Optometry Practices
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 19,000 optometry practices in the US are the main providers of vision care. About 55% of optometrist revenue comes from fees for patient care, which includes exams and treatment for problems. The sale of eyeglasses and contact lenses, known as “dispensing revenue,” accounts for over 40% of overall revenue. There are about 36,690 optometrists in the US – a majority work in private optometry practices.
Competition From Retail Chains
Independent optometry practices face competition from large retail optical chains, as well as mass merchandisers offering optical services.
Reimbursement Issues Affect Profit
Since about 30% of their revenue comes from managed care and vision plans, changing reimbursement rates and rules creates challenges for optometry practices.
Industry size & Structure
The average optometry practice has a single location, 8 employees, and about $947,000 in annual revenue.
- There are about 19,000 optometry practices in the US with $18 billion in revenue.
- On an annual basis, the typical optometry practice logs 2,500-3,500 patient visits per optometrist.
- There are about 36,690 optometrists in the US - a majority work in private optometry practices. The rest work for ophthalmologists, retail optical chains, hospitals, HMOs, or the military.
- Optometrists need a Doctor of Optometry (OD) degree, which requires 4 years of graduate study at one of 20 accredited schools of optometry in the US.
- All states require that optometrists be licensed, which requires an OD degree and passing a written National Board exam and a National, Regional, or State clinical exam. Licenses must be renewed every 1-3 years and continuing education credits are required for renewal.
Industry Forecast
Optometry Practices Industry Growth
Recent Developments
Jul 13, 2024 - Moderate Expenditure Growth Expected
- Physician and clinical services expenditures are projected to grow at a compound annual growth rate of 5.3% from 2021 to 2031, according to the Centers for Medicare and Medicaid Services. US optometry practice sales are forecast to grow at a 6.08% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Optometry practice employment increased slightly during the first five months of 2024 while average wages for nonsupervisory employees decreased slightly, according to the US Bureau of Labor Statistics.
- Increasing interest rates, with the federal fund rate hovering around a 23-year high in mid-2024, has had a slight cooling effect on merger and acquisition deals in the vision care space and may continue to do so in the short term, according to Vision Monday. Skittish consumers, inflation concerns, and worries about recession risk have also left a mark on the number of transactions taking place as well as how deals are being structured. Long-term prospects for the space remain strong, however, according to François Huré, partner and co-founder at CapM Advisors. “There are secular growth dynamics in the industry that have been there and that will continue,” Huré said. “As the population ages, the need for vision care gets greater. The growth in the demand for vision care services and products is greater than the number of doctors that come out of school, so that creates a dynamic where the supply and demand, the balance between those two factors, continues to go in favor of the profession."
- Optometry practice owners have been selling their practices and retiring at an increasing rate during the past five years, according to Invision Magazine. This has boosted demand for associate Doctors of Optometry to fill the vacant spots. Private practice is not appealing when it’s a choice between going into debt to start your business or accepting a high six-figure salary and a generous package as an employee, according to Invision. Compensation demanded by young optometrists reflects the disparity between low supply and high demand. The average day rate for a part-time optometrist is now above $700 and, in some markets, above $800.
- Increased fundraising by private equity (PE) firms in 2023 is not expected to translate into increased health care industry deal counts in 2024, according to Home Health Care News. “Dry powder or available capital is not always indicative of future dealmaking,” Rebecca Springer, lead health care analyst at PitchBook, told Home Health Care News. “The typical investment period for a 10-year fund is five years with some additional flexibility through a number of technicalities. In 2024, we anticipate that PE health care managers will focus on deploying capital into existing portfolio companies, lower-middle-market platforms, and occasionally pursue opportunistic carve outs.” Health care’s share of global PE deal count peaked at 13.7% in 2020. That number fell to 10.8% in 2023— its lowest level since 2015.
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