September 21, 2022
It's hump day, Health Tech readers, and we're feeling ready for the weekend.
📖 Axios is out with its first book: "Smart Brevity: The Power of Saying More with Less."
1 big thing: Webster retina platform eyes 2023 sale
Webster Equity Partners is gearing up for a potential 2023 sale of Retina Consultants of America, sources tell Sarah.
Why it matters: RCA is unique in its dedication to retina doctors exclusively — quickly becoming the country's largest such specialty physician practice management group.
Details: Fireside chats were held over the summer, though a process for the Southlake, Texas-based company won't start until at least Q1 of next year, sources say.
- Goldman Sachs has been mandated as lead adviser, alongside Rothschild, sources say.
- RCA, with 190-plus physicians in 18 states, produced $300 million-plus of 2021 TTM EBITDA, sources say.
- The process is expected to target PE initially, though RCA has also garnered strategic interest.
Yes, but: Sources caution that Webster is less than three years into its investment, and may opt to hold RCA.
- Plus, the choppy financing markets present a challenge for deals seeking a price tag starting with a "B."
Flashback: Webster simultaneously acquired and combined four specialty practices in early 2020 to form RCA.
- The firm injected $100 million into the newly formed platform alongside a $250 million LP co-investment, a source told Sarah at the time.
- A subsequent 2020 acquisition brought the company's combined EBITDA to north of $80 million quickly out of the gate.
💭 Sarah's thought bubble: Five simultaneous acquisitions is... a lot. Even if you're establishing a new platform. Maybe a record in PPM land?
Context: Led by CEO Robert Grabow, RCA partners with specialists delivering care to patients with macular degeneration, diabetic retinopathy and other retina diseases in coordination with referring ophthalmologic and optometric practices.
- Its affiliated practices participate in more than 80 active trials with an additional developing pipeline of 70-plus, RCA says.
State of play: The retina side of vision care is in the early stages of consolidation, which suggests RCA has the first-mover advantage and could be a test case for success in the specialty.
- One investor notes that the level of revenue derived from drugs injected into the retina could be factored into diligence.
- Private equity firms have invested meaningfully in ophthalmologist groups that hire retina doctors.
Of note: In general ophthalmology, Olympus Partners earlier this month agreed to acquire EyeSouth Partners from Shore Capital Partners in a deal valued just shy of $1 billion, Axios reported.
The bottom line: We could see the return of multibillion-dollar PPM deals next year — especially if the financing markets become more favorable.
Webster declined to comment. GS and Rothschild did not return requests for comment.