Webster gears up for sale of CenExel

The clinical site organization's concentrated model offering centralized capabilities is considered compelling to pharma companies and CROs looking to depend on fewer outsourced providers.

Webster Equity Partners is readying a sale of CenExel Clinical Research, the US’s largest operator of independent clinical research sites, according to sources familiar with the matter.

Fireside chats are currently taking place, with a sponsor-focused sale process poised to launch soon. The company has received multiple inquiries already, some of the sources said. 

Rothschild, out of London, and Edgemont Partners, a healthcare-focused bank based in New York, have been hired for sell-side financial advice, the sources said.

CenExel, based in Salt Lake City, is a clinical research site manager that conducts studies on behalf of pharmaceutical companies across areas including post-op pain (analgesia), neurology, psychiatry, vaccines and sleep. The company’s six facilities – called CenExel Centers of Excellence – provide study services spanning from patient recruitment and screening/enrollment to medical procedures and monitoring.

CenExel is projecting EBITDA of $70 million-plus in 2021, some of the sources said, indicating it remains too early to say where value is likely to pan out.

Formed in 2018, CenExel remains concentrated from a site perspective, but its facilities are of real scale. That is attractive to customers, one source said, as it offers more centralized capabilities and requires clinical trial sponsors to depend on fewer vendors.

“It’s a real flight to quality in the site sector,” this source said. Pre-covid, CROs and pharma companies would look to dozens of sites to execute their studies. However, the source said that trying to manage large collections of sites has become harder during the pandemic: “People recognize that it’s so much more efficient to go to those with scale.”

CenExel states that its mission is to “reduce costs and development times for innovative therapies which may advance patient care.”

Webster, a healthcare-focused private equity firm based in Waltham, Massachusetts, invested in CenExel in 2018 through Fund IV, an $875 million vehicle raised that year. 

The process comes on the heels of GHO Capital’s April acquisition of NaviMed Capital’s Velocity Clinical Research, which valued the clinical site company at more than $500 million, PE Hub wrote. 

Velocity, which under NaviMed had grown to 14 research sites, witnessed booming business as a result of coronavirus-related vaccine and treatment studies. CEO Paul Evans told PE Hub earlier this year that the pandemic had accelerated its business plan by one to two years.

However, covid also led to greater complexity in valuing the company. Although Velocity marketed $50 million in projected 2021 EBITDA, bidders in the process underwrote a more normalized figure of about $30 million to $35 million, sources said. Based on the latter range, that implies a mid-to-upper teens EBITDA multiple. 

CenExel, from that perspective, is a cleaner story as the company has experienced no real covid bump, sources told PE Hub

Some of our sources said that, with this being the case, private equity groups that looked at Velocity and liked the platform and concept, but struggled with the impact from the pandemic, could look at CenExel. 

Other private equity-based clinical research site companies include Linden Capital Partners’ Evolution Research Group and KKR‘s Headlands Research.

Broadly speaking, activity around all things pharma services remains robust, with assets commanding premium prices as investors continue to flock to opportunities across the spectrum. 

Thoma Bravo is buying Riverside Co’s Greenphire in a deal valuing the company at approximately $1.1 billion, sources familiar with the deal terms told PE Hub last week. Greenphire provides payment workflow automation solutions within the clinical trial process – both for research sites and patients

In terms of multi-billion-dollar deals in the making, Pamplona Capital Management is looking to exit its investment in Parexel, a large contract research organization that is helping to expedite the development of new drugs. Evercore is advising on the process, sources told PE Hub in April.

Webster Equity and Edgemont declined to comment. CenExel and Rothschild did not return PE Hub’s requests for comment.