Pharos Capital Group has acquired a controlling equity interest in TechLab, a maker of non-invasive diagnostic tests for gastrointestinal disease. This investment marks the seventh portfolio investment from Pharos Fund III, all in the healthcare sector.
Pharos is acquiring its ownership position from Alere (NYSE:ALR) as well as from TechLab’s founders Dr. Tracy Wilkins and Dr. David Lyerly, who will remain with TechLab and maintain a minority investment. Dr. Wilkins will become a board member and advisor to the company and Dr. Lyerly will join the board and continue in his role as Chief Scientific Officer. Alere will continue to be the lead distributor of TechLab products following the transaction.
To purse this investment, Pharos is partnering with Daniel Delaney, a medical technology and diagnostics executive, who will become the new chief executive officer of TechLab. Mr. Delaney has been a healthcare operating executive of Pharos since December 2015. Earlier he was president of Viracor-IBT Laboratories from February 2015 to November 2015 and from 2012 to 2015 he was the chief operating officer of AccuVein. From 2004 to 2011 he held a number of positions with Alere including Senior Vice President from 2010 to 2011 and President of Alere North America from 2008 to 2010.
TechLab’s QUIK CHEK product is a patented non-invasive diagnostic test that provides results in less than 30 minutes. The company is a market leader in testing for the C. difficile bacteria, a leading cause of hospital-acquired infection globally, with the Centers for Disease Control estimating 453,000 US cases annually. TechLab products also test for other gastrointestinal conditions, including Inflammatory Bowel Disease, Irritable Bowel Syndrome, and E. coli. The company was founded in 1989 and is headquartered near Roanoke in Blacksburg, VA (www.techlab.com).
“Pharos is looking to invest in providers of key niche healthcare solutions and we believe TechLab is poised for rapid growth,” said Pharos Managing Partner Bob Crants. “Under the Affordable Care Act, hospitals are increasingly penalized for hospital-acquired illnesses and are extremely motivated to help patients avoid them. Effective diagnostic solutions like those developed by TechLab improve clinical decision making and reduce time to treatment, thus providing cost savings for hospitals and improving outcomes for patients.”
Pharos Capital Group invests from $25 million to $50 million in companies seeking later stage funding for internal growth, acquisitions, management buyouts or recapitalizations. The firm invests across a number of sectors but has a particular interest in healthcare and business services. Pharos has offices in Dallas and Nashville (www.pharosfunds.com).
Alere (NYSE:ALR), the seller of TechLab, is a diagnostic device and service provider based in Waltham, MA. The company has annual revenues of approximately $3 billion (www.alere.com).
Duff & Phelps (www.duffandphelps.com) provided financial due diligence services to Pharos, and Gibson Dunn (www.gibsondunn.com) was the firm’s legal counsel.
© 2016 Private Equity Professional • 9-21-16
