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Scoop: H.I.G. buys Celerion from Court Square

Sarah Pringle
Oct 12, 2022
Illustration of a microscope with shapes and dollar elements.

Illustration: Gabriella Turrisi/Axios

H.I.G. Capital has agreed to acquire Celerion, an early-stage clinical research organization, from Court Square Capital, multiple sources tell Sarah.

Why it matters: Besides Emmes, Open Health and PharmaLex, few scaled deals in the pharma services universe have gotten announced since June.

  • On one hand, that makes Celerion a success in today's challenging environment. On the other, this wasn't a market-clearing multiple for an asset in this broader category.

By the numbers: Three sources peg the deal's valuation in the mid- to the upper-$600-million range, suggesting a low double-digit multiple of 2022 EBITDA.

  • Per Axios' June report, Celerion is projecting pro forma adjusted EBITDA for 2022 in the low $50 million range, up from just north of $40 million of pro forma adjusted EBITDA last year.
  • Revenue is expected to surpass $200 million this year and is growing at a 10% CAGR, sources said previously.

Meanwhile, Emmes and Open Health both went for 20x-plus EBITDA, whereas PharmaLex commanded 18x-20x, sources said previously.

Zoom in: Lincoln, Nebraska-based Celerion is considered a leading provider of Phase 1 studies, offering first-in-human studies — where treatment is tested in humans for the first time — through proof-of-concept studies, and beyond.

  • It also offers bioanalytical services, regulatory affairs, as well as data management and biometrics.
  • It operates three clinical research facilities and two bioanalytical labs in the U.S. and Europe, offering more than 600 beds and employing more than 1,000.

Catch up quick: Court Square kicked off a Lazard-run sale process this summer, Axios wrote previously.

  • The process included late-stage discussions with a strategic buyer, whose identity could not be learned, two sources say.
  • Court Square bought Celerion in late 2017, providing an exit for WindRose Health Investors (formerly MTS Health Investors).

Yes, and: Celerion hasn't historically been that acquisitive, but there's a lot it could do on the M&A front — both on the Phase 1 side, lab side and around bioanalytics.

What they're saying: Early phase CRO services may have more exposure to sluggish biotech funding levels — although, Phase 1 studies aren't lengthy, big-ticket items, one source says.

  • First-in-human studies tend to have a more difficult time with patient recruitment, another source adds.

Of note: Celerion marks H.I.G.'s second pharma services bet in a matter of weeks, having recapitalized Navitas Life Sciences in September.

  • Navitas, of Princeton, N.J., provides outsourced data science, regulatory and safety services, and other full-service CRO capabilities to large and midsized pharma and government clients.

👀 What we're watching: As H.I.G. buys one early-stage pharma services company, we're eager to see who scoops up its pre-clinical research development portfolio company Taconic Biosciences, whose Baird-run process is in its late stages.

One fun thing: Celerion says its name comes from the Latin celeritas — meaning swiftness and speed — which it says it aims to apply to drug research.

Court Square declined to comment, while H.I.G., Celerion and Lazard did not return requests for comment.

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