Partners Group claims victory for FFL’s EyeCare Partners in $2.2 bln deal

The integrated optometry-ophthalmology platform grew at a 65 pct CAGR under FFL's four-plus years of ownership.

Representing private equity’s latest vision-care investment of scale, Partners Group’s winning bid for EyeCare Partners commanded an enterprise value of approximately $2.2 billion, PE Hub has learned.

The Zug, Switzerland, firm said Monday it agreed to acquire ECP from FFL Partners, assuming majority ownership of the largest US provider of both optometry and ophthalmology services.

Led by CEO Kelly McCrann, ECP’s management team and physician partners will continue to maintain a substantial equity stake, with a deal expected to close in the first quarter of 2020, the announcement said.

The acquisition follows a PE Hub report in early December naming Partners Group as a contender in the Moelis-run auction for FFL-backed ECP.

Other participants in the sales process included a buyout group including GI Partners and Thomas H. Lee, in addition to TPG, KKR and Ontario Teachers’ Pension Plan, sources said at the time.

At approximately $2.2 billion, the pending transaction implies an EV-to-Ebitda multiple of about 16x, based upon ECP’s approximately $135 million of adjusted Ebitda, as previously reported by PE Hub.

Partners Group signed a transaction ahead of the process’s anticipated conclusion, two sources said, while a third said there was another close contender down to the wire.

ECP, of St. Louis, Missouri, employs more than 500 optometrists and 85 ophthalmologists, with more than 4,400 clinical staff. The eye-care platform 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.

Under FFL’s ownership, the company saw its revenue grow in less than five years at a compounded growth rate of 65 percent, expanding its geographic footprint from 63 to more than 450 locations across 13 states. Over 60 strategic acquisitions were made during FFL’s ownership, the San Francisco firm said.

Partners Group declined to comment on financial aspects of the deal; however, Piotr Bieżychudek, senior investment leader within its Private Equity Directs Americas platform, said the firm began diving into the medically-focused eye-care subsector about two years ago, ultimately zeroing in on ECP around the end of 2018 ahead of a formal process.

“Ultimately we think this model is better for patients, payers and providers,” Bieżychudek said.

For patients, an integrated model offers a means to access a one-stop shop for all eye-care medical needs, along with an improved experience from a scheduling, billing and coordination perspective, he said.

A built-in referral system between ECP’s optometrists and ophthalmologists helps providers maximize care, outcomes and efficiency, while a single source of medical records and data minimizes unnecessary replicable exams and leads to a lower-cost model preferred by payers, Bieżychudek said.

M&A has been a critical source of growth and will be going forward, with a continued opportunity to acquire small- and mid-sized practices in addition to organic growth efforts, added Todd Miller, managing director and co-head of Private Equity Directs at Partners Group.

Organic growth initiatives cited in the firm’s announcement included recruitment of ophthalmologists and optometrists, investment in clinical technologies, among other things.

ECP, whose recent acquisitions include Nationwide Vision, Associated Retinal Consultants and Grene Vision Group, has complemented M&A efforts with same store growth of 5 percent to 7 percent over the last few years, a source told PE Hub earlier this month.

In other notable vision-care activity, Goldman Sachs bought the parent company of optometry-focused MyEyeDr for enterprise value of approximately $2.7 billion, or about 17x, PE Hub reported in June. The deal concluded a Jefferies-run auction, producing an approximately 3.5x return for selling shareholder Altas Partners, PE Hub wrote.

For Partners Group, the investment is consistent with recent investment efforts in multi-site healthcare businesses.

Partners Group earlier this year invested in Blue River PetCare in a transaction valuing the Chicago veterinary hospital operator between $400 million and $500 million, PE Hub reported.

In May, the firm invested in Confluent Health, a Louisville, Kentucky, provider of outpatient physical and occupational therapy services.

FFL declined to comment on financial aspects of the transaction. A Moelis spokesperson declined to comment, while an ECP executive didn’t immediately return a request for comment.

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Update: This story has been updated to clarify Todd Miller’s title at Partners Group.