Jan 3, 2022 - Health

Scoop: Novo buying Medical Knowledge Group at $1.15 billion valuation

Illustration of a silhouette of a physician with a pill-shaped brain.

Illustration: Gabriella Turrisi/Axios

Novo Holdings has won the auction for Medical Knowledge Group, which provides marketing services to drug companies, at a $1.15 billion enterprise value, four sources tell Axios.

Why it matters: Drug therapies being developed today are increasingly aimed at smaller patient populations, which can complicate commercialization. If you have a true data analytics business like MKG, or a tech-enabled strategy, investors have no problem paying a premium.

  • All of what MKG does is aimed at health care professionals, whereas many other medical communications platforms are consumer-centric.

Inside the deal: Novo's bid values MKG at approximately 20.5x 2021 EBITDA, which puts it within the 17x to 22x EBITDA range that similar assets have commanded in the last year.

  • MKG's current owner is private equity firm Court Square, which was advised by Harris Williams, and the sale process is said to have been competitive.
  • Court Square reportedly bought MKG from WindRose Health Investors only two years ago at an enterprise value of roughly $330 million, or 13x EBITDA.
  • Novo, investing through its U.S. Principal Investments arm, is now the fifth PE fund to back seasoned CEO Leon Bahar. This separates it from many recent medical communications deals that have involved founders being backed by first-time institutional capital.

Novo and Court Square declined to comment.

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