Axios Pro: Health Tech Deals

August 08, 2022

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Happy Monday, and welcome to another week of health care dealmaking.

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1 big thing: Kohlberg's Trinity gets another backer

Illustration: Gabriella Turrisi/Axios

Bain & Company is taking a minority stake in Kohlberg-backed life sciences commercialization firm Trinity Life Sciences as part of a new strategic partnership, the firm tells Sarah exclusively.

Why it matters: The investment underscores demand in life sciences for outside resources to support innovation and strategic playbooks, while navigating a complex regulatory and deal environment.

What they're saying: "It is really one of the most robust markets for advisory services," Tim van Biesen, head of Bain & Co.'s global health care practice, tells Sarah. "We can't put a Bain team in 60 countries, but we can but a Trinity-like resource [in each of those]."

Yes, and: The investment speaks to the urgency to find new ways to keep up with advancements in science from a commercialization perspective, adds Leslie Orne, Trinity president and chief commercial officer.

  • "We on the commercialization side are trying to figure out how to get these great innovations in the hands of more people," Orne says. How drugs are priced, sold and marketed — "that's still a little bit antiquated."

Zoom in: This is both about meeting demand and gaining a competitive edge with a more robust set of offerings.

  • While Bain & Co. is focused on "large change transformation" for life sciences clients — i.e. M&A and commercial or medical affairs transformation — Trinity will bring complementary (and largely doctorate-centric) technical expertise in biopharma and medtech, such as benchmarking intelligence, van Biesen says.
  • Trinity, with a hybrid model including project-based, recurring revenue and membership-based offerings, specializes in technology-enabled strategy, insights and analytics to support commercialization.

Between the lines: With debt financing volatility and a sustained disconnect between seller and acquirer valuation expectations, van Biesen says many life sciences clients are hyper-focused on margin management and performance management.

  • Clients are "making sure they don't get in over their skis," he says.
  • But M&A screening activity and investment in growth remain high as folks wait for debt markets to normalize.
  • "Their hope is it begins to create opportunity in areas that were getting a little pricy... There's no problem with balance sheets or a cash shortage on the buyer side."

Catch up fast: Kohlberg & Co. in November won a competitive auction for Trinity, providing an exit for Parthenon Capital Partners in a deal commanding a total enterprise value of $1.4 billion, sources told Sarah at the time. Jefferies and SVB Securities advised the sellers on the deal.

  • Around that time, Bain & Co. and Kohlberg started having conversations around a transaction.
  • In July, Trinity acquired Illinois-headquartered D Cube Analytics, inheriting new data science and digital transformation capabilities. Trinity continues to look for tuck-in acquisition opportunities, Orne notes.
  • Trinity has grown to 12 global offices and 1,200 employees, up from about a 250-person workforce when Parthenon first invested in March 2018.

State of play: Trinity is one of many commercialization-focused or medical communications life sciences advisory firms that raked in a PE investment at valuations into the 17x to 23x range, per Axios' previous reporting. That includes:

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