta, is expected to produce a deal worth about 10x EBITDA, or $100 million, Buyouts previously reported.

H.I.G. managing director Rob Wolfson did not return a request for comment on Monday.

Action Item: Contact H.I.G.’s Rob Wolfson at rwolfson@higcapital.com

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