GTCR and ex-NuVasive chief launch Corza Medical through two-part surgical technology deal

Corza Medical snaps up Surgical Specialties and merges it with TachoSil – a carve-out from Japan's Takeda – to create a $300 million-plus revenue generating surgical technologies company.

GTCR, in partnership with industry veteran Gregory T Lucier, has bought and combined two businesses through a $1 billion-plus transaction that creates a sizable new surgical technology player called Corza Medical.

Formed through the simultaneous acquisition and merger of Surgical Specialties and TachoSil, Corza Medical will be led by Lucier as executive chairman alongside Dan Croteau as CEO. Lucier was most recently the chief of NuVasive, a medical device company specializing in spinal surgery. Croteau was CEO of Surgical Specialties.

Surgical Specialties focused on high-performance surgical sutures and ophthalmic knives. TachoSil, purchased from Japan’s Takeda Pharmaceutical, provided a differentiated surgical patch product line that enables safe and fast bleeding control during surgeries. 

The complex transaction marked the culmination of a 20-month search that began when the Corza Health partnership was formed in 2019 as part of GTCR’s Leaders Strategy. 

Greg Lucier
Greg Lucier, chairman, Corza Medical

“It was really a fortuitous timing of events,” Lucier told PE HubThe partnership began exploring the acquisition of Surgical Specialties in April 2020, having become aware that the company was evaluating a sale through GTCR’s long-time relationship with Croteau, a board member of the PE firm’s portfolio company Resonetics. During that process, Takeda’s agreed-upon divestiture of TachoSil to Johnson & Johnson was ultimately denied by the US Federal Trade Commission on anti-competitive grounds.  

“Because we then had that platform [Surgical Specialties], we were the ideal acquirer,” Lucier said. Simply put, Corza Health could not have done the TachoSil deal without Surgical Specialties. 

Dean Mihas, GTCR
GTCR managing director Dean Mihas

“Both deals closed simultaneously, contingent on each other,” added Dean Mihas, a managing director at Chicago-based GTCR. “We needed Surgical Specialties’ platform and infrastructure to buy TachoSil because the latter was really a product line. This will give us a really global footprint across Europe, the US and China.” 

Takeda, in a September announcement, revealed its pending agreement to sell TachoSil to GTCR for €350 million ($425 million) in cash upon closing. However, Mihas said Surgical Specialties was the larger of the two businesses by purchase price, with the combined transaction value north of $1 billion. 

GTCR, for its part, is an experienced carve-out investor, having purchased businesses from large corporates such as Johnson & Johnson (Devicor Medical Products) and Thermo Fisher Scientific (Cole-Palmer). 

According to Lucier, there is a tremendous opportunity for growth and additional dealmaking within the highly fragmented surgical tools and technology sector, with hundreds of technologies doing a variety of things inside the operating room.

The two 800-pound gorillas that dominate the space today are the Ethicon division of Johnson & Johnson and the Medtronic surgery business – which have, in large part, held hospitals hostage through their product bundles, he said.

“They’ve gotten immensely powerful extracting favorable pricing for themselves through restrictive purchasing requirements imposed on customers,” Lucier said. “And further, that purchasing experience really has not been stellar. We think there is an opportunity to both avoid the bundle concept by offering technologies at exceptional value, while providing remarkable service.”

At the same time, care is increasingly moving outside the hospital to more decentralized surgery centers – a trend accelerated by covid-19. Lucier said outpatient centers are generally more value-conscious than hospitals and that Corza Medical would emphasize that segment.

Already generating well over $300 million in top line today, Lucier said the newly combined company has the opportunity to become a $1 billion-in-revenue franchise with customized services and without the restrictions of a bundle. 

Growing in the high-single digits today, Corza Medical intends to build out its portfolio with complementary businesses and technologies through both an M&A playbook and organic efforts. 

“The needs inside the operating room are evolving quickly because of minimally invasive surgery,” Lucier said. One such example is the rapid growth seen by Surgical Specialties’ barbed sutures, a crucial tool in minimally invasive surgeries. 

Corza Medical will be headquartered in Westwood, Massachusetts, and operate in 13 countries with more than 1,700 employees. Its brands include Quill barbed sutures, Sharpoint Plus and Look surgical sutures, Sharpoint ophthalmic knives and the TachoSil fibrin sealant patch. The company serves clinicians, distributors and medical device companies. 

Barclays acted as financial adviser to GTCR on the transaction, while Kirkland & Ellis provided counsel.