Varsity Healthcare Partners Acquires Katzen Eye Group, Forms EyeCare Services Partners

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LUTHERVILLE, Md. and LOS ANGELES – Varsity Healthcare Partners, (VHP) a healthcare services-focused private equity investment firm, announced today that in partnership with management, it has acquired Maryland-based Katzen Eye Group, one of the country’s largest vertically integrated ophthalmologic and optometric services practices, and together, they will form EyeCare Services Partners Holdings LLC (ESP).

ESP will be based in Baltimore and will oversee the management operations of Katzen, specifically the practice’s infrastructure growth. EyeCare Services Partners will be led by CEO Michael Fricke, who was formerly the CEO of Sante Pediatric Services, OrthoRx, and served in various leadership positions during his tenure at Lincare Holdings. Other executives from Katzen Eye Group will also serve in executive roles. Brett Katzen, MD, formerly president of Katzen Eye, will become ESP’s chief medical officer. Richard Edlow, OD, who had served as Katzen’s CEO, will now be ESP’s president, and Melissa Pitchford will be chief financial officer of ESP.

ESP will absorb the managerial operations of the Katzen Eye Group and, in partnership with Varsity Healthcare Partners, continue to consolidate and provide growth capital and managerial infrastructure to targeted independent ophthalmologic and optometric practices in Maryland, Delaware and other and selected geographies.

Edlow told VMail, “We have had preliminary discussions throughout the mid-Atlantic area and there’s been a lot of interest expressed. Establishing a solid platform in this region is our first goal. But we will also look at other markets of the country. We believe, looking at the landscape of the eyecare field, that the demand for medical/surgical age-related eyecare services will be growing at a fast rate. And for the past few years at Katzen, we’ve invested in a clinical structure to maximize the clinical workflow. We see many opportunities out there and Varsity Health Partners really understood that vision and will help expand that vision.”

Edlow pointed out that the new scalable structure of ESP will remove the administrative responsibilities from Katzen’s physician network so they can focus exclusively on patient care. In turn, this also sets the stage for a more efficient and effective network of care that provides for expansion of Katzen’s vertically integrated services through acquisition of like-minded eyecare practices locally, regionally and nationally.

“We are excited to partner with the Katzen organization and to work closely with Brett Katzen, CEO Mike Fricke and the rest of the ESP leadership team as we believe the opportunity to replicate Katzen Eye Group’s market presence and vertical integration in other geographies is imminent, and anticipate executing our consolidation plan at high velocity,” stated David Alpern, a partner with VHP.

“As one of the true leaders in the ophthalmologic and optometric services space, Katzen was a natural choice to serve as ESP’s core platform for growth, given Katzen’s demonstrated clinical quality and world-class technology and managerial infrastructure. We have long been compelled by the attributes of the vision care services vertical, given the attractive secular growth (catalyzed by the aging U.S. population), the defensibility of patient demand across economic cycles, the diversity of revenue opportunity per patient, and the attractive consolidation economics.”

“The opportunity to work with Varsity Healthcare Partners was very compelling given the depth of their expertise in the healthcare market, the clarity of their specific mission within this practice area, and the collaborative working environment and high degree of enthusiasm the Varsity team brings to this venture,” stated Dr. Brett Katzen, president of Katzen Eye Group. “We are looking forward to VHP’s energy, resources, and domain expertise, as we accelerate our growth path in the next few years.”

New practices joining the partnership will have access to additional resources that will support comprehensive vertical integration, which includes optical; primary eye care/optometry; ophthalmology; sub-specialty eyecare services such as retina, glaucoma and oculoplastics; outpatient surgical facilities; and clinical research. ESP will also provide practices with a centralized operational platform that will include industry leading electronic medical records, revenue cycle management, information technology sophistication and a digital marketing and e-commerce strategy.

Katzen Eye Group, founded in 1968 by Dr. Leeds Katzen, is the largest private eyecare practice in Maryland, with offices in Lutherville/Towson, Rosedale, Bel Air and at Mercy Medical Center. The 22 specialists of Katzen Eye Group provide a full range of services, from comprehensive eye exams to the treatment and management of complex eye diseases.

The terms of the transaction, which was completed late last Friday, were not disclosed.

For more on Katzen Eye Group, see the profile in Vision Monday’s e-newsletter, “dba: Doing Business in Optical’s Local Markets,” – Katzen Eye Group Grows ‘Exponentially’ Due to New Startups and a ‘Three O’s’ Philosophy.