Scoop: Wasatch, men's sexual health provider, seeks buyer

Wasatch Medical Clinic, whose providers use acoustic wave therapy to treat erectile dysfunction, is exploring a sale, three sources tell Axios.

Why it matters: As both established women's health providers and femtech startups garner tremendous investor interest, more providers designed for men's sexual and reproductive health are gaining traction.

What's happening: A Macquarie Capital-run sale process recently kicked off for the founder-run company, sources say. First-round bids are due next week and a sponsor outcome is deemed most likely.

• Wasatch is marketing adjusted EBITDA of $40 million on about $120 million of revenue for 2021, accounting for fully ramped-up clinics that were recently opened, sources say. Non-adjusted EBITDA translates to approximately $15 million.
• Projected EBITDA for 2022 is closer to $60 million on about $175 million of revenue, they add.

How it works: Wasatch clinics treat patients with an acoustic wave or low-intensity shockwave therapy for ED with the goal of stimulating the growth of new blood vessels in the penis.

• Several conditions including diabetes, obesity, high cholesterol or high blood pressure are considered risk factors for ED.

Of note: The Herber, Utah-based company operates a direct-to-consumer model with services reimbursed on a cash-pay basis.

• Growth and customer flow have been fueled by its strong marketing engine, sources say, even as digital advertising has not yet been tapped.

Between the lines: Wave therapy sessions are typically held weekly for a period of six or so weeks, creating a captive population that Wasatch could be positioned to leverage, one source says.

• In other words, there's a perceived opportunity to cross-sell other men's health products to this patient group.

Yes, but: Acoustic wave therapy to treat ED is not FDA-approved, and while not a new innovation, research is ongoing to determine long-term benefits.

• Whoever ends up investing in Wasatch probably envisions a bigger opportunity to create a more diversified, comprehensive men's health company, one source says.

State of play: Comps are few and far between, but other clinic groups dedicated to ED treatment include Seacoast Capital-backed Peak Performance for Men, which applies focused linear compression therapy.

As for investment in the broader men's health category:

• Posterity Health, a Parker, Colorado-based digital health startup dedicated to male fertility care, collected $6 million in seed funding earlier this month, led by Distributed Ventures.
• Hims & Hers, a digital health startup offering men's wellness and telehealth via Hims, went public through a $1.6 billion SPAC deal last year.
• Digital health startup Ro, whose Roman unit operates a digital health clinic for men, soared to a $7 billion valuation in February.
• Vault, which offers in-home treatment for men's health issues including hormonal imbalance and ED, snagged $30 million in Series A funding in 2020, led by Tiger Global Management.

The bottom line: As men's health remains largely uncharted territory for private equity, Wasatch could enter as a good test case for the sector.

Wasatch could not immediately be reached.