A pair of private equity firms has bought Crescent Healthcare Inc., an Anaheim-based specialty drug provider.
Buyers Frontenac Co. of Chicago and Med Equity Capital of Wellesley, Mass., didn’t disclose the acquisition price.
Frontenac Managing Director Jeremy Silverman said it typically invests $25 million to $50 million. The deal, which was led by Frontenac, closed Oct. 12.
Frontenac and Med Equity bought a majority stake in Crescent from the family of Sohail Masood, a Pakistani immigrant who founded the privately held company with his wife, Mona, in 1992.
The Masoods kept a minority stake in Crescent.
Bob Funari, former chief executive of Syncor International Corp., a Woodland Hills-based nuclear pharmacy company that’s now part of Cardinal Health Inc., replaced Masood as Crescent’s chief executive.
Masood, who has a doctorate in pharmacy from the University of Southern California, will remain at Crescent as chief clinical officer.
Crescent has annual revenue of $70 million.
Crescent provides complex drugs to patients in health clinics and private homes. Its specialty is intravenous immunoglobin, a therapy for autoimmune diseases such as lupus, myasthenia gravis and muscular sclerosis.
The drug is made from plasma and helps a patient’s body produce gamma globulin that it can’t on its own.
“This is an excellent, clinically driven company,” Silverman said.
Frontenac expects the market for intravenous immunoglobin therapy to grow, Silverman said. Researchers have found that many diseases have an autoimmune component to them, he said.
The private equity firm also expects Crescent to boost the number of complex drug therapies it provides to patients.
Crescent has seven branches in California and Florida and employs some 200 people. The company said it has contracts with some 300 managed care organizations, hospitals, medical groups and individual doctors. Crescent bought the California infusion operation from Lake Forest-based Apria Healthcare Group Inc. in 1998.
Competitors include a trio of public companies: Memphis, Tenn.-based Accredo Health Inc., Lake Mary, Fla.-based Priority Healthcare Corp. and Hauppauge, N.Y.-based Curative Health Services Inc.
The growing market for specialty drug providers attracted Frontenac to Crescent, Silverman said. He estimated the market at about $20 billion.
“You need capable, clinically driven intermediaries who are able to deliver these pharmaceutical services in non-hospital settings,” Silverman said.
Silverman and Paul Carbery, another Frontenac managing director, joined Crescent’s board as part of the deal. The Crescent deal is Frontenac’s second healthcare investment this year.
Earlier this year, Frontenac bought Trilogy Health Services Inc., a Louisville, Ky.-based operator of 20 senior healthcare centers located in the Midwest.
Frontenac doesn’t plan to hold its stake in Crescent for more than five to seven years, according to Silverman.
“We are financial investors. Our goal is ultimately to get liquid,” he said.
Possible exits for Frontenac, Silverman said, include a public offering. More likely the company will be sold to a “strategic acquirer,” he said.
Frontenac raises money from pension funds and college endowments. It has about $600 million to invest in its fund.
