BrightSpring’s marriage with KKR’s PharMerica said to command $1.3-bln-plus valuation

  • Onex, whose BrightSpring investment dates to 2004, to generate blended gross MOIC of 5.7x
  • Sell-side advisers: Goldman, Guggenheim
  • Competitor Civitas remains up for sale; shares drop ~2.4% Tuesday amid PharMerica announcement

Onex Partners concluded its sales process for BrightSpring Health Services, agreeing to combine with KKR-backed pharmacy-services provider PharMerica.

Terms weren’t disclosed, but the deal commanded a 9x to 9.5x multiple of Ebitda, a source familiar with the matter said.

The Louisville, Kentucky, company, formerly known as ResCare, is projecting 2018 Ebitda of $145 million to $150 million, the source said. This implies a valuation in the ballpark of $1.3 billion to $1.43 billion.

The announcement follows a September Buyouts report that Goldman Sachs and Guggenheim Partners were advising on a sales process for BrightSpring, which offers home- and community-based care services to the nation’s most in-need populations.

Upon closing, the combined companies will be owned by KKR alongside an affiliate of Walgreens Boots Alliance as a minority investor, BrightSpring said in a Dec. 11 news release. A new KKR-Walgreens venture took PharMerica private in a $1.4 billion deal that closed in December 2017.

While representatives of Onex and KKR declined comment, Onex said in a Dec. 10 announcement that the BrightSpring sale would produce a blended gross multiple of invested capital of 5.7x.

Onex’s initial minority investment in BrightSpring — through which it invested $110 million for an about 30 percent stake — was done through Onex Partners I in June 2004.

The Canadian PE firm invested additional capital through Onex Partners III in November 2010 in a deal that valued BrightSpring at $390 million.

Led by President and CEO Jon Rousseau, BrightSpring provides diversified services to all age groups, including daily living support and in-home care, vocational training, job placement, pharmacy, rehab and behavioral health. Ancillary services include telecare and pharmacy services.

BrightSpring specializes in services tailored to what it describes as the most complex and in-need populations, which includes the disabled, neurorehabilitation patients, home-health patients, the elderly and at-risk youth.

The deal gives PharMerica, which offers pharmacy services to markets including assisted-living and long-term-care facilities, hospitals and nursing homes, the opportunity to cross-sell into acquired business clients, a source said.

BrightSpring’s Rousseau will lead the combined company, while PharMerica chief Greg Weishar will serve as a strategic adviser and remain on the board.

With the conclusion of the BrightSpring process, eyes are likely to shift to competitor Civitas, which, as initially reported by Reuters, also is exploring a sale. A person familiar with the matter said earlier this week that final bids are due around the end of the week.

Civitas shares on Dec. 11 closed off 2.25 percent at $13.02.

Formation Capital-backed RHA Health Services, a smaller player offering similar services to ResCare and Civitas, is also considering a sale, Buyouts reported.

Representatives of PharMerica and BrightSpring didn’t immediately return requests for comment.

Action Item: Contact BrightSpring at +1 502-394-2100