LLR Partners Bets on Fertility Centers For Growth

LLR Partners is looking for growth from fertility clinics.

Over the summer, the Philadelphia PE firm acquired the Piney Point Surgery Center and Houston Fertility Laboratory which were both owned by Dr. Jimmy Gill and Dr. Gus Haddad. The doctors currently own The Houston Fertility Institute, which is their medical practice.

LLR used the two businesses to launch Vivere Health, a platform company that will be used to rollup other firms in the fertility space, says Joseph Cashia, Vivere’s CEO.

David Steines, an LLR principal, declined to disclose how much LLR invested in Vivere, a word that means “life” in Italian. However, Gill and Haddad retained a roughly 30% stake, while Cashia has roughly 10%. LLR owns the balance, Cashia says.

Cashia is the former founder and CEO of National Renal Alliance, which was sold to Welsh Carson Anderson & Stowe in late 2008. Other NRA execs have joined Vivere, including David Skelton, the ex-CFO of NRA, as well as David Bradley, who was NRA’s VP of development. Brenda Lepley, NRA’s chief operating officer, is also COO of Vivere.

So what’s the interest in fertility clinics? About 12% of women, aged 15-44, have an “impaired” ability to have children, according to the Centers for Disease Control. “Fertility in the U.S. is much below the rest of world,” Steines says.

Only 20% of U.S. couples that could benefit from fertility services are using them, Steines says.

The fertility industry is expected to grow by 6% to 7% annually, which Cashia says “isn’t huge but steady.” The business model for fertility clinics is also in its infancy while the sector is fragmented. Many of the clinics are owned by “mom and pop operators” that need the financial and marketing leadership of a larger organization. “They will need cash to grow the business or attract new doctors,” Cashia says. “They need experienced management to run the surgery centers.”

Vivere will be looking to buy many of these “mom and pop operators” but wants them to retain equity stakes, Cashia says.

Headquartered in Franklin, Tenn., Vivere expects to have about 10-15 fertility centers and $100 million revenue in the next two to three years, Cashia says. The first two, already up and running, are located in Houston and Austin.

LLR, which has more than $1.4 billion under management, typically provides from $20 million to $100 million in equity per transaction. The Vivere investment comes from LLR’s third fund, which raised $800 million in 2008.