Frazier Healthcare raises $780M for investments in health companies

Managing partner at Frazier Healthcare Partners
Nader Naini, managing partner at Frazier. (Image: Frazier)

Seattle-based private equity and venture capital firm Frazier Healthcare Partners raised $780 million to invest in profitable healthcare companies.

The company, which announced the closing of its growth buyout fund Tuesday, said they will focus the investments on profitable healthcare companies in the lower middle market, or with EBITDA (earnings before interest, taxes, depreciation, and amortization) ranging from $5 million to $50 million.

Frazier has its eye on companies that capitalize on broader health trends, such as the shift from volume- to value-based care. "We think healthcare companies that are focused on delivering quality outcomes in a more cost-effective manner will succeed. Companies we invest in are focused on bending the healthcare cost curve, while delivering better outcomes said Nader Naini, managing partner at Frazier in an emailed statement.

Naini pointed to two successful portfolio companies: US Renal, which is an operator of dialysis clinics, and PCI, a pharmaceutical services company.  "Both had less than $10 million of earnings when we acquired them in partnership with a Frazier operating partner, and currently both have earnings well north of $100 million," Naini said 

RELATED: Frazier Healthcare Partners hits $419M for early-stage biotech play

This is the eleventh fund for Frazier, which was founded in 1991 and has more than $4.2 billion under management.

The venture firm has made more than 170 investments ranging from company creation and venture capital to buyouts of profitable lower-middle market companies. Naini said Frazier's strategy is to partner with seasoned healthcare executives to acquire and develop smaller platforms into category-leading companies that will reshape the evolving healthcare landscape.  

RELATED: Frazier Healthcare Acquires AndersonBrecon from AmerisourceBergen

The fund's leadership includes Nathan Every, M.D., Brian Morfitt and Ben Magnano.

Frazier has invested in numerous healthcare sectors including staffing services, hospice, home care, physician practice management, lab distribution, pharma distribution and pharma logistics. Those investments have included companies such as Aspen Education Group Inc., a provider of educational and behavioral programs for struggling teens which was later acquired by Bain Capital LP, as well as Priority Solutions International, a global supply chain-management company which was acquired by Thermo Fisher Scientific, and Bravo Health, a managed care company acquired by HealthSpring Inc., which is part of Cigna. Bravo grew from $100 million in revenue to more than $1 billion in revenues during Frazier's ownership, Naini said.

Frazier officials said this offering attracted "a world-class group of investors" including both existing investors and new limited partners, which included endowments, public/private pension funds and global financial institutions.