DSI Renal Buys Dialysis Clinics

DSI Renal, a provider of dialysis services that is backed by Frazier Healthcare and New Enterprise Associates, has acquired 54 dialysis clinics from Fresenius Medical Care AG & Co. Terms of the deal, which closed March 30, were not released.


DSI Renal (or Dialysis Newco, Inc.), a leading provider of dialysis services for patients suffering from chronic kidney failure, announced today that it has acquired 54 dialysis clinics from Fresenius Medical Care AG & Co. KGaA. The DSI acquisition, driven by a Federal Trade Commission (FTC) divestiture order associated with the recent Fresenius acquisition of Liberty Dialysis Holdings, officially closed on March 30, 2012[1], making DSI the fourth largest for-profit provider of outpatient dialysis services in the United States. With the close of the DSI/Fresenius Medical Care transaction, DSI Renal now operates 85 dialysis centers as well as home and acute care programs across 23 states, providing care to more than 6,500 patients.


“This acquisition is transformative for DSI in that we are establishing a larger, national focus and footprint,” said Craig Goguen, President and Chief Executive Officer of DSI Renal. “On a local level, we’re creating jobs that will bolster Nashville’s economy, and we’re also helping to foster competition in markets across the country for thousands of people who rely on clinics like ours to provide life-saving dialysis treatment.”


“Regardless of size, we will continue to focus on delivering a high level of service to our physician partners so that together we can provide exceptional care for our patients. Our added scale will allow DSI to further invest in new and existing partnerships with nephrologists, to broaden our relationships with payers and suppliers, and to facilitate ongoing recruitment and retention of the best dialysis industry caregivers.”


DSI’s management team has experience in the integration of dialysis clinics, as DSI was formed through a similar acquisition in October 2011. The company was reorganized by Frazier Healthcare and New Enterprise Associates (NEA), in partnership with Bob Lefton and Craig Goguen, DSI Renal’s Executive Chairman and CEO, respectively, when it acquired 30 clinics from DaVita and the former DSI Renal Inc. through a separate FTC-mandated divestiture. The new platform company, DSI Renal, remained in Nashville with the company name, newly appointed Goguen at the helm and the former DSI management team still largely intact.


“DSI’s leadership team collectively has hundreds of years of experience in the dialysis industry and we have positioned the company for rapid growth,” said Goguen. “We are confident that our highly scalable infrastructure will support a largely seamless integration of these new sites, as well as further opportunities for expansion through de novo clinic creation, new joint venture partnerships with physicians and acquisition of additional established clinics in targeted geographies.”


Over the last year, DSI Renal has become one of the fastest-growing dialysis companies in the United States. Prior to the October 2011 acquisition of DSI by DaVita, DSI’s management team oversaw operations of 106 free-standing dialysis clinics serving 8,000 patients, and continues to oversee the growth of the business from its corporate offices in Nashville. DSI is funded by the Company’s management and two leading private equity firms–Frazier Healthcare and New Enterprise Associates.


“From a standing start, in only eight short months, Frazier and NEA have helped create the #4 player in the for-profit dialysis clinic business. It has been a pleasure working with the DSI team in putting this platform together. None of this would have been possible without the leadership of our world class management team in Nashville and we look forward to executing on our aggressive growth plans,” said Ben Magnano, Principal at Frazier Healthcare.


Mohamad Makhzoumi, Partner at NEA, added, “The broader fundamentals remain compelling when considering that dialysis care lacks any clinical need controversy, faces limited therapeutic alternatives and remains a recession-resistant industry where demand for treatment is steady, predictable and not overly dependent on macroeconomic factors. In the midst of this stable environment and dynamically mounting demand, the DSI team has built a potentially transformative company to better serve the vast number of patients suffering from end-stage renal disease.”


About DSI Renal


DSI Renal is a leading provider of dialysis services in the United States, offering state-of-the-art treatment for patients suffering from chronic kidney failure and renal disease. Together with its physician partners, DSI Renal owns and operates 85 dialysis clinics in 23 states. The company plans for growth through acquisition and development of new clinics as well as through establishment of additional joint venture partnerships with leading nephrologists for the clinic, hospital and alternate settings. For more information, please visit www.dsi-corp.com .


About Frazier Healthcare


Founded in 1991, Frazier Healthcare is a leading provider of growth equity and venture capital to high growth and emerging healthcare service, biopharma and medical device companies. With over $1.8 billion under management across seven funds, Frazier Healthcare has invested in more than 100 companies across the entire developmental spectrum. From seed stage venture investments to leveraged recapitalizations of cash generating companies, Frazier Healthcare has established itself among entrepreneurs and seasoned executives as a preferred partner to help create and grow successful healthcare companies. For more information about Frazier Healthcare, visit the company’s website at www.frazierhealthcare.com .


About NEA


New Enterprise Associates, Inc. (NEA) is a leading venture capital firm focused on helping entrepreneurs build transformational businesses across multiple stages, sectors and geographies. With approximately $11 billion in committed capital, NEA invests in information technology, healthcare and energy technology companies at all stages in a company’s lifecycle, from seed stage through IPO. The firm’s long track record of successful investing includes more than 170 portfolio company IPOs and more than 290 acquisitions. In the U.S., NEA has offices in the Washington, D.C. metropolitan area; Menlo Park, California; and New York City. In addition, New Enterprise Associates (India) Pvt. Ltd. has offices in Bangalore and Mumbai, India and New Enterprise Associates (Beijing), Ltd. has offices in Beijing and Shanghai, China.