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Riordan, Lewis & Haden’s sale of Avella fetches about $325 mln

  • LA firm’s investment dates to 2009
  • Price came down by ~$100 mln: source
  • Deal follows OptumRx’s purchase of Advent’s Genoa for reported $2.5B

Riordan, Lewis & Haden’s sale of Avella Specialty Pharmacy commanded an about $325 million valuation, two sources told Buyouts.

The buyer is UnitedHealth Group, which quietly bought the specialty pharmacy company through the OptumRx segment of its Optum subsidiary.

The transaction was disclosed in the health insurer’s third-quarter earnings release Oct. 16 and comes about eight months after Buyouts reported that Optum was nearing a deal for the Phoenix company.

The deal closed several weeks ago and was negotiated down from a valuation perspective due to challenges at Avella, the sources said. One of the sources said the deal was ultimately priced down by at least $100 million.

Avella is one of the last independent specialty pharmacy operators of scale, with a big focus on oncology and infectious-disease treatments. It also provides outsourced sterile compounding services.

For UnitedHealth, Avella was one of two deals struck by the prolific acquirer through OptumRx over the latest quarter as it looks to build out its pharmacy operations.

The industry giant also bought Genoa Healthcare from Advent International for a reported $2.5 billion, adding telepsychiatry services and a national network of pharmacies located in behavioral-health centers.

Nine years in making

The sale of Avella marks the end of a saga for Riordan, Lewis & Haden. The Los Angeles PE firm acquired its initial majority stake in the company, then called Apothecary Shops, in February 2009.

The sponsor kicked off a sales process for Avella in the first half of 2017, with Raymond James & Associates and B of A Merrill Lynch advising on the auction.

The process was complex. While the auction initially targeted a sale of Avella as a whole, a piecemeal sale was later evaluated after private equity firms expressed interest in the asset’s compounding unit, sources previously told Buyouts.

Only select PE groups were included in the process for the compounding operations, having been compelled by the unit’s wide margins and an opportunity to create a second national provider after PharMEDium.

Whether sponsors ultimately backed away or a sale of the company in its entirety was a preferential path remains unclear.

Other strategics that could have purchased Avella in whole include CVS, Express Scripts and Walgreen, sources have said.

Clayton Dubilier & Rice in October 2015 agreed to sell PharMEDium to AmerisourceBergen in a more than $2.5 billion cash deal.

Raymond James declined comment. Riordan, Lewis & Haden, Avella, B of A and Optum didn’t respond to requests for comment.

Action Item: Contact Rob Zielinski of Riordan, Lewis & Haden: rzielinski@rlhequity.com.