Private Equity in the COVID Era: A Look at the Private Equity Landscape in Ophthalmology

Ophthalmology Management November 2020

Gary W. Herschman and Anjana D. Patel, Members of the Firm in the Health Care & Life Sciences practice, in the firm’s Newark office, co-authored an article in Ophthalmology Management, titled “Private Equity in the COVID Era: A Look at the Private Equity Landscape in Ophthalmology.”

Following is an excerpt:

It’s no secret that private equity (PE) investment in ophthalmology and other medical specialties has been on the rise over the last several years. The number of PE transactions in ophthalmology and eye-care practices have been robust recently, and have snowballed to more than 20 transac­tions in the first quarter of 2020 alone, according to Bloomberg Law ( But that was before the COVID-19 pandemic hit and transaction activity ground almost to a halt.

Now that our economy is beginning to recover, let’s take another look at the PE landscape.

Transaction Activity: Pre-Covid-19 and Now

We say “ground almost to a halt,” because some of these transactions that were well underway when the pandemic hit the United States earlier this year were initially put on pause but eventu­ally closed a few months later. Others, especially those deals in the nascent stages, were put on a longer hold while PE and their lenders assessed the risks and uncertainty facing certain special­ties, such as ophthalmology, and whether those specialties would soon be able to open for busi­ness as usual. Complicating factors such as the patchwork nationwide response to the pandemic and geographic variances of the impact of the pandemic made this assessment more difficult.

In the last couple of months, however, our research shows that transaction activity has picked up with over a dozen eye-care transac­tions in the third quarter. Whether this activity will return to the pre-COVID pace remains to be seen. However, as PE investors and their lenders get more comfortable with the COVID economic environment, we expect more eye-care deals to close in the next 3 to 6 months and beyond.


Some of the fall-out from the pandemic has been a renewed look at how to value physician deals. Current deal valuations may be lower because many of these deals are valued at physician group’s EBITDA, and COVID has impacted that cash flow. Some investors, however, are basing valuations on 2019 financial results — as long as there is proof that the groups have returned to, or are close to returning to, pre-COVID levels.