Waud Capital Partners has partnered with longtime industry executive John Damgaard to kick off an initiative to acquire and build out a healthcare IT platform.
Waud, a growth-oriented middle market firm, committed $150 million of equity capital to the partnership.
The initiative will target segments of healthcare IT that have yet to be consolidated, said Damgaard, who most recently served as CEO of MatrixCare, an electronic health record company tailored to the long-term, post-acute care industry.
Outside of the electronic health records segment — an obvious choice for potential investment — Damgaard said he thinks about healthcare IT opportunities in two dimensions: “There are a series of specialty practice areas and a series of workflows core to the business,” he said.
The initial asset acquired for the platform could generate anywhere from $15 million to $65 million in revenue, Damgaard said.
“That’s what I love to do: take small, good companies and make big, strong companies,” Damgaard, who has more than 25 years of management experience, told PE Hub.
Indeed. During his about eight years of leadership at MatrixCare, Damgaard helped grow MatrixCare to $120 million of revenue through both organic efforts and M&A. The executive led the company under the backing of OMERS Private Equity through its $750 million sale to ResMed in November 2018.
Damgaard previously was COO of Mediware Information Systems, supporting the HCIT company through its take private by Thoma Bravo in 2012.
Consistent with his prior experience, the Waud platform will seek to grow through professionalization, fueled by both organic efforts and add-on M&A, Damgaard said.
“Healthcare is great because it’s big and it still needs a lot of help,” the executive said. “To really do healthcare right, you really need a certain scale. Hundreds [of companies] in healthcare IT have been created but few have got that scale or industrial strength.”
Partner Matt Clary, who is heading the initiative for the Chicago private equity firm, said Waud has the ability to look at a wide range of deals, including carve-outs, as it seeks an initial platform investment.
“Because we are already investing in Integrated, frankly, we have a lot of deal flow we’re already evaluating,” Clary added.
Waud also owns SphereCommerce, a payments technology company serving the healthcare industry, and Health & Safety Institute, which delivers content, tools and expertise to help businesses, emergency services and individuals improve safety, health and compliance.
As Clary put it, putting capital to work in HCIT offers a means to leverage both Waud’s healthcare and software expertise: “I really feel like this is the Goldilocks of the world for us.”
On the tech front, Waud in September and November partnered with executives to launch and build out new platforms in the HR software and vertical software markets, respectively.
From a healthcare perspective, Waud in October 2018 got into the veterinary business, launching Heart + Paw alongside a longtime industry executive. In November 2018, it formed the GI Alliance through its acquisition of Texas Digestive Disease Consultants.
Action Item: Get in touch with Waud’s Matt Clary at firstname.lastname@example.org