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Kohlberg & Co-backed e+CancerCare hits the auction block

  • Cain Brothers offers sell-side advice
  • Kohlberg acquired e+CancerCare in 2011 through its sixth fund
  • Sale to PE anticipated

E+CancerCare, the Kohlberg & Co-backed provider of outpatient cancer care centers, is weighing a sale, Buyouts has learned.

Cain Brothers has been hired to run a sales process for the Nashville company, according to people with knowledge of the matter.

The most likely outcome of the process is a sale to another sponsor, sources said. The company in the past held discussions with strategic buyers, one of the people said.

Kohlberg, Mount Kisco, New York, acquired its majority stake in e+CancerCare in July 2011 from Frontenac Co. Frontenac, a Chicago PE group focused in the lower-middle market, retained a minority stake.

Kohlberg’s investment was done through Fund VI, which collected $1.5 billion in 2007.

E+CancerCare operates 24 cancer care and imaging centers across 10 states. The company’s integrated care model includes diagnostic testing, radiation oncology, medical oncology and ancillary services.

The company generates EBITDA in the ballpark of $20 million to $27 million, sources said.

Outpatient cancer treatment has proven a tough business, sources said, with customer concentration and slow growth rate factors that may prove challenging for e+CancerCare.

Cancer-treatment giant 21st Century Oncology Holdings Inc filed for Chapter 11 bankruptcy in May. The Fort Myers, Florida, company attributed its diminishing profits to lower reimbursement rates, challenges meeting electronic-health-record demands and a changing political landscape, among other things.

The debt-ridden company is also facing ongoing litigation and legal settlements.

In other deals in the sector, McKesson Corp in February 2016 scooped up cancer-treatment company Vantage Oncology and oncology pharmacy services company Biologics Inc. The pair of transactions were valued at a combined $1.2 billion, an announcement said at the time.

The associated deal team at Kohlberg includes Benjamin Mao, George Dehuff III, Jean Roberts and Wyatt Brothers.

Kohlberg typically makes investments in North American-based middle-market companies with enterprise values between $100 million and $1 billion. The buyout firm typically injects $50 million to $300 million of equity capital.

A Kohlberg & Co spokesperson declined to comment, while representatives of Frontenac and Cain Brothers didn’t return requests for comment on Tuesday.

Action Item: Kohlberg & Co’s current investments: www.kohlberg.com/Investments/Default.aspx

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