2025 Could Be the Year of the Retina Practice Deal

By Eric YetterPublished On: December 20, 2024

Momentum is building around retina practice transactions following Cencora’s November announcement that it will acquire Retina Consultants of America (RCA).

Private equity-backed ophthalmology groups have seen significant growth over the last eight years, with more than 30 platforms establishing themselves in the market; most completing numerous add-on (individual practice) acquisitions. While questions around the ultimate buyers of these organizations have been building, the sale of RCA, the largest retina practice portfolio in the U.S., to a strategic buyer confirms the value retina practices hold for healthcare investors and operators.

While Retina groups were already receiving competitive valuations from private equity-backed companies like EyeSouth Partners and NVision Eye Centers, the RCA-Cencora transaction indicates there are long-term buyers outside of private equity for retina practices with the capital to acquire and operate them.

Retina physicians often use injectable drugs to treat macular degeneration and other diseases of the retina and vitreous. In RCA, Cencora saw the opportunity to acquire additional profitability downstream of its existing operations. Cencora, one of the largest publicly-traded pharmaceutical companies in the world, distributes pharmaceuticals, over-the-counter healthcare products and other healthcare supplies and equipment to healthcare providers. This sale allows Cencora to capture additional profitability through the delivery phase at retina practices (and gain or retain them as customers).

Cencora’s acquisition of RCA is part of a larger theme where drug distributors are seeking vertical integration with providers who administer those drugs. Additional examples of this type of deal include:

Cencora’s acquisition of OneOncology
Cardinal Health’s acquisition of Integrated Oncology Network
McKesson’s partial acquisition FL Cancer Specialists & Research Institute

Why sell now?

The acquisition of RCA by Cencora is not the only indication that 2025 may be a great year for physician-owners of retina practices to pursue a sale. Other factors include:

The convergence of newly-capitalized buyers and those about to transact—both of which are seeking aggressive growth.

Cencora doesn’t plan to stop with OneOncology and RCA, indicating they will acquire additional retina practices and invest money into growing each further. In fact, they’ve structured their deal with RCA specifically to incentivize continued growth.

Other groups have sold within the private equity space. For example, EyeSouth Partners was also recapitalized when Shore Capital Partners, its initial private equity backer, sold the organization to Olympus Partners in 2022. Olympus is a larger private equity firm that has continued to pursue aggressive growth.

We expect many of the other 30+ private equity-backed platforms will transact over the next few years. And many of their existing owners will pursue acquisition opportunities in the interim to grow before a sale and hopefully achieve a higher exit valuation.

We believe the convergence of these two buyer types – the first newly recapitalized and incentivized to show continued grow, and the second with its own incentives to grow prior to a sale – will produce a highly competitive environment for independent practices that go to market in 2025.

Strong overall economic activity and lower interest rates.

In addition to competition, a bright economic outlook will only increase momentum for ophthalmologists and retina transactions going into 2025. While interest rates are still elevated, energy is positive among private equity groups that interest rates are coming down and will not be going back up–and often that is enough to encourage significant activity.

The convergence of these factors indicate now is an opportune time for retina physicians to consider a sale, and FOCUS Investment Banking is ready to help. As one of the most experienced advisors to ophthalmologists and retina physicians in transactions with private equity groups, FOCUS understands the complex nature of retina practices and tailors its process accordingly to uncover their unique strengths.

Physicians who are interested in learning more about a sale process should contact Eric Yetter, Managing Director at [email protected].

Eric Yetter is an investment banker focused on healthcare. His practice includes healthcare provider services, home health and hospice, and behavioral health. Mr. Yetter has completed a variety of healthcare transactions, many with private equity firms and PE-backed companies. His past clients include leading physician groups, healthcare facilities, and institutional healthcare investors. Mr. Yetter founded Physicians First in 2016, recognizing the emerging need for investment banking and advisory services for owners of physician practices, surgery centers and clinical businesses. The next four years saw record levels of physician-owner M&A activity and Physicians First became one of the nation’s most active advisors for transactions between private equity firms and medical practices. In 2021, Mr. Yetter agreed to merge Physicians First with FOCUS and lead the firm’s healthcare team. Mr. Yetter also has healthcare operating and investing experience. He was an early executive at Covenant Physician Partners (previously Covenant Surgical Partners), an acquirer and operator of ambulatory surgery centers and physician practices. The company built and operated an outsourced laboratory, an anesthesia business, and a revenue cycle management company. Covenant has grown into a major player in healthcare services and is currently backed by private equity firm KKR. Prior to Covenant, Mr. Yetter held operating roles at Volkswagen Group of America and Brainlab, Inc., an image guided surgery company. While at Brainlab, Mr. Yetter worked with leading neurosurgeons and hospitals to implement cutting edge technology and improve patient outcomes. Mr. Yetter is a licensed attorney (currently inactive) and earned JD and BS degrees from Vanderbilt University, graduating with high honors. He is a FINRA licensed investment banker.