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Linden, Audax, invest in Frazier’s HOPCo in $400 mln-plus deal

Linden Capital and Audax Private Equity have joined Frazier Healthcare Partners as investors in Healthcare Outcomes Performance Company, a provider of musculoskeletal care services.

The transaction assigns Phoenix, Arizona, HOPco a total enterprise value north of $400 million, according to three people familiar with the matter. HOPco projects 2019 Ebitda of approximately $40 million, they said.

Chicago’s Linden and New York’s Audax have taken equal ownership stakes in the company, while Frazier has remained a minority investor in HOPco, two of the people said.

Frazier’s investment dates to January 2017, when the Seattle firm led a growth-equity financing in the company alongside Princeton Ventures.

The recently closed deal concludes what was said to be a robust sponsor-focused sales process.

Buyouts initially reported in January that Houlihan Lokey had been engaged to conduct a sales process for HOPco, formerly known as the management company behind CORE Institute.

Launched in 2005 as The Center for Orthopedic Research and Education, CORE provides integrated orthopedic and neurological care throughout the greater Phoenix area as well as in Michigan.

HOPCo partners and serves both CORE and Banner Health, Arizona’s largest health system.

HOPCo seeks to reduce costs and improve outcomes for orthopedic care providers, offering administrative support systems, managing information systems and technologies, managing payer risk and facilitating oversight of compliance with laws and regulations, among other things.

Other private equity groups that have taken a piece of the orthopedic segment include Varsity Healthcare Partners, which in November 2017 invested in Orthopaedic Institute, north-central Florida’s largest player.

Atlantic Street Capital in September 2018 acquired OrthoBethesda, whose services are focused in the greater Washington region.

Frazier and Linden declined to comment, while Audax didn’t return requests for comment on Friday.

Action Item: Check out Linden’s latest Form ADV: https://bit.ly/2VJgPQB