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Thoma Bravo values Greenphire at ~$1.1bn as tech transforms clinical research

Already proving a home run investment for Riverside, Greenphire remains on a fast growth track as the clinical research market remains largely dominated by manual, paper-based workflows.

Reflecting private equity’s eagerness to participate in the technology-driven transformation of the clinical research industry, Thoma Bravo is buying Riverside Co’s Greenphire in a deal valued at approximately $1.1 billion, sources familiar with the deal terms told PE Hub. 

The pending deal, announced Wednesday, represents a big outcome for Riverside – marking the lower-mid-market firm’s largest exit in history in terms of price. The business through Riverside’s seven-year partnership grew revenue by 8x and employee count by 4x.

Now under the backing of Thoma, one of the software industry’s most prolific investors, there’s opportunity to unlock much more growth at Greenphire, which provides payment workflow automation solutions within the clinical trial process – both for research sites and patients. The company’s top line has been growing at a more than 30 percent clip organically and that ought to persist, one person said, buoyed by the added likelihood of M&A with Thoma’s deep pockets. 

“This was a story about heavy innovation and product development,” said Joe Manning, senior partner at Riverside, declining to comment on any financial metrics of the deal. Greenphire is “helping remove barriers for people participating in clinical trials.” For example, Riverside recently supported the launch of Greenphire’s newest product, EnvisiX, a clinical trial budget negotiation and management tool that plays at the front-end of the payment process. 

“This is yet another validating data point around the interest in companies that are helping to increase the level of productivity, efficiency and automation in the clinical trial process,” added Michael Gerardi, managing director at Jefferies, which advised Greenphire on the transaction alongside AGC Partners. Jefferies and Thoma Bravo also declined to comment on deal terms. 

Greenphire, based in King of Prussia, Pennsylvania, also streamlines payments between sites and sponsors/CROs throughout the clinical trial process, facilitates and automates payments to trial participants, as well as looks to improve patient participation by providing travel arrangements. 

One question raised earlier this year by sources: would a financial buyer step up to prevail over interested strategic suitors ranging from payment companies to healthcare technology players? 

In the end, only sponsors made it to advanced phases of the focused process, one source said, underscoring the private equity community’s appetite to invest behind growth of the pharma services sector.

Much white space lies ahead for Greenphire, which can continue to capture share in a market still largely dominated by manual, paper-based workflows. “It’s early in the adoption phase,” Manning said. “Most of the market is not doing this with modern technology.”

“It’s very easy to come up with this thesis that years down the road this is going to be heavily automated and digitized,” one of the sources added. Further, Greenphire has its hands on a treasure trove of site performance data that can ultimately be monetized, this person said. 

That future opportunity and macrodynamic, plus Greenphire being the only integrated provider of site and patient payment solutions, stands up what appears to be a premium multiple for Greenphire.

Sources told PE Hub the company’s approximate $1.1 billion valuation was based upon projected 2021 revenue of $75 million and run-rate revenue of $100 million for year-end, while projected 2021 EBITDA lies in the high $20 million range. 

Automation in clinical research: a win-win

The excitement around Greenphire can be simply rationalized: its role in the clinical trial process is compelling to all constituents. 

“When we evaluated the business in 2014, market penetration for tech solutions [like those offered by Greenphire] was less than 5 percent,” Manning said. “It was clear that there were strong advantages for all stakeholders.”

Clinical trial sponsors, including pharmaceutical companies and CROs that use Greenphire, can deliver more financial control and visibility into workflow efficiencies to help manage workflows. Elsewhere, the physical trial sites benefit from a massive reduction in administrative burden using its online portal to track information, all the while trial participants are reimbursed more efficiently and quickly, the investor explained.

Besides a great track record of growth and high customer retention rates, the company under Riverside also expanded internationally into Europe, which showed the next investors that there is a global market opportunity, he said. 

Greenphire has grown its client base to over 500, partnering with CROs, pharmaceutical and biotech companies, academic medical centers and hospitals.

Already a sector producing a lot of interest pre-covid, technology’s role in pharma services, broadly speaking, has only become more compelling in the post-covid world, Jefferies’ Gerardi added.

“Funding levels have really ratcheted up for their end-customer – the biopharma sector – but also, there is this trend towards getting closer to patients,” Gerardi said. In other words, patient-centricity is lucrative as trials increasingly are done at the home in a decentralized way. 

Consider Science 37, a decentralized clinical trial operating system, which earlier this month merged with LifeSci Acquisition II Corp as a means to ultimately go public. The deal assigned Science 37 an initial enterprise value of approximately $1.05 billion.

Greenphire, for its part, also plays on this trend, with offerings that help bring research to the home or facilitate travel requirements for patients. “There isn’t a group affected that doesn’t like it,” Manning said.