It certainly appears so, with Primary Health Care Limited (ASX: PRY) announcing that it had upped its stake in Vision Eye FPO (ASX: VEI) from 20% to 21.884% earlier this week.
And you can certainly see the attraction. Vision Eye operates eye care clinics as well as 8 day surgeries and 7 refractive and laser surgery centres, which would be a nice addition to complement Primary's existing general medical, diagnostic imaging and pathology centres.
Vision operates what is known as a roll-up or aggregation model, where it acquires practices from ophamologists, then runs the business for them, leaving the specialist to focus on what they do best. It's a similar story to aggregators in various industries including the likes of dental – 1300 Smiles Limited (ASX: ONT), child care – G8 Education Limited (ASX: GEM), diagnostic imaging – Capitol Health Limited (ASX: CAJ), Primary Health Care itself and Sonic Healthcare Limited (ASX: SHL).
The model should have worked perfectly, but Vision Eye found that specialists were leaving after their initial contract terms, setting up new practices and taking their patients and respective revenues with them. After some years in the wilderness, Vision Eye appears to have found the solution with doctor numbers stabilising, and cashflows and profits improving.
But what appears to be a key focus of the company these days is the day surgery clinics and driving more revenue from those. Day surgeries could be leased out to other specialists rather than just eye specialists, driving utilisation rates higher.
Acquisitions have slowed as the company focuses on paying down its once-substantial debt pile, so Vision management appear to be driving more revenues and lowering costs at its existing facilities.
Primary may have taken an interest because it could easily pay off Vision's existing debt of less than $30 million, and roll out more specialist eye clinics at a faster rate.
Takeover provisions mean Primary can only purchase up to 3% of Vision every six months, once it has more than 20% of the shares, without making a takeover offer. But it only appears to be a matter of when, rather than if.
