Founded in 1997 and based in Pacheco, CA, Biocare Medical (“Biocare”) is an oncology-focused developer of immunohistochemistry (“IHC”) and molecular reagents, as well as the associated instrumentation.  With a product portfolio of patented and licensed products, Biocare offers a comprehensive suite of reagents, equipment, and lab services to clinical laboratories, research organizations, and pharmaceutical manufacturers.  Serving nearly 2,000 customers worldwide with a catalogue of over 2,000 unique product SKUs, customers rely on Biocare’s product quality and consistency for their research and clinical needs.

Top Down Investment Thesis

Excellere’s investment in Biocare is a result of the firm’s disciplined top down investment strategy, driven by several factors including i) a compelling value proposition to medical and research professionals who can better identify cancer with enhanced specificity, ii) attractive industry growth driven by increasing cancer incidence rates and expanding testing and research needs, iii) IHC’s position as the most widely used platform in histopathology and standard of care for cancer diagnoses, and iv) the buy-and-build opportunity within a highly fragmented industry sector that Excellere pursued for approximately five years and established a list of over 100 acquisition candidates and industry relationships.

The reagents industry is large, global and fast growing with several drivers providing attractive tailwinds.  Biocare’s primary end-market is cancer research and detection, one of the most attractive sub-segments within the broader life sciences tools sector.  According to LEK, worldwide cancer incidence is expected to grow 2.4% per annum to nearly 17.1 million new cancer diagnoses in 2020.  Increases in the total number of new cancer diagnoses are driving an expanding number of U.S. biopsy procedures and ultimately growing consumption of reagents.  The worldwide IHC and molecular diagnostics market is expected to grow to $2.4 billion by 2021, reflective of approximately 5% annual growth driven by cancer incidence rate growth, development of new biomarkers, and pricing increase within the currently primary technology for the cancer diagnostic value chain.

Buy and Build Strategy

Consumable life science and diagnostic tools remains a highly fragmented industry with a multitude of organic and acquisition growth opportunities.  Since inception, Biocare has remained focused on providing world class immunohistochemistry and molecular products solely focused on the attractive, growing oncology market with an emphasis on cancer research, diagnostics, and monitoring.  Biocare’s significant historical investments in its research and development capabilities, manufacturing footprint, strong executive team and a global sales force provides the scale required to serve a substantial worldwide customer base.

To the extent you are interested in learning more about Biocare, please contact Ryan Glaws at , Justin Unertl at , or Nick Coleman at to discuss the life science tools sector further.

Founded in 1980 and based in Hamilton, NJ, Medlogix is a premier provider of medical claims management solutions to leading auto insurance carriers, administrators for workers’ compensation and group health insurers. Leveraging its proprietary technology platform and deep clinical expertise, Medlogix offers a full suite of medical claims management services including pre-certification, independent medical exams, medical director review, medical bill and code review, and bill negotiation support as well as operates a proprietary PPO network in the northeastern United States.

Top Down Investment Thesis

Excellere’s investment in Medlogix is a result of the firm’s disciplined top down investment strategy, driven by several factors including i) rising medical costs driving an increase in auto and workers’ compensation claim severity, ii) persistence of improper billing and fraudulent claims within the auto and workers’ compensation industries, iii) carrier’s enhanced focus on effective loss prevention and cost containment solutions, and iv) growing utilization of outsourced service providers that improve efficiency and offer a quantifiable ROI.

According to the Insurance Research Council and National Insurance Crime Bureau, annual costs related to improper billing or fraudulent claims in the auto insurance and workers’ compensation industries are estimated to total up to $7.7 and $7.2 billion, respectively.  Despite a decline in claim frequency, since 2005 rising medical costs have driven an increase in claim severity (per claim cost) of 35.5% for bodily injury liability claims and 40.7% for workers’ compensation claims. Persistent claim fraud, rising medical costs and growth in claim severity are propelling the need for greater, more robust claims management and cost control measures among insurers and corporations; outsourced providers of medical claims management services offer an essential, highly effective loss containment solution. Medlogix’s medical claims management solutions and proprietary PPO network help carriers i) identify areas for cost savings tied to improper billing and limit leakage due to payment of fraudulent claims, ii) reduce administrative expenses associated with claims adjudication, and iii) lower medical treatment costs. Combined, the Company’s services deliver a more efficient and disciplined claims process, resulting in greater productivity and reduced severity for its customers.

Buy and Build Strategy

Medical claims management is a highly fragmented industry, which combined with continued trends in the outsourcing of non-core service functions by carriers, creates an attractive sector to employ a buy-and-build strategy. It is estimated that there are currently more than 500 outsourced medical claim service providers in the United States, the vast majority of which are regionally focused and family owned. Medlogix is focused on partnering with organizations known for service quality and excellence in complementary business lines and operating in favorable geographies.

To the extent you are interested in learning more about Medlogix, please contact Matt Hicks at , Ross Gundry at , or Nick Coleman at to discuss the medical claims management services sector further.

Founded in 2003 and headquartered in Powell, Ohio, Two Labs Marketing provides innovative solutions for pharmaceutical manufacturers’ most prevalent and complex commercialization challenges. The Company leverages its experience from more than 125 discrete product launches to design and implement proven commercial strategies that are customized to each product’s therapeutic class, distribution channel and patient access needs. Two Labs’ comprehensive portfolio of commercialization services incorporates best-in-class product launch, compendia strategy, trade management, state licensing, e-prescribing, and lifecycle management services. Through strategic partnerships with Two Labs, pharmaceutical clients are able to provide patients with access to critical therapies while optimizing the commercial potential of their brands.

Top Down Investment Thesis

According to the Centers for Medicare & Medicaid Services, pharmaceutical spending in the U.S. is forecasted to nearly double by 2025 to $615 billion annually. Market growth is being driven by a host of favorable demographic trends and the rapid emergence of specialty pharmaceuticals, including biologics and orphan drugs, some of which present promising new clinical options to today’s most significant therapeutic areas. As these revolutionary therapies continue to evolve, so too does the commercial environment and the ways in which pharmaceutical manufacturers must engage with patients, payers, prescribers and regulators to provide access to these treatments. Achieving a product’s full commercial potential requires pharma manufacturers to effectively communicate a product’s clinical value, resolve patient access and support challenges, select appropriate distribution channels and optimize their performance, and cope with ever-evolving regulations. In doing so, manufacturers require strategic partners with substantial expertise in product commercialization, as well as a detailed understanding of the dynamics specific to the product’s therapeutic area and competitive environment. For more than 13 years, Two Labs has been a trusted partner of pharma and biotech companies to manage the most critical details necessary for timely, successful product launches and optimized performance throughout the product lifecycle.

Buy and Build Strategy

Two Labs’ success has been built over many years based on unique service capabilities, exceptional customer service and deep expertise in product commercialization and support services. As a result, Two Labs benefits from exceptional customer loyalty and longstanding partnerships with its client base. Two Labs is a highly compelling platform for acquisitions due to the breadth and diversity of its customer base, and its proven ability to maintain strong customer relationships through a broad service offering that spans the duration of a product’s lifecycle. The Company is pursuing strategic acquisition opportunities in the pharmaceutical market access services industry, including companies with the following capabilities: (i) managed markets strategy and implementation, (ii) healthcare data aggregation and analytics, (iii) trade management, (iv) patient support services, (v) regulatory pathway and compliance consulting, (vi) government affairs / health economics and outcomes research, or (vii) medical science liaison outsourced agents.

To the extent you are interesting in learning more about Two Labs, please contact Brad Cornell at , Eric Mattson at , Mike Vieth at , or Mike Forsyth at .

LucidHealth is a leading provider of professional radiology services to hospitals, clinics and outpatient imaging centers, completing over 1.7 million interpretations per year.  Powered by the belief that all patients should have access to the highest quality of subspecialized imaging care, regardless of facility size or location, LucidHealth leverages its internally developed, industry-leading workflow technology and clinical processes to provide the highest-quality, subspecialized care for patients and referring physicians.  Founded in 1980 and based in Ohio, LucidHealth is a top ten provider of radiology services in the United States.

Top Down Investment Thesis

According to WallStreet Research, United States commercial healthcare spending on the radiology industry is over $200 billion per annum and is expected to grow at a 10% CAGR from 2015-2020, driven by constantly evolving imaging technologies and the overall expansion of healthcare.  Imaging and radiology services are one of the largest spend categories at hospitals, representing nearly 10% of total U.S. commercial healthcare spending each year.  Hospitals are continuing to outsource highly subspecialized services such as radiology due to operational challenges associated with keeping them in-house.  In addition to challenges related to recruiting, retention, and billing, hospitals often are forced to pay for full-time employees regardless of whether there is enough volume to justify an on-staff physician.  Outsourced models allow hospitals to benefit from high-quality subspecialty providers, while enjoying the flexibility of only paying for services that are needed.

With the implementation of PQRS and transition to MACRA and other reforms, payers have become increasingly focused on monitoring quality outcomes to justify reimbursement, and LucidHealth is well positioned to benefit from these changes due to its investments in technology and infrastructure.  In turn, this is propelling growth in imaging services as a way to increase efficiency and drive elevated clinical outcomes.  Radiology is a leading driver of key hospital metrics such as patient safety, emergency department throughput, length of stay, referral patterns and overall patient experience.

Excellere’s investment in LucidHealth is a result of the firm’s disciplined top down investment strategy, driven by several factors including i) expectations for the continued outsourcing of radiology services, ii) an increased aversion to malpractice liability from misdiagnosis, iii) relative stability in radiology reimbursement rates for professional services, and iv) increased focus on quality outcomes within the medical community.

Buy and Build Strategy

Radiology is one of the most fragmented medical subspecialties, which combined with positive outsourcing trends, makes it an attractive subsector to employ a buy-and-build strategy.  It is estimated that there are currently more than 3,000 radiology groups in the United States, with only the top 15 in the country having more than 65 radiologists in their practice.  LucidHealth is focused on partnering within radiology service providers with a culture of compliance, best-in-class patient outcomes, and a patient-first approach clinically and operationally.

To the extent you are interested in learning more about LucidHealth, please contact Patrick O’Keefe at , Justin Unertl at , or Nick Coleman at to discuss the radiology services sector further.

G2 Integrated Solutions is a provider of asset integrity solutions to midstream and downstream energy companies, offering a suite of services designed to help clients manage risk within their existing transmission and distribution networks, demonstrate regulatory compliance, and extend the useful lives of their infrastructure assets. The Company leverages customers’ internal data and records, its proprietary tools and methodologies, and a deep pool of highly trained professionals to solve complex operating problems for an extensive client base that includes a number of high profile North American pipeline operators and natural gas utilities.

Top Down Investment Thesis

Given the dramatic increase in activity in the domestic energy market, aging midstream and downstream infrastructure, and an increasingly stringent regulatory environment surrounding these assets, Excellere believes that there is an opportunity to establish a vertically integrated integrity management services provider that operates through a national footprint and broad suite of capabilities. Excellere’s investment into G2 Integrated Solutions is driven by a number of dynamics, including (i) the opportunity to deliver G2’s broad suite of advanced technical solutions to a diverse set of clients that are focused upon risk management solutions and regulatory compliance support, and (ii) attractive end market fundamentals, whereby new project build-out is resulting in an expanded installed base for service and an aging infrastructure is positioning high-quality integrity management services providers for future growth.

Increasing global demand, advancements in horizontal drilling and hydraulic fracturing technologies and new discoveries of economically viable basins have contributed to the continued emphasis on unconventional oil and gas production. In order to support this increased activity, energy companies are required to build infrastructure to integrate new producing regions into existing midstream and downstream networks, maintain and support aging infrastructure given increased throughput, and engineer complex solutions such as converting gas pipelines to liquids in order to respond to market conditions. Furthermore, given the increase in energy activity and the number of high profile catastrophic incidents, an increasingly stringent regulatory environment has evolved, which is driving higher compliance standards. As a result, the North American natural gas industry is currently projected to spend an estimated $20.0 billion annually through 2035 to build new infrastructure and maintain existing assets, resulting in substantial future opportunities for integrity management service providers with advanced technical capabilities and broad service offerings.

Buy and Build Strategy

The North American asset integrity market is highly fragmented with numerous independent product and service providers. As such, G2 Integrated Solutions is well-positioned to add complementary capabilities and extend its geographic reach via acquisitions. The fragmentation in this market, coupled with the increased importance of domestically produced oil and natural gas to the North American energy supply, has created an opportunity to build a full-scale integrity management solutions provider to midstream and downstream energy companies. Specific areas of interest within the systems integrity management industry include: (i) complementary high-end infrastructure engineering services, (ii) GIS products and services, (iii) data analytics and management, and (iv) safety services.

To the extent you are interested in learning more about G2 Integrated Solutions or the integrity management industry, please contact David Kessenich at or Brad Cornell at .

Advanced Infusion Solutions (“AIS”) is a compliance focused provider of patient-specific medications for chronic pain patients with intrathecal pumps and other chronic and acute conditions. Intrathecal drug delivery is a method of providing customized medications directly to a patient’s spinal cord through an implanted pain pump that is surgically placed under the skin of a patient’s abdomen. Founded in 1998, AIS operates out of its headquarters in Clinton, MS and provides services in more than 30 states.

Top Down Investment Thesis

Excellere’s investment in AIS is based upon (i) the non-discretionary need for intrathecal drug delivery for patients with chronic pain conditions that cannot be improved from further surgeries or oral pain medications, (ii) the highly recurring revenue model of intrathecal pain management, as the estimated 150,000 patients using this treatment receive 4 to 6 pain pump refills annually, and (iii) the highly-fragmented nature of the industry.

The U.S. chronic pain industry, at over $100 billion in annual spending, is characterized by numerous constituents trying to serve the 76+ million Americans suffering from pain linked to diseases and syndromes such as obesity, cancer, diabetes, arthritis, HIV-AIDS, failed surgeries, cerebral palsy, multiple sclerosis and countless other conditions. The industry is expected to continue growing due to (i) a rapidly growing geriatric population – “baby boomers” currently account for 30%+ of the U.S. population, (ii) continued and growing U.S. obesity, which contributes to chronic pain as body structures support heavier weights over time and wear down, (iii) increasing recognition of the therapeutic benefits of effective pain management (specifically, versusoral pain medications) and (iv) expected growth in surgical procedures (29% from 2010 to 2020).

Buy and Build Strategy

The intrathecal pain pump market is composed of approximately150,000 patients, and is expanding due to the increase in chronic pain patients as well as the recognition of intrathecal pumps as a safe and cost effective treatment methodology for patients that have exhausted other forms of therapy (e.g. continual oral medications and multiple surgeries). AIS’s platform is well positioned to grow both organically and through selective acquisitions due to its (i) compliance-centric model (including USP 797), (ii) growing and recurring patient base, (iii) diversified referral network and (iv) proven growth profile.

To the extent you are interested in learning more about AIS, please contact Ryan Glaws at .