Controlling their own destiny

Nautic Partners acquires Omnicare’s CRO arm

Lori Lesko
PROVIDENCE, R.I.—Nautic Partners LLC, a private equity firm with more than $2.5 billion of capital under management, has acquired Omnicare Clinical Research (Omnicare CR) from parent company Omnicare Inc. Headquartered in King of Prussia, Pa., Omnicare CR is a global clinical research organization (CRO) that conducts early-phase, Phase II/III and late-phase clinical trials for the pharmaceutical, biotechnology and medical device industries.

Neither company would comment on the financial details of the acquisition, announced April 28.

The signing of the deal not only makes official the separation of Omnicare CR from Covington, Ky..-based Omnicare Inc., but also successfully ends a comprehensive two-year plan to accelerate Omnicare CR into the future, the company reports.

Patrick Lee, Omnicare's vice president of investor relations, tells ddn,  "We decided to divest our clinical research organization because we had a management change in mid-2010, and the new team decided Omnicare CR would no longer be part of our portfolio."

Now, as the CRO takes this next step forward, added support from Nautic will allow Omnicare CR to meet customer needs even more quickly, Lee says.

Nautic declined to comment for this story.

James M. Pusey, president and CEO of Omnicare CR, said in a press release announcing the deal, "Our new affiliation with Nautic is very exciting for all of us at Omnicare CR.  This marks a new era for our business that will provide us the ability to more efficiently make vital, strategic decisions, placing us in control of our own destiny. The group in the best position to benefit from this reorganization is our current and future customer base. With our renewed strength, Omnicare CR will be able to deliver an even higher level of customer service, while maintaining the teams currently in place who support our customers on a day-to-day basis."

Nautic's managing director, Chris Crosby, led the way for the deal with Omnicare CR's leadership team.

"It was the 900 capable, intelligent people of Omnicare CR, including James Pusey and his leadership team, who initially interested Nautic in the company as a potential investment opportunity," Crosby stated. "Once we looked at the financials, it was evident that this was a healthy company with great potential in a growing market."

Since its founding in 1986, Nautic has completed more than 110 investments, with the Omnicare CR transaction adding to the firm's successful history of investing in the healthcare services industry.

"Nautic will fully support Omnicare CR on a strategic level and with additional capital for growth," Crosby stated. "We have complete confidence that with our added support, company leadership will maximize efforts …  adding to Omnicare CR's profitability."

Looking ahead, Omnicare CR's senior leadership anticipates added growth among its specialized business units.

"We're looking forward to a bright future with support from Nautic," Pusey says. "As Omnicare CR continues to grow, exciting times lie ahead for our employees and our customers across the globe."

Others are not as optimistic. The Wall Street Journal reports that after suffering from the decline in research and development spending for the past few years, Omnicare CR is beginning to see recovery in its business as it takes on new owners.

Omnicare's business has seen declining revenue for the past few years, the WSJ reports. Net sales were $109.2 million for 2010, with an operating loss of $109.9 million, compared with the $156.7 million in revenue and $3.6 million operating loss for 2009. Revenue fell in 2009 primarily because of lower levels of new business added along with the early termination and client-driven delays in the launching of certain projects, Omnicare stated in a U.S. Securities and Exchange Commission filing.

Management anticipated a turnaround in its CRO business in the third quarter of 2010 based on restructuring moves enacted in late 2009 and the first half of 2010, including staff cuts and location consolidation. It also re-evaluated its contracts backlog, thus improving the financial character of the company.

The division has been running its own balance sheet inside the company for two quarters or so, anticipating an eventual spinoff of the branch, as it didn't align well with Omnicare's main business of providing pharmaceuticals and pharmacy and ancillary services to healthcare institutions.


Lori Lesko

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