- Leonard Green investment dates to 2012; Frazier investment dates to 2011
- Texas company accounts for 4-5 pct of U.S. dialysis market, after DaVita, Fresenius
- Largest markets: Texas, California, Georgia
U.S. Renal Care, the third-largest U.S. provider of dialysis services, is evaluating a sale, according to people familiar with the matter.
The company’s investor group, which includes Leonard Green & Partners, Frazier Healthcare Partners, New Enterprise Associates, Cressey & Co and SV Health Investors, has engaged Goldman Sachs for financial advice on a process, the people said. The process is in its early stages, they said.
The Plano, Texas, company generates north of $300 million in Ebitda, one of the people said. Revenue sits at about $1.3 billion, Moody’s said in a June report.
U.S. Renal has drawn interest from large buyout funds, one of the people said, though this person and a second source said a sale to a strategic is possible.
U.S. Renal is the No. 3 dialysis-service provider after public companies DaVita and Fresenius Medical Care. The latter two combined treat some 75 percent of dialysis patients in the U.S., Moody’s said. U.S. Renal’s market share is about 4 percent to 5 percent, the credit-rating company said. The fourth largest player is publicly traded American Renal Holdings.
Potential financial buyers are likely to be compelled by the opportunity to consolidate, as the rest of the sector is highly fragmented, one source said. At the same time, should U.S. Renal combine with a strategic, regulators would likely require divestitures in certain markets, sources said.
Founded in 2000 by CEO Chris Brengard, U.S. Renal offers dialysis to patients suffering from chronic kidney failure. Via about 335 clinics across 32 states and Guam, U.S. Renal provides in-center and at-home hemodialysis and peritoneal dialysis services for end-stage renal disease. The company also manages acute dialysis programs in conjunction with local community hospitals.
U.S. Renal’s top 10 states, led by Texas, California and Georgia, account for 70 percent of its revenue, Moody’s reports.
Leonard Green’s U.S. Renal Care in August 2015 agreed to merge with its competitor, DSI Renal. Frazier Healthcare and NEA formed the latter in October 2011 through its acquisition of clinics from DaVita and DSI Renal.
The FTC cleared the $640 million merger in March 2016 after the combined entity agreed to divest three DSI Rental outpatient dialysis clinics.
Leonard Green’s initial investment in U.S. Renal dates to 2012, when it acquired a majority stake from investors including Cressey, Salix Ventures, SV Life Sciences and Select Capital Ventures.
Representatives of Frazier, Cressey and Goldman declined comment, while Leonard Green, U.S. Renal, SV Health and NEA did not immediately return requests for comment.
Action Item: Contact Leonard Green at +1 310-954-0444.