DW Healthcare Hits Big Multiple on Sale of Med-Pharmex

DW Healthcare Hits Big Multiple on Sale of Med-Pharmex

The sale to publicly traded Dechra values Med-Pharmex at 17x its 2021 EBITDA of $15.3 million

Med-Pharmex is a manufacturer of animal health drugs for companion animals, such as dogs, cats, and horses, as well as cattle, swine and poultry

SOURCE: Getty Images

DW Healthcare Partners has closed the sale of Med-Pharmex, a veterinary pharmaceutical manufacturer, to publicly traded Dechra Pharmaceuticals at an enterprise valuation of $260 million.

Med-Pharmex is a fully integrated veterinary pharmaceutical manufacturer focused on developing, manufacturing, and commercializing animal health drugs for companion animals, such as dogs, cats, and horses, and cattle, swine and poultry.

[Source: Med-Pharmex]
The majority of Med-Pharmex’s revenue is derived from white label products which are sold through distributors and approximately 75% of the company’s revenues are in the companion animal (CAP) and equine sectors, with the balance in food-producing animal products (FAP). The Ponoma, California-headquartered company, led by CEO Paul Hays, has approximately 130 employees and was founded in 1983.

“Med-Pharmex has a rich history, built over nearly 40 years, of efficiently developing, manufacturing, and distributing animal health products that are valued by our customers. Our recent investments in people, processes, technologies and facilities have strengthened our quality foundation enabling us to now support significant growth”, said Mr. Hays. “I am so proud of our people and what they have accomplished in the last few years. Dechra’s investment, capabilities, and vision for the business will build on this foundation and leverage the ability of our people and site to provide even more value to customers and stakeholders alike.”

DW Healthcare acquired Med-Pharmex in May 2013. “The speed at which the company improved operationally over the last couple of years was the highlight of our investment,” said Eric Moore, a principal at DWHP. “What the Med-Pharmex team has accomplished is nothing short of remarkable. We would like to thank them for all of their hard work and dedication.”

“It has been a pleasure to work with Med-Pharmex over the years,” said Andrew Carragher, a co-founder and managing partner at DWHP. “Med-Pharmex represents DWHP’s first investment in the animal health space, and since then, we have added three additional animal health investments to our portfolio. Dechra is the perfect buyer for Med-Pharmex, and we look forward to watching the company continue to grow and scale under Dechra’s ownership.”

For the full year 2021, Med-Pharmex had revenues of $43 million and an adjusted EBITDA of $15.3 million. Based on the $260 million enterprise valuation, this equates to a 17x valuation multiple.

Dechra Pharmaceuticals (LSE: DPH) is a developer and marketer of veterinary products mainly for dogs, cats, equine and food-producing animals. The company had revenues of just over £600 million in 2021 and is headquartered near Liverpool in Northwich, United Kingdom.

“I am delighted that we have completed the acquisition of Med-Pharmex, a company that I have been in dialogue with for a number of years,” said CEO Ian Page. “The US market is highly consolidated, and this is a unique opportunity to add several new products to our portfolio, enter the US FAP market and improve the manufacturing footprint for our North American business.”

The buy of Med-Pharmex follows Dechra’s $210 million July acquisition of Piedmont Animal Health, a Greensboro, North Carolina-based developer and manufacturer of companion animal pharmaceuticals.

DW Healthcare Partners invests from $20 million to $60 million in North America-based healthcare companies that have at least $5 million of EBITDA. The firm has a team of 30 professionals and offices in Toronto, Ontario and Park City, Utah.

Stifel was the financial advisor to Med-Pharmex on its sale to Dechra.

© 2022 Private Equity Professional | September 1, 2022

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