TPG Growth to sell CTSI to Varian for ₹1980 crore

CTSI owns and operates a network of cancer treatment facilities across India and South Asia

TPG Growth, the middle market and growth equity platform of alternative asset firm TPG, has signed a definitive agreement to sell Cancer Treatment Services International (CTSI) to Varian Medical Systems for $283 million (approximately ₹1980 crore).

CTSI is part of Asia Healthcare Holdings (AHH), a healthcare operating platform founded by TPG Growth. The transaction is expected close approximately two weeks and is subject to customary closing conditions.

CTSI owns and operates a network of cancer treatment facilities across India and South Asia, including several brands. These include American Oncology Institute, CTSI’s flagship network which comprised of multi-disciplinary radiation, medical, and surgical oncology focused cancer hospitals across South Asia.

Its US-based CTSI Oncology Solutions, provides cancer treatment planning services to healthcare providers worldwide; and AmPath, which is an integrated reference laboratory and pathology services provider in India.

CTSI employs more than 1,500 people across in India and the U.S.

Healthcare investing franchise

“We invested in CTSI in 2016 with the belief that the company was in a strong position to address a substantial and growing need for quality cancer care in India. Today, CTSI is one of the largest and leading providers of high-quality oncology services across the country and broader South Asia,” said Matthew Hobart, Partner at TPG Growth.

“CTSI’s growth story is an example of what we are trying to achieve through AHH, which is to provide dynamic single-specialty healthcare companies the resources and expertise to meaningfully build and scale their businesses. The transaction today marks an exciting step for CTSI and an important milestone in AHH’s evolution as one of the leading healthcare platforms in South Asia,” he said.

When TPG Growth acquired CTSI it operated only one facility in Hyderabad. In just three years, with AHH’s support the company has grown to a network of 11 cancer hospitals with a pipeline of six more hospitals under execution.

“The success of CTSI builds on the track record of TPG’s healthcare investing franchise around the world, which has invested $14 billion of equity in the sector,” TPG Growth said.

More than 20% and approximately $3 billion of equity has been invested outside the US, across leading healthcare delivery networks including Parkway Holdings (Singapore), Healthscope (Australia), Manipal Health (India), Asiri Health (Sri Lanka), and United Family Healthcare (China),it added.

Cancer center operations

“At Varian, the patient and clinician are at the center of our thinking as we evolve into a broad-based cancer care solutions company,” said Dow Wilson, president and chief executive officer of Varian.

“Our acquisition of CTSI is consistent with this strategy and will allow us to better support oncology centers globally, accelerate access to technology-driven care and build a feedback loop that will drive cost-effective innovation. We look forward to pooling the ingenuity of our combined team with the power of data, technology and clinical insights to achieve new victories against cancer, especially for the millions of patients globally without access to appropriate care,” he said.

This transaction will increase Varian’s expertise in cancer center operations, allowing for new partnerships globally to deliver care in developed and emerging markets.

Varian will finance the acquisition with a combination of borrowings under its credit facility and cash on hand.

CTSI generated annual revenues of $43.5 million in the fiscal year ended March 31, 2019. Varian estimates the transaction will have a 6 cents per share dilutive impact to earnings on a GAAP basis and a 3 cents per share dilutive impact to earnings on a Non-GAAP basis for the remainder of fiscal year 2019.

The Company expects this acquisition to be accretive to earnings per share during fiscal year 2021 on a Non-GAAP basis and fiscal year 2022 on a GAAP basis.

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