Varsity Healthcare Partners has won the auction for Peak Gastroenterology Associates, Colorado’s largest gastroenterology practice group, PE Hub has learned.
The Los Angeles firm’s recapitalization of Peak concludes a competitive sales process launched several months ago.
Colorado Springs, Peak engaged Alkaline Advisors to advise on a private equity-focused sales process, which formally kicked off in early March, PE Hub previously reported.
The company was marketed off of pro forma Ebitda of approximately $6 million, excluding a doctor compensation scrape, a source said at the time. In other words, doctor-owners will make the same income pre- and post-transaction.
Projected adjusted Ebitda is approximately $19 million, when accounting for current growth initiatives including the roll-out of multiple joint venture endoscopy centers throughout the state, the source said.
Peak’s physician leaders, President and Founder Buck Patel and Prashant Krishnan, will remain significant shareholders and continue to lead the recapitalized company.
Patel launched Peak in 1996 as a single practice in Colorado Springs, having previously formed and sold the city’s first hospitalist group.
Today Peak encompasses 42 providers offering gastroenterology and digestive services across its 12 outpatient locations and 21 ambulatory and hospital-based endoscopy centers. The medical group offers ancillary treatment services including anesthesia, pain management, clinical research and pathology.
The latter is unique, Peak’s Krishnan told PE Hub earlier this year, as patients who fail traditional therapy are typical referred to universities for enrollment in medical studies. Peak, which runs its own studies, is involved in more than 70 clinical trials, Krishnan said in March.
Only a small handful of sponsors have invested in the GI specialty to date, with Audax Private Equity among the first entrants via its April 2015 recapitalization of Miami’s Gastro Health.
Waud Capital and Frazier Healthcare Partners both entered the segment in 2018 via deals for Texas Digestive Disease Consultants and Atlanta Gastroenterology Associates, respectively.
Amulet Capital earlier this year married three southeast Pennsylvania gastroenterology groups in a transaction valued at approximately $130 million, PE Hub reported. In connection with the transaction, Amulet formed a new management services organization called U.S. Digestive Health.
Varsity earlier this month invested in The Steadman Clinic, Colorado’s world famous sports medicine practice, through Orthopedic Care Partners. The transaction brought OCP’s revenues to approximately $125 million, and on the basis of earnings, made it one of the largest PE-backed orthopedic companies in the country, PE Hub reported.
Action Item: Contact Peak at (719) 636-1201