New Mountain Capital has agreed to sell Medical Specialties Distributors to McKesson Corporation at an enterprise valuation of $800 million.
Medical Specialty Distributors (MSD) is a provider of medical supplies, biomedical services, and technology services to the post-acute/non-hospital patient supply chain. MSD serves over 9,700 healthcare providers at over 11,000 sites nationwide, as well as servicing patients in the home through its Patient Home Direct program. The company was founded in 1982 and is headquartered south of Boston in Stoughton, MA (www.msdonline.com).
New Mountain acquired MSD in December 2013 and during the term of its ownership the company’s enterprise value approximately tripled driven by growth in revenue, earnings, and new products, as well as add-on acquisitions. MSD strengthen its leadership in the home infusion market and also expanded its presence in the post-acute sector, particularly within the long-term care, home health, and oncology segments. The company added or created over 400 jobs during New Mountain’s ownership, net of any job losses, and total employment more than doubled.
“We are proud of our successful partnership with MSD,” said Bert Notini, a Managing Director at New Mountain. “Over the last four years we have partnered with management to invest in new technology, execute strategic acquisitions, and implement strategic initiatives to accelerate MSD’s growth, and look forward to seeing MSD continue to thrive moving forward. This new partnership will create significant value for all MSD stakeholders and we are confident that MSD is well positioned to continue on its impressive trajectory with McKesson.”
“New Mountain has been an invaluable partner to us,” said Tom Burke, CEO of MSD. “We have enjoyed working with the New Mountain team, which has provided support, strategic guidance, and capital to help us rapidly expand across the post-acute care market. We’re very proud of what we were able to accomplish together, and look forward to building upon this momentum with McKesson.”
McKesson Corporation (NYSE: MCK) is healthcare company that distributes pharmaceuticals and provides health information technology, medical supplies, and care management tools. The company is headquartered in San Francisco and had revenues of $198 billion in 2017 (www.mckesson.com).
New Mountain is an industry generalist and seeks to acquire just three or four companies each year, typically in the $100 million to $1 billion enterprise value range, and generally invests $100 million to $500 million per transaction. In September 2017, New Mountain Capital held an oversubscribed final close of its fifth private equity fund, New Mountain Partners V LP. The new fund closed at its hard cap with just over $6.1 billion of capital commitments. The firm was founded in 1999 and is headquartered in New York (www.newmountaincapital.com).
Morgan Stanley & Co. is the financial advisor to Medical Specialties Distributors.
The transaction is expected to close by the end of September 2018.
© 2018 Private Equity Professional | April 27, 2018
