GTCR Firm Update
Since the firm’s inception in 1980, GTCR has partnered with management teams to build and transform growth businesses, investing over $15 billion in more than 200 companies. In October 2017, we closed GTCR Fund XII, the firm’s largest fund to date, with $5.25 billion of limited partner capital commitments. To date, GTCR Fund XII has invested in 7 platform companies, including one pending transaction; 2 of these companies are within the healthcare industry. GTCR Fund XII follows GTCR Fund XI, which we closed in 2014, with $3.85 billion of limited partner capital commitments. GTCR Fund XI invested in 17 platform companies, including 10 within the healthcare industry.
Healthcare Group Update
We believe that GTCR’s nearly 60 healthcare platform investments in our history have made us one of the leading private equity investors in the sector.
Over the last several years, the GTCR Healthcare team has remained very active, both buying and selling healthcare businesses. Since 2010, we’ve made 20 new platform investments and completed 68 add-on acquisitions, for a total of 88 healthcare transactions, with a combined purchase price of over $11 billion. We have realized several of those investments in the last 4 years, selling 9 healthcare portfolio companies for a combined enterprise value of over $8 billion.
In 2018, we completed 2 platform acquisitions and 8 add-on acquisitions, as well as 3 dividend recapitalizations and 2 portfolio company sales. In February, Regatta Medical completed its initial platform acquisition of Resonetics, a leading medical device contract manufacturing organization (“CMO”) specializing in laser micro-fabrication of highly technical componentry for interventional medical devices. In October, Cedar Gate Technologies completed its platform acquisition of Global Healthcare Alliance, a leading provider of SaaS technology and technology-enabled services to health systems and provider groups, enabling them to develop, manage and adjudicate bundled payments arrangements with payors.
In addition to our focus on identifying new platform investments, we also continued to invest in our existing healthcare portfolio companies throughout 2018. Since our platform acquisition in Resonetics, the company has completed 2 proprietary acquisitions, including Medelec, a Switzerland-based manufacturer of tight-tolerance metal tubing, and STI Laser Industries, an Israel-based nitinol manufacturer and laser processor of interventional medical devices. Over the summer, TerSera Therapeutics, our specialty pharmaceutical company, acquired the products Varubi and Prialt from public companies Tesaro and Jazz Pharmaceuticals, respectively.
In August, Sotera (f.k.a. Sterigenics), our investment in the contract sterilization industry, acquired Gibraltar Laboratories, a leading outsourced provider of microbiology and analytical chemistry testing for pharmaceutical and medical device companies. Ceba-Tech Specialty Solutions (“Ceba-Tech”) also completed its first add-on acquisition in October with the proprietary purchase of Flavormatic, a family-owned flavor ingredients company. Finally, Riverchase Dermatology, our investment in the dermatology practice management sector, acquired 2 practices in 2018 as part of its consolidation strategy in the highly fragmented dermatology industry.
Our productive 2018 also included several realizations. In October, GTCR completed the sale of GreatCall to Best Buy (NYSE: BBY) for $800 million. Also in October, GTCR completed the sale of Correct Care Solutions to Correctional Medical Group Companies. Supported by strong business performance, we also completed several dividend recapitalizations, including by Transaction Data Systems (“TDS”, f.k.a. Rx30), Maravai LifeSciences and Sotera Health.
We view inorganic growth as a critical element of value creation and therefore seek to develop robust and creative acquisition strategies across our portfolio. Since 2000, approximately 75 percent of capital invested has been in companies that have completed at least 1 add-on acquisition. All of our active healthcare businesses are looking for and currently evaluating add-on acquisitions.
Below is a snapshot of our current GTCR Healthcare portfolio companies. These 10 companies have completed 30 add-on acquisitions so far under our ownership.
|Outsourced pharmaceutical drug development and manufacturing services||Michael Mulhern||Platform acquisition|
|Specialty chemicals & ingredients||Charles Nicolais||Management partnership / platform acquisition and 1 add-on acquisition|
|SaaS-based healthcare data and analytics||David Snow||Management partnership / platform acquisition|
|Life science tools and diagnostics||Carl Hull||Management partnership / platform acquisition, 4 add-on acquisitions and debt-financed recapitalization|
|Medical devices||Chip Hance||Management partnership / platform acquisition and 2 add-on acquisitions|
|Dermatology practice management||Karl Wagner||Platform acquisition and 10 add-on acquisitions|
|Outsourced sterilization and lab testing services||Michael Petras||5 add-on acquisitions and several debt-financed recapitalizations|
|Specialty pharmaceuticals||Ed Fiorentino||Management partnership / platform acquisition and 3 add-on acquisitions|
|Pharmacy management software solutions and transaction processing||Jude Dieterman||Platform acquisition, 4 add-on acquisitions and debt-financed recapitalization|
|SaaS-based billing solution for diagnostic service providers||Lâle White||Platform acquisition, 1 add-on acquisition and 1 asset acquisition|
ALBANY MOLECULAR RESEARCH, INC., Albany, NY
CEO: Michael Mulhern
Platform Acquisition: August 2017
In August 2017, GTCR acquired Albany Molecular Research, Inc. (“AMRI”). AMRI supports the full lifecycle of a drug’s development, providing upfront drug discovery and formulation services, development- and commercial-stage manufacturing of active pharmaceutical ingredients and fill/finish of injectable drugs. AMRI was founded in 1991 and has expanded to become a top 10 pharma contract development and manufacturing organization (“CDMO”). The company operates 21 facilities worldwide to supply over 250 products to more than 1,000 customers.
The acquisition of AMRI leverages GTCR’s investment experience in the pharma sector and the firm’s continued interest in outsourced services to pharma and medical devices. AMRI is a top 10 platform and should be well-positioned to capitalize on future growth opportunities. In January 2018, Michael Mulhern joined AMRI as CEO. Mr. Mulhern is a four-time GTCR CEO and most recently ran Sotera Health before joining AMRI.
GTCR and the AMRI management team are focused on continuing to grow the company both organically and through strategic M&A. GTCR and AMRI are actively pursuing add-on acquisition opportunities to both enhance current offerings and expand into adjacent products and services.
GTCR partnered with The Carlyle Group on the acquisition of AMRI.
CEBA-TECH SPECIALTY SOLUTIONS, St. Louis, MO
CEO: Charles Nicolais
Platform Acquisition: December 2017
Recent Transaction: October 2018
In January 2017, GTCR partnered with Charles Nicolais to form Ceba-Tech Specialty Solutions, a new company focused on executing upon The Leaders Strategy™ in the specialty chemicals, materials and ingredients industry. Mr. Nicolais is a 30-year industry veteran, having most recently served as CEO of SensoryEffects, a leading provider of performance ingredients to the food and beverage industries. He founded SensoryEffects in 2006 and significantly grew the business through acquisition and organic growth before completing a successful sale of the company for $567 million in 2014. Prior to founding SensoryEffects, Mr. Nicolais spent 22 years in leadership positions at Air Products and Chemicals and at Sensient Technologies, running a range of value-add specialty chemicals businesses, both in the United States and Europe.
In December 2017, Ceba-Tech completed the platform acquisition of Flavor Producers, a leading provider of custom flavors and extracts with a focus on organic and natural ingredients. Founded in 1981, Flavor Producers sells its products to over 500 customers across food, beverage and nutraceutical industries. Since the platform investment, Ceba-Tech has continued to evaluate additional acquisition opportunities to help Flavor Producers broaden its capabilities and expand its geographic footprint. In October 2018, Flavor Producers acquired Flavormatic Industries, a family-owned flavor company. The acquisition strategically expanded Flavor Producers’ end-markets, customer base and formulation capabilities.
GTCR and Ceba-Tech plan to continue to invest additional resources to drive organic growth at Flavor Producers as well as aggressively pursue add-on acquisitions that would provide additional capabilities, scale and diversification.
CEDAR GATE TECHNOLOGIES, Greenwich, CT
CEO: David Snow
Platform Acquisition: October 2018
In August 2014, GTCR partnered with David Snow to form Cedar Gate Technologies (“Cedar Gate”), a new company focused on executing upon The Leaders Strategy™ in healthcare data analytics technologies and technology-driven services. Mr. Snow is a 34-year veteran of the healthcare industry, previously serving as Chairman and CEO of Medco, one of the nation’s largest pharmacy benefit managers. During Mr. Snow’s tenure, Medco’s revenue grew from $34 billion to over $70 billion before its eventual sale to Express Scripts in 2012. Prior to joining Medco, Mr. Snow served in various executive leadership roles throughout his career, including at Empire BlueCross BlueShield and Oxford Health Plans. Under Mr. Snow’s guidance, Cedar Gate has developed a proprietary SaaS analytics suite, ISAAC™, that enables healthcare providers, payors and self-insured employers to evaluate the cost and quality of care within their healthcare delivery network.
In October 2018, Cedar Gate acquired Global Healthcare Alliance (“GHA”), a leading provider of SaaS technology and technology-enabled services to health systems and provider groups, enabling them to develop, manage and adjudicate bundled payments arrangements with commercial payors. Established more than 20 years ago, GHA developed a proprietary SaaS claims adjudication technology, Axia™, that automates the conversion of fee-for-service claims into a single, bundled claim and facilitates and manages payments between payors and providers. It enables healthcare entities to successfully manage prospective bundled payment programs for multiple clinical specialties. It has processed over 2.25 million distinct bundles since inception.
Together, Cedar Gate and GHA are focused on developing healthcare data and analytics technologies and technology-driven services as part of its strategy to build a leading business in value-based care. Cedar Gate will continue to seek to invest in companies, products and services that help providers and payors understand and manage risk effectively as they transition toward value-based reimbursement.
MARAVAI LIFESCIENCES, San Diego, CA
CEO: Carl Hull
Platform Acquisition: April 2016
Recent Transaction: December 2017
In 2014, GTCR partnered with Carl Hull to form Maravai LifeSciences (“Maravai”), a new company focused on executing upon The Leaders Strategy™ in life science tools and diagnostics. Mr. Hull is a 30-year veteran of the diagnostic and life sciences industry, previously serving as Chief Executive Officer of Gen-Probe, a market-leading molecular diagnostic company. His leadership helped reposition Gen-Probe for commercial growth, culminating in the eventual sale to Hologic for $3.7 billion.
In April 2016, Maravai completed its platform acquisition of Vector Laboratories, a founder-owned immunohistochemistry reagents company. Since its initial platform investment, Maravai has completed 4 additional acquisitions of other founder-owned life science reagents businesses that help broaden the company’s product portfolio. In September 2016, Maravai acquired TriLink Biotechnologies, a manufacturer of specialty oligonucleotide reagents. Then in October 2016, Maravai acquired Cygnus Technologies, a manufacturer of reagents used to test impurities in biologic drug development. In December 2016, Maravai acquired SoluLink, a manufacturer of nucleic acid-based conjugation reagents. And most recently, in December 2017, Maravai acquired Glen Research, a supplier of critical inputs for oligonucleotides.
Together, Maravai’s acquired businesses form the basis for a differentiated portfolio of life science products that fit well with the Maravai team’s collective experience. With the combination of these assets, Maravai now has scalable commercial infrastructure and will continue to pursue attractive add-on acquisitions.
REGATTA MEDICAL, Bannockburn, IL
CEO: Chip Hance
Platform Acquisition: February 2018
Recent Transaction: October 2018
In April 2017, GTCR partnered with Chip Hance to form Regatta Medical, a new company focused on executing upon The Leaders Strategy™ in the medical device sector. Mr. Hance is a 30-year veteran of the medical device industry. He most recently served as CEO of Creganna Medical, where he significantly grew the business through acquisition and organic growth before completing a successful sale of the company in 2016 to TE Connectivity for approximately $895 million. Prior to leading Creganna Medical, Mr. Hance spent more than 20 years in senior leadership roles at Abbott Laboratories, including in its medical devices, diagnostics and diabetes segments. He most recently was President of Abbott’s Vascular division, building it into a global leader in interventional cardiology with more than $3 billion in revenues.
In February 2018, Regatta Medical acquired Resonetics, a leading medical device CMO, specializing in laser micro-manufacturing for interventional medical devices. Since GTCR’s initial platform investment, Resonetics has completed 2 additional acquisitions of founder-owned medical device CMOs that help broaden the company’s capabilities and geographic footprint. In June 2018, Resonetics acquired Medelec, a Switzerland-based company specializing in fabricating stainless steel and precious metal tubing used as a key input to many interventional medical devices. In October 2018, the company acquired STI Laser, an Israelbased CMO specializing in precision laser manufacturing. The combination of Medelec and STI with Resonetics established a European footprint, added scale in key medical device innovation hubs such as Israel, and expanded the company’s offerings into commercial nitinol manufacturing and specialty tubing.
GTCR and Regatta Medical plan to continue investing additional resources to drive organic growth at Resonetics as well as aggressively pursuing add-on acquisitions to expand the company’s capabilities, scale and geographic reach.
RIVERCHASE DERMATOLOGY, Fort Myers, FL
CEO: Karl Wagner
Platform Acquisition: October 2016
Recent Transaction: October 2018
In October 2016, GTCR acquired Riverchase Dermatology (“Riverchase”), a leading dermatology practice management company with a large geographic presence in the southeastern U.S. Riverchase provides general, surgical and cosmetic dermatology, as well as related pathology lab services with a determined focus on clinical quality. Founded in 2000, Riverchase has become one of the largest dermatology practice management platforms in the U.S. with more than 40 locations across Florida.
The acquisition of Riverchase is the result of GTCR’s continued proactive efforts in the dermatology space, a market that is highly fragmented today and benefits from good supply and demand economics. The investment also builds upon the firm’s significant experience investing in multi-site healthcare services companies, including ATI Physical Therapy, Capella Healthcare and Curo Health Services. In September 2017, Karl Wagner joined the company as CEO. Mr. Wagner previously was President of Mednax’s American Anesthesiology Division.
GTCR and the Riverchase management team, including Mr. Wagner and founder and CMO Dr. Andrew Jaffe, are focused on continuing to grow the company both organically and through strategic M&A. Riverchase successfully completed 10 add-on acquisitions since GTCR’s investment and continues to evaluate additional acquisition opportunities in the highly fragmented industry.
SOTERA HEALTH (F.K.A. STERIGENICS), Cleveland, OH
CEO: Michael Petras
Platform Acquisition: March 2011
Recapitalization: May 2015
Recent Transaction: August 2018
In 2011, GTCR partnered with Michael Mulhern, the successful CEO of 2 previous GTCR investments, to acquire Sterigenics, now operating as Sotera Health (“Sotera”), a global leader in outsourced sterilization, lab services and gamma technologies across a global network of approximately 60 facilities. Between 2011 and 2015, the company completed 3 add-on acquisitions, including the transformative acquisition of Nordion to create the only vertically integrated sterilization services company in the world.
In May 2015, GTCR recapitalized Sotera in partnership with Warburg Pincus and Sotera’s management team. Subsequent to the recapitalization, Sotera has executed several facility and service line expansions and completed 5 add-on acquisitions including the transformational acquisition of Nelson Labs (“Nelson”). Since joining Sotera, Nelson has generated strong organic growth and enabled 2 follow-on lab acquisitions (Toxicon Europe and Gibraltar Labs) that further enhanced Sotera’s presence in medical devices and extended its reach in the pharmaceutical sector. The Company also recently executed the sale of its noncore medical isotope segment to BWXT. The Company has remained active in the capital markets, raising new financing to complete those acquisitions as well as several other recapitalizations.
In June 2016, Michael Mulhern transitioned from CEO to serve as Chairman, and Michael Petras joined the company as CEO. Mr. Petras was previously with Cardinal Health, where he served as President of the Post-Acute Solutions business. Before joining Cardinal, Mr. Petras was the CEO of AssuraMed, a leading medical products supplier, which Cardinal Health acquired for $2 billion in 2013.
Sotera continues to leverage and expand its global network and service offering to better serve existing and new customers. The company is seeking additional acquisitions in the sterilization and lab testing markets, as well as potentially broader and more transformative opportunities.
TERSERA THERAPEUTICS, Lake Forest, IL
CEO: Ed Fiorentino
Platform Acquisition: March 2017
Recent Transaction: September 2018
In February 2016, GTCR partnered with CEO Ed Fiorentino and his management team to form TerSera Therapeutics, a new company focused on executing upon The Leaders Strategy™ in the specialty pharmaceuticals sector. TerSera is the third partnership between GTCR and Mr. Fiorentino. Previously, Mr. Fiorentino was CEO of Crealta Pharmaceuticals, a GTCR portfolio company that was built through a series of 4 acquisitions and sold to Horizon Pharma, as well as CEO of Actient Pharmaceuticals, a GTCR portfolio company built through a series of 5 proprietary acquisitions and sold to Auxilium Pharmaceuticals. TerSera represents GTCR’s 7th investment in the pharmaceutical industry, which we believe makes GTCR one of the leading private equity investors in the sector.
TerSera is focused on building a leading specialty pharmaceutical business through the acquisition of marketed products in attractive therapeutic areas and executing on commercial growth. In March 2017, TerSera acquired the U.S. and Canadian rights to the product Zoladex in a carve-out transaction from AstraZeneca. Zoladex is a hormonal therapy indicated for the treatment of breast cancer, prostate cancer and endometriosis. The product’s long-acting, controlled-release formulation and drug-device patents provide a unique IP profile. TerSera re-launched the Zoladex brand in 2017 to accelerate its use for the treatment of breast cancer as well as to capture physician preference within the prostate cancer and endometriosis therapies.
In 2018, TerSera completed 2 additional add-on acquisitions with the acquisition of the products Varubi from Tesaro in July and the acquisition of the product Prialt from Jazz Pharmaceuticals in September. Varubi is an oncology supportive care product indicated for the prevention of chemotherapy-induced nausea and vomiting, a highly debilitating side effect of chemotherapy. The product is complementary to Zoladex and builds out the company’s product portfolio in oncology. Prialt is a non-opioid analgesic indicated for severe chronic pain and is administered directly to the spine using an implanted pump. The product is the only FDA-approved non-opioid drug for use in this niche pain therapy. The product builds out TerSera’s footprint within the interventional pain and inflation therapeutic area.
As a result of the 2 recent transactions, TerSera now has products in the growing therapeutic areas of oncology and non-opioid pain and inflammation, and will continue to evaluate new acquisition opportunities that can leverage its existing infrastructure.
TRANSACTION DATA SYSTEMS (D.B.A RX30 AND COMPUTER-RX), Ocoee, FL
CEO: Jude Dieterman
Platform Acquisition: June 2015
Recent Transaction: December 2017
In June 2015, GTCR acquired Transaction Data Systems (“TDS”), a leading developer and provider of pharmacy management and transaction processing software solutions to the independent retail, hospital, long-term care and specialty pharmacy markets. TDS offers a suite of market-leading software solutions to enable prescription filling, inventory management and other critical functions for its pharmacist customers. The company has deep expertise in providing cuttingedge technology solutions to help pharmacy owners streamline their operations, improve financial performance and better manage their businesses. Since the initial acquisition, GTCR and TDS have completed 4 add-on acquisitions, including Computer-Rx, Lagniappe Pharmacy Services and Health Business Systems, providers of pharmacy management software primarily sold to independent pharmacies.
The investment in TDS is the result of GTCR’s continued proactive efforts in the healthcare IT sector. TDS represents 1 of 4 recent investments by GTCR within healthcare IT, an area of focus for the firm over the past several years.
In 2017, TDS named Jude Dieterman, former CEO of TriZetto, as CEO and subsequently named Kevin Lathrop, former head of TriZetto’s provider business, as President and COO. In addition to driving organic growth, TDS continues to pursue expansion through strategic M&A opportunities.
XIFIN, San Diego, CA
CEO: Lâle White
Platform Acquisition: July 2014
Recent Transaction: May 2015
In July 2014, GTCR acquired XIFIN, a market-leading SaaS provider of billing and reimbursement solutions to diagnostic laboratories. As part of the transaction, GTCR partnered with founder and CEO Lâle White. XIFIN is a leading cloud-based software solution, serving approximately 150 customers and 7 of the top 10 labs in the country. XIFIN’s technology platform enables end-to-end connectivity from patient to payor, linking together the many stakeholders in healthcare delivery and optimizing for the best business and patient outcomes. XIFIN’s technology plays a critical role in a laboratory’s financial performance. As a result, the company has a stable recurring revenue base with high renewal rates and a history of consistent growth.
XIFIN completed 2 acquisitions in 2015, adding product capabilities to XIFIN’s technology platform and expanding the company’s market presence. The company continues to enhance its position as a market-leading provider of health economic optimization across the diagnostic service provider landscape by adding new customers and evaluating add-on acquisitions and strategic partnerships.
- In October 2018, Flavor Producers raised an incremental term loan under its existing credit facility to finance its acquisition of Flavormatic
- NXT, Barings, BMO, Golub, Antares, Newstone and Northwestern Mutual provided the additional financing
- In October 2018, Cedar Gate raised new credit facilities, including a revolving credit facility, first-lien term loan and a delayed-draw first-lien term loan, to partially finance the acquisition of Global Healthcare Alliance
- Alliance Bernstein provided the financing package
- In August 2018, Maravai completed a debt recapitalization, introducing the company to the syndicated markets, and completed a dividend transaction
- JPM, Antares and Carlyle led the senior financing package, while Newstone and Northwestern Mutual led the second-lien financing
- In February 2018, Resonetics raised new credit facilities, including a revolving credit facility, first-lien term loan and second-lien term loan, to partially finance the acquisition by GTCR
- In June and October 2018, Resonetics raised two incremental loans under its existing credit facility to finance its acquisition of Medelec and STI with lenders BMO, NXT, Barings, Antares, and Northwestern Mutual
- In July and September 2018, TerSera raised incremental term loans under the existing credit facility to finance its acquisitions of Varubi and Prialt
- MidCap, Ares, Newstone and Oaktree provided the additional financing
- In June 2018, TDS completed a new portable debt recapitalization with Golub to support a dividend transaction
Geoffrey Tresley joined GTCR in 2018 as a Vice President. Prior to joining GTCR, he worked at CVC Capital, where he focused on healthcare and consumer/retail transactions. Geoff holds an MBA with honors from the Wharton School at the University of Pennsylvania and a B.A. Summa Cum Laude in Economics and Political Science from Northwestern University, where he graduated first in his class and was elected to Phi Beta Kappa. Geoff is a CFA charterholder.
Dylan Beil joined GTCR in 2018. Prior to joining GTCR, he worked as an Associate at Centerbridge Partners and an analyst at Goldman Sachs. Dylan graduated from The Pennsylvania State University with a B.S. in Finance.
Matt Munfakh joined GTCR in 2018. Prior to joining GTCR, he worked as an Investment Banking Analyst in the Mergers & Acquisitions group at Morgan Stanley. Matt graduated Summa Cum Laude from Boston College with a B.S. in Finance and minor in Mathematics.
Nick Wright joined GTCR in 2018. Prior to joining GTCR, he worked as an Investment Banking Analyst in the Midwest Coverage Group at Morgan Stanley. Nick graduated Cum Laude from the College of the Holy Cross with a B.A. in Accounting.
Constantine (Dean) Mihas
Albany Molecular Research, Inc.
ATI Physical Therapy
Ceba-Tech Specialty Solutions
Cedar Gate Technologies
Cord Blood Registry
Correct Care Solutions
Curo Health Services
Devicor Medical Products / Mammotome
Graceway Pharmaceuticals (Fund VIII)
Graceway Pharmaceuticals (Fund IX)
Managed Healthcare Associates
Maravai Life Sciences
Morton Grove Pharmaceuticals
Sotera Health (f/k/a Sterigenics)
Sterigenics (Fund IX)
Universal American (f/k/a APS Healthcare)
This newsletter is not an offer to sell or a solicitation of an offer to buy an interest in any private fund sponsored by GTCR LLC (“GTCR”) or any of its affiliates, and was not prepared for existing or potential investors in such funds. This newsletter may not be relied upon in any manner as legal, tax or investment advice, and is not to be used for any investment purpose whatsoever. GTCR assumes no responsibility or liability for, and expressly disclaims any obligation or undertaking to update, the information contained in this newsletter.
*This information reflects activity with respect to multiple healthcare investments in multiple GTCR funds, and does not reflect a group of investments managed as a single portfolio. This information does not reflect investment performance in any manner whatsoever and is provided solely to illustrate recent activity with respect to healthcare portfolio companies. This information is not meant to be indicative of future activity. If a portfolio company has been categorized in more than one industry group by GTCR, it may be separately included in the number of platform acquisitions and add-on acquisitions, and the aggregate acquisition value associated with such acquisitions, completed by each group.