While ophthalmology practices have restricted their current in-person patient care to only the most serious cases, the current COVID-19 situation does not affect the bright medium to long term prospects of the industry or the investment thesis. In fact, smaller practices, under increased pressure from the financial overhang imposed by the current stay home orders, will be more likely to affiliate with larger groups post COVID-19. There will be more sellers among smaller practices and more acquisition opportunities for platform operators.
Following the relaxing or lifting of stay-at-home orders over the next several weeks, ophthalmology groups will begin to work through a wave of pent-up demand for services. For example, 9,000 or half of all ophthalmologists across the U.S., typically perform 3.8 million cataract surgeries a year, or 35 procedures a month. With cataract surgeries largely on pause during the current stay-at-home orders, each of these cataract surgeons will, on average, enter the third quarter with a backlog of more than 100 procedures—on top of their typical 35 surgeries per month.
| Forecasting cataract volumes through the cycle
Note: Future procedures estimated based on a slow reopening of ophthalmology practices due to evolving stay-at-home mandates and changes in office procedures to optimize staff and patient safety. Cumulative backlog is estimated based on historical monthly patient demand. |
Provider backlog will continue to build even after stay-at-home limitations are relaxed. Most providers will likely enter the fourth quarter with nearly five months of backlog in cataract procedures alone. Given the economic toll on potential corrective vision patients, Lasik volumes are likely to take some time to recover. Lasik surgeons can and will offset deferred Lasik volume with excess cataract volumes as there will be no shortage of patient care needs. |
The surge in capacity to meet the pent up demand for ophthalmology appointments will coincide with the restoration of more robust M&A deal activity—presenting private equity-backed ophthalmology groups and private equity investors seeking new ophthalmology platforms the opportunity to rapidly expand through a combination of both platform and tuck-in acquisitions.
Vision for the future: M&A activity to accelerateThe consolidation of ophthalmology practices in the U.S. will accelerate post-COVID-19. Smaller, sub-scale ophthalmology groups will seek to monetize a portion of their practice and partner with large, well-capitalized groups that have the infrastructure and scale to weather future crises like the current pandemic. Large independent groups that have yet to bring on a new financial partner continue to represent attractive investment opportunities as the practice management value proposition remains strong. |
Lincoln Perspective
The dip in ophthalmology deal activity during COVID-19 will be brief in a sector that continues to provide a positive long-term outlook.
| Ophthalmology is still in the early innings of consolidation. There are more than 18,000 ophthalmologists in the U.S. and the majority are still in private practice, leaving ample opportunity for M&A activity ahead. |
| Independent ophthalmology groups are open to creative deal structures. Reduced availability of debt financing through the pandemic will likely continue for some time. This dynamic has led groups and investors to explore creative deal structures in the current environment. For instance, with lenders less active amid the pandemic, smaller ophthalmology groups have indicated an openness to greater use of equity rollover structures and seller financing to close deals in the current environment. |
| Certain operating procedures will change post pandemic. The pandemic has stress-tested large and small ophthalmology practices, and groups are adopting new processes and procedures to address post-pandemic concerns such as staff and patient safety and patient care logistics. |
| Telemedicine utilization will continue and expand post pandemic. Many ophthalmology groups have adopted telemedicine with rules relaxed through the pandemic, patient acceptance has grown dramatically and payers are supportive. Rules are likely to re-tighten somewhat post-COVID-19, however telemedicine provides an additional area of opportunity for better clinical care (patient assessments and post-operative evaluations) and practice growth. |
| Planning for reopening practices and managing demand surge. Operational adjustments related to the pandemic such as closing practices or furloughing staff, have largely been made—groups are now focused on planning for reopening and dealing with the demand surge. |
Meet our Senior Team in Healthcare
It’s extremely rewarding to work in one of the largest and most diverse global business sectors helping support clients to realize their goals.
Matthew Lee
Managing Director, Head of UK & Co-Head of Healthcare, Europe
London
I enjoy working closely with clients to overcome challenging situations and to develop strategies to meet their business goals.
Dirk-Oliver Löffler
Managing Director & Co-Head of Healthcare, Europe
Frankfurt
My goal is to bring the best of Lincoln to each and every transaction, ensuring the topmost outcomes for our clients.
Roderick O’Neill
Managing Director & Co-Head of Healthcare
New York
Ophthalmology Sector Thesis Strongly Intact with Demand Build-up Amidst COVID-19
Across the world, individuals are prioritizing human health and safety amidst the coronavirus pandemic, but hope is starting to dawn as countries, like Germany and the Czech Republic, begin easing… Read More
Pharmacies: The Right Prescription for Investors
Prior to the effects of COVID-19, UK community pharmacies were already undergoing significant change as a range of factors converge to transform the role of pharmacists within the primary care… Read More
In Manufacturing and Distribution, “Recession Resilience” Is No Longer Enough
For years, potential buyers asked management teams how their companies weathered in the Great Recession. The present pandemic will be the next test of company resilience and value. Until recently,… Read More
Articulating & Supporting Your COVID-19 Response “Playbook”
For years, potential buyers asked management teams how their companies weathered the Great Recession. It was a common question to gauge the agility, strategic thinking and fortitude demonstrated by leadership… Read More
The Role of “Physical Space”: New Constraints for Retail in a Post-COVID World
In an earlier COVID-19 article, we addressed how COVID-19 might impact consumer spending habits. In addition to shifts in spending behaviors, the very location where said spending occurs will be… Read More
COVID-19 Puts Spotlight on Organizational Investments in Human Capital Technology
Over the last decade, organizations around the world have debated the strategic merits and pace of investments in technology focused on the challenge of attracting, engaging and retaining talent. During… Read More
Trends in Digital Fitness
The Fitness Industry is Being Disrupted by New Business Models, Digital Delivery and Subscription Commerce The fitness industry has already been experiencing the massive growth of digital fitness, out-of-studio experiences… Read More
Interim/Post-COVID-19 Sector Outlook: Services & Products for Homebound Patients
Click the home healthcare sectors below to view key takeaways on the effects of COVID-19. Medical and Personal Services Skilled Home Healthcare Near term: REASONABLY STABLE / POSITIVE Long term:… Read More
M&A Market in Germany: Expected Revival after Coronavirus
Transactions will increasingly be characterized by distressed sales and defensive, less strategically motivated deals The corona crisis has left the global economy and M&A business in an unprecedented state of… Read More
Bradley Drake
Brad provides mergers and acquisitions (M&A) advisory services in Lincoln’s Industrials Group, specializing in the aerospace and defense (A&D) sector. He has executed cross-border sell-side and buy-side transactions for leading… Read More
Rethinking the Global Chemicals Supply Chain
The chemicals supply chain has always been global, because certain raw materials can only be sourced from, made in or distributed to certain areas of the world. Chemical manufacturers’ supply… Read More
Powering Utility & Infrastructure Services M&A Activity in a COVID-19 Landscape
Last month, the Cybersecurity and Infrastructure Security Agency (CISA), along with other federal agencies, state and local governments and the private sector, created an advisory list of “Essential Critical Infrastructure… Read More
Packaging Sector Update Amidst COVID-19 Uncertainty
Since the beginning of 2020 and particularly over the last several weeks, the Coronavirus (COVID-19) has had widespread effects on the global economy and M&A activity in the middle market.… Read More
Varied Effects of COVID-19 Across Facilities Services Sectors
The Coronavirus Disease 2019 “Coronavirus (COVID-19)” crisis is an incredibly fast-moving and unprecedented challenge that has had widespread effects on the global economy and M&A activity in the middle market.… Read More
Aerospace & Defense Trends Amidst Turbulent COVID-19 Period
As commercial airlines have made significant cuts to their capacity due to global travel restrictions and demand reductions, coupled with facility shutdowns of OEMs and major suppliers, the commercial aerospace… Read More
Teaching Without Classrooms: Education Investing in a COVID-19 World
Despite significant gains in online, or distance, learning over the last ten years, COVID-19 has enormously and irrevocably altered the education landscape in 2020. Technology adoption in primary and secondary… Read More
Partnering to Survive Today – and Thrive Tomorrow
The record levels of dry powder at the beginning of 2020 led to predictions of robust M&A activity. However, COVID-19 has thrown investors and businesses a curveball. Debt financing is… Read More
COVID-19 Pandemic Could Accelerate Recent U.S. Healthcare Growth Trends
One hundred years after the 1918 Spanish Flu, the world is facing another pandemic: COVID-19. Government and healthcare officials are working around the clock to flatten the curve and slow… Read More
How COVID-19 Could Change Consumer Spending Behavior, Even in a Post-Pandemic World
As people stock chest freezers with frozen meals and stores and restaurants temporality shutter their doors, COVID-19 has undoubtedly created significant disruption within consumer purchasing in the restaurant, retail and… Read More
Getting from A to B: A Roadmap to Freight Forwarding
A Closer Look at Shifting Dynamics like COVID-19, Flight to Scale, and Tech Disruption Mar 2020 With the rolling in of a new decade came the inking of a “phase… Read More
Tigmanshu Dubey
Tigmanshu provides mergers and acquisitions (M&A) advisory services to clients in Lincoln’s Technology Group with a primary focus on IT services and the enterprise software sectors. He has experience in… Read More
Sathya Ramanathan
Sathya leads the firm’s Technology efforts in India. He leverages over a decade and a half of corporate finance and mergers and acquisitions (M&A) advisory experience, involving a combination of… Read More
Better Together: Critical Early Steps Towards JV and Partnership Success
Marc van Grondelle and Emma Blackley of Lincoln’s global Joint Ventures & Partnering practice unpack why JVs and partnerships are so often overlooked and how to execute them without mishap.… Read More
Restaurant Investors Are Expected to Remain Active in 2020
Buyers Are Sitting on Capital That Needs to be Deployed While middle market restaurant brands once aggressively pursued IPO’s as the liquidity event of choice, today private equity and family… Read More
Indian Chemical News | M&A & Partnerships Will Play a Key Role in Chemical Sector
Originally published by Indian Chemical News on February 27th, 2020 Preet Singh, Managing Director in Lincoln’s Industrials Group, discusses trends, upcoming opportunities and sub-sectors to watch in the chemicals industry.