Golden State Medical Supply, backed by Frazier-led group, kicks off sales process

  • GSMS investors: Frazier Healthcare, Goldman, NEA
  • Preliminary indications of interest submitted
  • California company serves gov’t agencies including VA,  DoD

Golden State Medical Supply, the largest supplier of generic pharmaceuticals to the country’s federal healthcare system, is evaluating a sale, according to four sources familiar with the matter.

Cantor Fitzgerald and Guggenheim Securities are providing sell-side financial advice on the process, the sources said.

GSMS is owned by Frazier Healthcare Partners, Goldman Sachs and New Enterprise Associates.

The investor group acquired GSMS in 2015, providing an exit for LKCM Headwater Investments. LKCM initially acquired the company in 2012.

Books were distributed in March and preliminary indications of interest have been submitted, the sources said.

While the process remains in its early stages, GSMS has so far fielded interest from both sponsors and a wide range of strategic buyers, one of the sources said.

The sources declined to comment on a potential valuation.

GSMS, Camarillo, California, serves agencies including the Department of Veterans’ Affairs and the Department of Defense. As a full-scale reseller, the company partners with generics manufacturers, providing packaging, sterilization, labeling and distribution services.

GSMS was founded in 1986 by a veteran of the U.S. Air Force, Jim Stroud.

Ben Hall holds the CEO post at GSMS, which encompasses two facilities located at its headquarters.

For Seattle’s Frazier, which invests exclusively in healthcare, the process comes as fellow portfolio company CORE Institute seeks a buyer.

The orthopedic care group, which received a growth-equity investment from Frazier and Princeton Ventures in 2015, is working with Houlihan Lokey to evaluate options, Buyouts reported in January.

In other recent activity involving Frazier, the firm recently bought Comprehensive Pharmacy Services from NexPhase Capital in a deal valued north of $500 million.

Representatives of Guggenheim, Cantor Fitzgerald, Goldman Sachs and Frazier declined comment, while those with GSMS and NEA couldn’t immediately be reached.

Action Item: Check out Frazier Healthcare Partners’ latest Form ADV: