Scoop: Spectrum Science evaluates options
Spectrum Science, a founder-led life sciences communications business, is exploring strategic alternatives in response to inbound interest, sources tell Axios.
Why it matters: Many scale assets in this space have come to market and transacted over the last 18 months. Spectrum, while smaller, is fast-growing — presenting an opportunity for PE groups that have gotten educated on med comms (and chased other assets) but have yet to score an entry point.
Driving the news: The Washington, D.C.-headquartered company has engaged Houlihan Lokey for financial advice to weigh options, sources say.
- Spectrum — which recently inked three bolt-ons supported by a senior credit facility from Monroe Capital — is producing in the mid-$20 million range of EBITDA, they add.
What they're saying: "We have enough in that debt facility to fund several more deals as they make sense for the business," CEO Jonathan Wilson wrote in an email to Axios.
- He adds: "In addition, over the past three years we have a number of different financial institutions express interest in Spectrum. We are always looking at options, but have no intentions of selling the agency. However, we will continue to evaluate our capital structure on an ongoing basis."
Of note: The med comms agency world is known for attracting minority strategic growth investments big funds like...
- TPG, which invested into BGB Group in October 2021 at a $760 million value.
- Ares Management's October 2021 strategic investment into The Lockwood Group, which valued it in the mid-$300-million range, per Sarah's previous report.
How it works: Spectrum has diversified from a traditional pharmaceutical media agency to what it describes as a one-stop shop for paid media, advertising, marketing, clinical trial recruitment, and med comms.
- Led by Wilson, Spectrum employs more than 250 team members with four U.S.-based offices and a presence in London.
- In recent months, Spectrum has acquired SONIC Health, The Seismic Collaborative, and the U.K.'s Aurora Healthcare Communications.
Be smart: A number of drivers are drawing attention to the market — from both private equity and strategics like AmerisourceBergen that want to bring more value-add offerings to their pharma clients. Tailwinds include:
- The increasing volume and complexity of therapeutics.
- Increasingly targeted drug marketing spend as complex therapies focus on niche populations.
- Demand for digitization strategics that support engagement with both HCPs and consumers.
State of play: Despite uneven market conditions, the outsourced pharma commercialization and communications industry has seen deals done at healthy valuations this summer.
- Just this week, AmerisourceBergen bought PharmaLex for $1.29 billion in cash, after private equity dropped from the process.
- Astorg in June bought Open Health from Amulet Capital in a nearly $1 billion deal
- WindRose Health Investors in July recapitalized RevHealth.
What we're watching: The return to market for those assets like Real Chemistry (formerly W2O), whose backer New Mountain Capital surpassed a three-year hold this summer.
Houlihan declined to comment.