Blue Wolf’s Pharmaceutical Strategies Group weighs sale

Blue Wolf Capital Partners is exploring the sale of Pharmaceutical Strategies Group, a provider of technology that helps companies manage drug spending, according to three sources familiar with the matter.

Jefferies is financial adviser to the Plano, Texas, pharmacy-benefits consultant, Buyouts has learned.

The process is in its early stages, sources said.

As a hybrid healthcare IT company and provider of outsourced services to the pharmaceutical industry, PSG is expected to garner strong interest from sponsors.

Blue Wolf, which tends to invest in complex and special situations in the middle market, invested an undisclosed amount in PSG in September 2011.

The New York PE group is currently fundraising for its fourth fund, which is seeking $525 million, an SEC filing in August disclosed. Blue Wolf’s third fund closed in 2013 at $300 million.

PSG describes itself as the largest independent pharmacy-benefit consulting firm in the U.S. Its technology and pharmacy supply-chain services help reduce costs associated with prescription-drug programs and optimize population management programs, among other things.

One of PSG’s software-as-a-service offerings is tailored to the 340B market. Under the 340B program, the U.S. federal government requires drugmakers to provide outpatient drugs at discount to healthcare organizations serving low-income and vulnerable patient populations.

PSG works with more than 300 clients including health plans, hospitals and health systems, employers and labor unions. A few of its big name clients are Blue Cross Blue Shield, Cleveland Clinic and Supervalu.

The Dallas Business Journal in February reported that PSG has doubled its revenue and grown its EBITDA fivefold since 2014. The company recently moved into new headquarters in Plano to accommodate its growing employee business space, the report said.

PSG CEO Dave Borden told the publication that he expects growth of at least 40 percent in 2017.

One comparable deal is ABRY Partners’ 2015 acquisition of Sentry Data Systems Inc. The transaction followed a Triple Tree sales process and commanded north of $200 million, Buyouts reported at the time. Sentry, Deerfield Beach, Florida, provides SaaS-based services focused on 340B work for hospital pharmacies.

Blue Wolf’s other healthcare investments include StateServ, Great Lakes Caring, ModernMD and Healthcare Laundry Systems.

The sponsor typically seeks to make equity investments of $25 million to $250 million in companies with enterprise values ranging from $50 million to $500 million, its website states.

Blue Wolf Partner and COO Charles Miller and Principal Jeremy Kogler sit on PSG’s board.

Jefferies declined comment. Representatives of Blue Wolf and PSG did not immediately return requests for comment.

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Update: This article was updated to show that Jefferies declined comment.