February 2013

GTCR | Healthcare Leadership Report February 2013

GTCR Firm Update

GTCR continued to invest actively throughout 2012, completing over 60 acquisitions across our Healthcare, Financial Services & Technology and Information Services & Technology sectors. Since the firm’s inception in 1980, we have partnered with leading management teams to build businesses and invest more than $10 billion in over 200 companies. In 2011, we closed our 10th investment fund, the firm’s largest to date, with $3.25 billion of equity capital commitments.

Healthcare Team Update

We believe our 30-year investment history has made us one of the leading private equity investors in the healthcare sector. Since our founding, we have made over 40 healthcare platform investments. Over the past three years, the GTCR healthcare team has made seven new platform investments, as well as add-on acquisitions at five portfolio companies—totaling 30 transactions in the healthcare industry during this period. We have invested over $1 billion of GTCR capital in the healthcare industry since the start of 2010.

Through our Leaders Strategy,™ we seek to partner with exceptional management teams as the critical first step in identifying, acquiring and building market-leading companies through acquisitions and organic growth. We continue to actively seek investments across all segments of the healthcare and applied sciences industries, including providers, payors, medical devices, pharmaceuticals, and tools and diagnostics.

Portfolio Update

Actient

Actient Pharmaceuticals, Lake Forest, IL
CEO: Ed Fiorentino
Platform Investment: July 2010 | Recent Acquisition: April 2011

GTCR partnered with Ed Fiorentino, a senior executive and 22-year veteran of Abbott Laboratories, to form Actient Pharmaceuticals in March 2009. The company is focused on acquiring and commercializing products with a focus on select physician specialties.

Following the establishment of its urology franchise in 2010, Actient acquired Slate Pharmaceuticals, a specialty pharmaceutical company marketing Testopel, a long-acting testosterone replacement product, in December 2011. Actient completed the acquisition of Bartor Pharmacal, the Testopel manufacturing facility, in 2012. To date, Actient has completed five transactions and built a pharmaceutical portfolio of 10 marketed products, as well as several pipeline products. All of the acquisitions have been consistent with Actient’s strategic focus in urology. Actient continues to evaluate acquisitions in the urology space and other specialty therapeutic areas.

ATI Physical Therapy

ATI Physical Therapy, Bolingbrook, IL
CEO: Greg Steil
Platform Investment: March 2010 | Exit: December 2012

GTCR partnered with Greg Steil (founder and CEO) to acquire ATI Physical Therapy (ATI), an operator of outpatient rehabilitation clinics, in March 2010. ATI provides comprehensive outpatient rehabilitation services through 197 clinics across Illinois, Indiana, Wisconsin, Delaware, Maryland, Pennsylvania and Ohio. During GTCR’s ownership, ATI grew from 86 clinics to 188 clinics. This was accomplished through a combination of 10 strategic acquisitions of 46 clinics and 56 organic de novo clinic openings. In December 2012, GTCR closed the sale of ATI to KRG Capital Partners.

Capella Healthcare

Capella Healthcare, Brentwood, TN
CEO: Dan Slipkovich
Platform Investment: November 2005 | Recent Acquisition: July 2012

In 2005, GTCR partnered with former Province Healthcare COO Dan Slipkovich and other Province team members to form Capella. After completing several acquisitions, the company currently operates 13 non-urban hospitals in six states.

Capella completed the acquisition of Oklahoma-based Muskogee Community Hospital in July 2012. In addition, the company signed an agreement to acquire Mercy Hospital Hot Springs, an Arkansas-based hospital, in September 2012. The company continues to actively explore other opportunities to expand its hospital portfolio.

Cord Blood Registry

Cord Blood Registry, San Bruno, CA
CEO: Geoffrey Crouse
Platform Investment: September 2012

GTCR acquired Cord Blood Registry (CBR) in September 2012. CBR is the market leader in the collection, processing and storage of umbilical cord blood for family use. As part of the transaction, healthcare executive Geoffrey Crouse, former COO of Immucor, joined the company as CEO. CBR founder Tom Moore will remain actively involved with the company.

CBR provides services that enable expectant families to preserve their child’s umbilical cord blood for potential future medical use by the child or a biological family member. Cord blood stem cells have well-established clinical applications in a range of diseases and have demonstrated therapeutic potential in regenerative medicine applications. CBR has a long history of quality and innovation in newborn stem cell medicine and is focused on enhancing its service offering to client families.

Correctional Healthcare Companies

Correctional Healthcare Companies, Greenwood Village, CO
CEO: Doug Goetz
Platform Investment: December 2012

GTCR acquired Correctional Healthcare Companies (CHC) in December 2012. CHC is a leading outsourced healthcare provider to correctional facilities. As part of the transaction, healthcare executive Dale Wolf, former CEO of Coventry Health Care, joined the company as Executive Chairman. We believe Dale’s experience will provide a valuable addition to CHC’s strong existing management team, led by CEO Doug Goetz.

CHC is the only outsourced healthcare provider that operates across each stage of the correctional system, combining inmate healthcare with community-based programs designed to reduce recidivism. The company provides fully staffed managed healthcare to correctional facilities, serving over 64,000 inmates in more than 250 correctional facilities across 26 states. Additionally, the company provides community-based mental health services to over 20,000 probationers and parolees annually, and assists more than 250 local courts with their probation management services.

CURO Health Services

Curo Health Services, Mooresville, NC
CEO: Larry Graham
Platform Investment: September 2010 | Recent Acquisition: May 2012

In April 2010, GTCR partnered with Larry Graham, the former president and COO of Amedisys, to form Curo Health Services. Curo was a management start-up focused on building a hospice platform through acquisitions and organic growth.

Curo has completed six acquisitions since September 2010, and the combined business operates 87 locations across 10 states with a combined census of over 3,500 patients. Most recently, Curo doubled the size of its operations with the May 2012 acquisitions of Community Home Care & Hospice, the largest provider of hospice services in North Carolina, and Hospice Family Care, a leading hospice provider in central and southern Arizona. Curo is continuing to pursue additional acquisitions.

Devicor

Devicor Medical Products, Inc., Cincinnati, OH
CEO: Tom Daulton
Platform Investment: July 2010 | Recent Acquisition: August 2011

In 2008, GTCR partnered with Tom Daulton, formerly with Cardinal Health, to form Devicor Medical Products, Inc., a new business focused on making investments in the interventional procedures segment of the medical device industry. In July 2010, Devicor completed its initial platform acquisition, buying the Mammotome breast care business of Johnson & Johnson’s Ethicon Endo-Surgery division. Mammotome sells advanced biopsy devices, tissue markers and other ancillary products used in the diagnosis of breast cancer and the treatment of benign breast lesions. In August 2011, Devicor acquired Neoprobe’s gamma detection business and related trademarks. In 2012, Devicor completed the carve-out of the Mammotome business from J&J and began evaluating additional tuck-in acquisition opportunities.

Since acquiring Mammotome, Devicor has invested heavily in new products and technologies. Devicor’s new tetherless biopsy device, the Mammotome Elite, received 510(k) approval from the FDA in March 2012 and was launched in the U.S., Europe and Korea. Revolve, the next-generation Mammotome biopsy system, received 510(k) approval from the FDA and a CE mark from the EU in November 2012 and is expected to launch commercially in the first quarter of 2013. Devicor believes these new products will both improve patient outcomes and bolster the company’s global market leadership.

Sterigenics

Sterigenics International, Oak Brook, IL
CEO: Michael Mulhern
Platform Investment: March 2011

In 2011, GTCR acquired Sterigenics International, the leading global provider of contract sterilization and ionization services for medical devices, food products and other advanced applications. Michael Mulhern, who joined Sterigenics shortly after closing as chairman and CEO, was the CEO of two previous GTCR investments, Fairmount Food Group and AmSan. Sterigenics provides comprehensive outsourced sterilization services to its customers through a network of 38 sterilization facilities across all major global geographies.

Sterigenics has continued to leverage and expand its global network of service centers to better serve existing and new customers. The company is actively seeking acquisitions in the sterilization market, as well as in the broader medical device services market.

Universal American

Universal American, White Plains, NY
CEO: Richard Barasch
Platform Investment in APS Healthcare: June 2007

In 2007, GTCR partnered with Greg Scott, former CFO of PacifiCare, to acquire and build a care management business. GTCR and Greg Scott acquired APS Healthcare (APS), which focuses on care management and behavioral health services for state Medicaid programs, health plans and self-insured employers. In March 2012, GTCR sold APS to Universal American (UAM), a publicly traded provider of health benefits to Medicare recipients. GTCR remains a shareholder and active board member of UAM.

2012 Capital Markets Activity

Actient

Actient Pharmaceuticals

  • GTCR completed an add-on to the senior term loan to finance Actient’s acquisition of Bartor Pharmacal in June 2012
  • Debt facilities led by GE Capital Corp. with additional commitments provided by SunTrust, RBC and Fifth Street Finance

ATI Physical Therapy

ATI Physical Therapy

  • GTCR raised incremental senior secured credit facilities to finance ATI’s investments in Orthopaedic Associates of Wisconsin, Motion Hand and Physical Therapy, and Fox Valley Orthopedics
  • Debt facilities led by Barclays with additional commitments provided by GE Capital Corp., NXT Capital, and Solar Capital

Cord Blood Registry

Cord Blood Registry

  • GTCR raised senior secured credit facilities and a mezzanine facility to finance the platform investment in CBR
  • Debt facilities led by BMO Capital Markets and Newstone Capital Partners with additional commitments provided by GE Capital Corp., Fifth Third Bank, CapitalSource Bank, Capital One, AP MA Funding, and The F&M Bank and Trust Company

Correctional Healthcare Companies

Correctional Healthcare Companies

  • GTCR raised senior secured credit facilities and mezzanine facilities to finance the platform investment in CHC
  • Debt facilities led by NXT Capital and Prospect Capital with additional commitments provided by CapitalSource Bank and Bank of Ireland

CURO Health Services

Curo Health Services

  • GTCR raised senior secured credit facilities and mezzanine facilities to finance Curo’s investments in Community Home Care & Hospice and Hospice Family Care
  • Debt facilities led by GE Capital Corp. and Northwestern Mutual with additional commitments provided by SunTrust, Fifth Third Bank and Raymond James Bank

Please see below for a complete list of all of our investments in the healthcare sector since 2005.


Healthcare Team Member Updates

Principal

Josh Earl was promoted to Principal in September 2012. Josh joined GTCR in 2003 and has played an instrumental role in several of the firm’s investments. He currently is a director of Correctional Healthcare Companies and Curo Health Services. He also works extensively with Capella Healthcare and Universal American. Josh holds a BBA in finance and business economics, and a BA in Japanese summa cum laude from the University of Notre Dame.

Associate

Adam Brown joined GTCR in 2012. Prior to joining the firm, he worked as an investment banking Analyst in the Healthcare Group of BofA Merrill Lynch. Adam graduated from Penn State University with a BS, highest distinction, in finance.

Associate

Jon Michael Reese joined GTCR in 2012. Prior to joining the firm, he worked as an Analyst in the Leveraged Finance Group at BofA Merrill Lynch. Jon Michael is a graduate of Vanderbilt University with a BA in economics.

Associate

Nick Crowne joined GTCR in 2010 from Moelis & Company. He will be staying with the firm as an Associate for a third year. Nick graduated cum laude from Harvard University with an AB in history.

GTCR Healthcare Team Contact Information

Sean Cunningham
Managing Director

312.382.2260
David Katz
Managing Director

312.382.2222
Dean Mihas
Managing Director

312.382.2204
Josh Earl
Principal

312.382.2168
Ben Daverman
Vice President

312.382.2069
John Kos
Vice President

312.382.2229

Healthcare Investments Since 2005

Actient Pharmaceuticals | APS Healthcare | ATI Physical Therapy | Capella Healthcare | Cord Blood Registry | Correctional Healthcare Companies | Curo Health Services | Devicor Medical Products | GeneraMedix Pharmaceuticals | Graceway Pharmaceuticals | HealthSpring | Jessamine Healthcare | Managed Health Care Associates | Morton Grove Pharmaceuticals | Ovation Pharmaceuticals | Sterigenics International | Trans Healthcare | Universal American