Linden’s ProPharma restarts process, targeting August deal

The Chicago healthcare PE firm last week shook hands on the $425 million sale of Solara Medical Supplies to AdaptHealth.

Linden Capital Partners formally relaunched its sale process for ProPharma Group after private equity interest in the pharma services company persisted through the crisis, according to four people familiar with the process.

Deal books are being distributed this week to potential suitors and a first round bid date is set for late June, sources told PE Hub.

The process is targeting a deal signing in August; however, sources said Chicago’s Linden could opt to hold the business if bids drop below pre-covid values.

Centerview Partners and William Blair were enlisted several months ago to advise on the potential sale of ProPharma, PE Hub initially wrote in January. Pre-process introductory meetings took place in January during the J.P. Morgan Healthcare Conference in San Francisco.

The auction’s formal launch was postponed in March due to market uncertainty stemming from the pandemic, two of the people said. Linden has now chosen to continue the process after receiving interest from numerous financial sponsors in the period since, one person said.

ProPharma, which provides compliance-related consulting services to the life sciences industry, expects to produce more than $40 million in 2020 EBITDA, accounting for small covid-19 adjustments, sources said.

ProPharma is led by CEO Dawn Sherman. Its offerings include life-science consulting services to ensure quality and regulatory requirements are met, as well as services for medical information and regulatory affairs. The company also provides pharmaco-vigilance, or services that ensure drug safety during clinical trials and post-marketing.

Based in Overland Park, Kansas, the global company employs more than 1,200 across its 15 offices in eight countries. ProPharma serves pharmaceutical, biotechnology and medical device clients across six continents.

ProPharma fueled growth in part through M&A. Its 2019 purchases included the UK’s Southwood Research and The Weinberg Group, of Washington, D.C.

Price expectations are uncertain in the current environment, but ProPharma has seen minimal impact from covid-19, sources said. The pandemic led to a pause on clinical trials; however, demand for outsourced regulatory and safety-related services offered by ProPharma and peers isn’t going anywhere, sources said.

Pre-crisis, the sector in which ProPharma operates commanded premium valuations in the mid-teens to 20x EBITDA multiple range.

Linden is among firms that have proven successful in the space, making out well on its majority stake sale of Advarra, a provider of institutional review board and other compliance-related services for clinical research.

Genstar Capital in June 2019 agreed to buy Advarra in a deal valued at approximately $1.3 billion, or about 18x Ebitda, sources told PE Hub at the time. Linden remained a minority investor, injecting new capital via Fund IV.

Leonard Green & Partners subsequently bought Advarra peer WIRB-Copernicus Group in a deal valued between $3.5 billion and $4 billion, equating to a 2019 EBITDA multiple of approximately 20x, PE Hub reported.

Linden, which invests exclusively in the healthcare sector, invested in ProPharma in October 2016 out Fund III.

The Chicago private equity firm just last week clinched a deal to sell Solara Medical Supplies to AdaptHealth in a $435 million cash and stock deal. The firm, less than two years into its investment, is set to make more than 3x on money on the distributor of continuous glucose monitors, PE Hub wrote.

Linden and William Blair declined to comment. Centerview and ProPharma did not return requests for comment on Monday.

Action Item: Read more about AdaptHealth’s purchase of Linden’s Solara