GTCR Firm Update
Healthcare Group Update
We believe that GTCR’s ~50 healthcare platform investments over our 35-year investment history in the sector have made us one of the leading private equity investors in healthcare. Over the last several years, the GTCR Healthcare team has remained very active both buying and selling healthcare businesses. Since 2010, we’ve made 14 new platform investments and 46 add-on acquisitions, for a total of 60 transactions with a combined purchase price of over $7.9 billion. We have realized many of those investments during the past 24 months, selling six healthcare portfolio companies for a combined enterprise value of more than $5.7 billion. In 2016, we continued to identify attractive opportunities to invest capital in the healthcare industry, completing 11 total acquisitions over the course of this year.
The GTCR Healthcare team established two new healthcare platforms during 2016. Our Maravai LifeSciences portfolio company completed its initial platform acquisition and executed two transformative add-on deals, acquiring three founder-owned life science tools businesses: Vector Labs, TriLink Biotechnologies and Cygnus Technologies. Our second new platform investment was our acquisition of Riverchase Dermatology, one of the largest dermatology practice management platforms in the U.S. In addition, we entered into our third management partnership with Ed Fiorentino, creating TerSera Therapeutics, a specialty pharmaceutical company, as part of our continued execution of The Leaders Strategy™.
We also continued to invest in our existing healthcare portfolio companies throughout 2016. GTCR’s pharmacy-management software business, Rx30, completed three add-on acquisitions this year, including the transformative add-on of its competitor, Computer-Rx. Our Cole-Parmer portfolio company continued its acquisition activities in the specialty lab equipment space, completing two acquisitions in 2016, which supplemented three previous add-on acquisitions since initially carving the business out of Thermo Fisher in August 2014. In addition, our investment in the contract sterilization industry, Sterigenics, significantly increased the scale of its lab testing services business with the acquisition of Nelson Labs in April, then capitalized on Sterigenics’ strong business performance, healthy capital markets and low interest rates by executing a debt-financed dividend recapitalization in November 2016.
Below is a snapshot of our recent portfolio company activity. These nine companies completed 15 add-on acquisitions under our ownership.
|Healthcare data and analytics||David Snow||Management partnership|
|Specialty lab equipment||Bernd Brust||Management partnership/platform acquisition and five add-on acquisitions|
|Outsourced correctional healthcare services||Executive
|Merger of Correctional Healthcare Companies with Correct Care Solutions and one add-on acquisition|
|Life sciences tools and diagnostics||Carl Hull||Management partnership/platform acquisition and two add-on acquisitions|
|Dermatology practice management||Andrew Jaffe||Platform acquisition|
|Pharmacy management software solutions and transaction processing||Steve Wubker||Platform acquisition and three add-on acquisitions|
|Outsourced sterilization and lab testing services||Michael Petras||Three add-on acquisitions and debt-financed dividend recapitalization|
|Specialty pharmaceuticals||Ed Fiorentino||Management partnership|
|SaaS-based billing solution for diagnostic service providers||Lâle White||Platform acquisition, one add-on acquisition and one asset acquisition|
Cedar Gate Technologies, Greenwich, CT
CEO: David Snow
Management Partnership: August 2014
Cedar Gate Technologies focuses on acquiring and developing healthcare data and analytics technologies and technology-driven services as part of a strategy to build a leading business in the industry. GTCR and Mr. Snow believe the data and analytics space represents an attractive and growing segment within healthcare technology. Cedar Gate seeks to invest in companies, products and services that help providers and payors understand and manage risk effectively as they transition toward value-based reimbursement.
GTCR may invest up to $200 million of equity capital to support management’s strategy. Mr. Snow serves as Chairman and Chief Executive Officer of Cedar Gate Technologies, and he and his management team will invest alongside GTCR.
Cole-Parmer Instrument Company, Vernon Hills, IL
CEO: Bernd Brust
Management Partnership/Platform Acquisition: August 2014 | Recent Acquisition: October 2016
GTCR’s relationship with Mr. Brust dates back to 2009, when he was Chief Commercial Operations Officer at Life Technologies Corporation and responsible for a $3.5 billion global business. Prior to partnering with GTCR, he was President and CEO of Qualicaps, a leading provider of capsule manufacturing and processing equipment for pharmaceutical companies, which was sold to Mitsubishi Chemical Holdings in 2013.
Founded in 1955, Cole-Parmer offers a portfolio of industry-leading brands and private-label products in niche applications to fulfill important needs in the market. The company has deep technical expertise across a range of specialty products in the field of fluid handling, test and measurement, electrochemistry, and other laboratory products. The company sells its products across a range of end markets to a diverse global customer base.
Since GTCR’s initial investment in 2014, Mr. Brust and the Cole-Parmer team have successfully carved out the business from Thermo Fisher, invested in organic growth and completed five complementary add-on acquisitions to grow the company’s proprietary product portfolio, manufacturing capabilities and geographic footprint. The company is actively pursuing a large M&A pipeline and aims to continue adding complementary products and capabilities.
Correct Care Solutions, Nashville, TN
Executive Chairman: Jerry Boyle CEO: Jorge Dominicis
Management Partnership: September 2011 | Platform Acquisition: December 2012 | Recent Transaction: March 2015
In July 2014, CHC merged with Correct Care Solutions (“CCS”), a portfolio company of Audax Management and Frazier Healthcare Partners. The combination of CCS and CHC created a strong player in the growing public jails segment of the market and one of the largest companies in the outsourced correctional healthcare industry. The combined company leverages the scale of its infrastructure and clinical capabilities in order to capitalize on the continuing trend toward outsourcing. The combined company operates under the CCS name and is led by CCS Founder and Executive Chairman Jerry Boyle and CEO Jorge Dominicis.
In March 2015, CCS completed the add-on acquisition of a provider of healthcare and claims processing services to the Federal Bureau of Prisons.
Maravai LifeSciences, San Diego, CA
CEO: Carl Hull
Management Partnership: March 2014 | Platform Acquisition: April 2016 | Recent Acquisition: October 2016
In April 2016, Maravai completed its platform acquisition of Vector Laboratories (“Vector”), a founder-owned immunohistochemistry reagents company. Since its initial platform investment, Maravai has completed two additional acquisitions of other founder-owned life science reagents businesses that help broaden the chemistry portfolio of Maravai's Vector business. In September 2016, Maravai acquired TriLink Biotechnologies (“TriLink”), a manufacturer of specialty oligonucleotide reagents. Then in October 2016, Maravai acquired Cygnus Technologies (“Cygnus”), a manufacturer of analytical chemistry reagents used in biologic drug development.
Together, these three businesses form the basis for a differentiated portfolio of life science products that fit well with the Maravai team’s collective experience. Vector’s products include labeling and detection reagents and consumables used by medical and scientific researchers; TriLink’s products include synthetic DNA and RNA products used in genomic applications; and Cygnus’ products include test kits and immunoassay reagents used to evaluate process-related impurities and contaminants within the biologic drug development and manufacturing process.
With the combination of Vector, TriLink and Cygnus, Maravai now has the scalable infrastructure to pursue the fragmented landscape of attractive add-on acquisitions and build Maravai into a market-leading life science tools and diagnostics company.
Riverchase Dermatology, Fort Myers, FL
CEO: Andrew Jaffe
Platform Acquisition: October 2016
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.
GTCR and the Riverchase management team are focused on continuing to grow the company both organically and through strategic M&A. GTCR and Riverchase are actively pursuing de novo and acquisition opportunities to expand the company’s geographic footprint and service offering.
Rx30 (Transaction Data Systems), Ocoee, FL
CEO: Steve Wubker
Platform Acquisition: June 2015 | Recent Transaction: October 2016
The investment in Rx30 is the result of GTCR’s continued proactive efforts in the healthcare IT sector. Following GTCR’s recent investments in XIFIN and Cedar Gate Technologies, Rx30 represents GTCR’s third recent investment within healthcare IT, an area of focus for the firm over the past several years.
In addition to driving organic growth, Rx30 continues to pursue expansion through strategic M&A opportunities.
Sterigenics International, Cleveland, OH
CEO: Michael Petras
Management Partnership/Platform Acquisition: March 2011 | Recapitalization: May 2015 | Recent Transaction: November 2016
Between 2011 and 2015, the company completed three 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 Sterigenics in partnership with Warburg Pincus and Sterigenics’ management team. Subsequent to the recapitalization, Sterigenics has completed three additional acquisitions, Companhia Brasileira de Esterilização (“CBE”), a Brazilian sterilization company, in August 2015; Nelson Labs, a microbiology testing lab, in April 2016; and Reviss, a Cobalt-60 supplier, in October 2016. Sterigenics also completed a debt-financed dividend recapitalization in November 2016.
In June 2016, Michael Mulhern was appointed to serve as Executive Chairman of the Board, with Michael Petras joining as the CEO. Mr. Petras joined Sterigenics from 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.
Sterigenics continues to leverage and expand its global network of service centers 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
Management Partnership: February 2016
TerSera is focused on acquiring specialty pharmaceutical companies, carving out undermanaged products from large pharmaceutical companies, and growing through targeted promotion strategies and lifecycle management programs. Current target acquisition opportunities include products that are already approved or currently marketed, as well as late-stage development assets.
XIFIN, San Diego, CA
CEO: Lâle White
Platform Acquisition: July 2014 | Recent Transaction: May 2015
XIFIN completed two 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 April 2016, Maravai raised new credit facilities, including a revolving credit facility, senior secured term loan and mezzanine debt, to partially finance the acquisition of Vector.
- In September and October 2016, Maravai raised incremental senior and mezzanine debt to partially finance the acquisitions of TriLink and Cygnus, respectively.
- NXT, Antares, MidCap and Newstone provided the financing packages.
- In October 2016, Riverchase raised new credit facilities, including a revolving credit facility, senior secured term loan and mezzanine debt, to partially finance the acquisition by GTCR.
- Golub, NXT and Northwestern Mutual provided the financing package.
- In May and October 2016, Rx30 raised incremental term loans under its existing credit facility to partially finance two add-on acquisitions, Lagniappe Pharmacy Services and Computer-Rx.
- Golub, Annaly, Antares, MidCap, SunTrust and Ares provided the incremental loans to support these strategic acquisitions.
- In November 2016, Sterigenics completed a debt-financed dividend recapitalization.
- J.P.Morgan, Jefferies, Credit Suisse, RBC and Goldman Sachs acted as joint bookrunners on the transaction.
Ben Daverman joined GTCR in 2008 and was promoted to Managing Director in 2016. Prior to joining GTCR, he worked as a Venture Capitalist at Alta Partners, as well as an Investment Banking Associate at JMP Securities and an Analyst in the Mergers & Acquisitions group at J.P.Morgan (formerly Hambrecht & Quist). He holds an MBA from the Wharton School at the University of Pennsylvania and a BA in history magna cum laude from Colgate University. Ben also holds a master’s degree in biotechnology from the School of Applied Sciences & Engineering at the University of Pennsylvania.
Ben is currently a Director of Cole-Parmer, Maravai LifeSciences, TerSera Therapeutics and XIFIN. Ben was previously a Director of past GTCR investments such as Actient Pharmaceuticals, Cord Blood Registry, Crealta Pharmaceuticals, Devicor Medical Products, GeneraMedix and Sterigenics. In addition, Ben was involved in transactions with past GTCR investments ATI Physical Therapy and Graceway Pharmaceuticals.
Ben is active in the community and serves on the executive board of Spark Program, a national non-profit that provides transformative apprenticeships for at-risk middle-school students.
Nick Okano joined GTCR in 2016. Prior to joining GTCR, he worked as an Investment Banking Analyst in the Mergers & Acquisitions group at Bank of America Merrill Lynch. Nick graduated from Yale University with a BA in economics.
Jonathan Skekloff joined GTCR in 2016. Prior to joining GTCR, he worked as a Senior Associate Consultant with the Industrials and Healthcare practices at L.E.K. Consulting. Jonathan graduated summa cum laude from the University of Pennsylvania with a BA in philosophy, politics and economics.
Constantine (Dean) Mihas
Managing Director, Group Head
ATI Physical Therapy
Cedar Gate Technologies
Cole-Parmer Instrument Company
Cord Blood Registry
Correct Care Solutions
Curo Health Services
Devicor Medical Products
Managed Healthcare Associates
Morton Grove Pharmaceuticals
Universal American (f/k/a APS Healthcare)
*This information represents the approximate number of platform acquisitions and add-on acquisitions, and the aggregate purchase price associated with such acquisitions, completed by GTCR’s Healthcare group since 2000, as of November 30, 2016. The actual amounts may exceed the amounts set forth above and, with respect to purchase price, include the amount paid by all investors in the applicable GTCR portfolio company. This information is for illustrative purposes only and reflects investments that were made across multiple funds during different economic cycles. This information does not relate to fund or portfolio company performance. 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 purchase price associated with such acquisitions, completed by each group.
This newsletter is for illustrative and informational purposes only. 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 or any other entity. This newsletter was not prepared for existing or potential investors in such funds and may not be used or relied upon 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.