Webster forms gastroenterology platform via equity-only deal for Gastro One 

The Waltham, Massachusetts, PE shop prevailed over PE-backed gastroenterology platforms and set aside up to $80m in total equity for the platform.

In the midst of the coronavirus-inspired economic slowdown, Webster Equity Partners has launched a new gastroenterology platform, One GI, managing to clinch an all-equity deal for Tennessee’s Gastro One, PE Hub has learned. 

The Waltham, Massachusetts, private equity firm agreed to make an equity investment of approximately $22 million in Gastro One, reserving up to $80 million in total equity for the new platform, a source familiar with the transaction told PE Hub

The transaction was structured without bank debt, having been recrafted by sell-side advisor Nexus Health Capital after covid-19 related market turmoil surfaced in mid-March, the source said. Purchase price was not adjusted in the wake of the downturn, the person noted. 

Other finalists in the running for Gastro One included existing private equity-backed GI platforms, Audax Private Equity’s Gastro Health and Waud Capital Partners’ GI Alliance, sources said.

Headquartered in Memphis, Gastro One is the largest GI practice in Tennessee, encompassing 30 physicians across 10 locations. Newly formed One GI will partner with Gastro One and additional GI practices, providing non-clinical management services and capital to support growth.

Michael Dragutsky and David Harano will lead One GI as chairman and president, respectively. In addition, Joe Olivo has joined as a member of the board of directors. 

For Webster, the investment follows its formation of the largest retina-focused physician practice management company in the country, Retina Consultants of America. The firm invested $100 million in the platform earlier this year, in addition to a $250 million LP co-investment, PE Hub reported in early March

The firm is a prolific investor in healthcare services, with existing investments including Bristol Hospice, Discovery Behavioral Health, InBloom Autism Services and BayMark Health Services, to name just a few. 

Webster earlier this year pulled BayMark from the auction block, after bids for the opioid-treatment giant failed to meet $1 billion-plus price expectations, PE Hub reported. 

Audax and Waud did not immediately return requests for comment.

Action Item: Check out Webster’s latest Form ADV https://adviserinfo.sec.gov/firm/summary/156729