Case Study - Recapitalization


AVITA DRUGS, LLC

Baton Rouge, Louisiana

Avita Drugs is a specialized pharmacy that dispenses and delivers prescription medications for patients with certain chronic diseases.

Seller Need: The founders sought liquidity and participation in the future increase in value of the business. One of the two founders desired to transition out of the business while the other wanted to retain his role as chief executive.

Transaction: In May 2007 Argenta Partners recapitalized this specialty pharmacy, providing liquidity for the two founders in a structure that allowed for both to maintain minority ownership positions, and for one founder to retain his role as chief executive.

Role: Since the transaction, we have provided guidance and assistance in acquiring management talent, including a new Chief Operating Officer and Controller, facilitated improved accounting and information systems and enhanced the overall strategy to strengthen their market position. Additionally, we are assisting Avita in new market development and new locations, including the relocation of the headquarters and primary pharmacy to Baton Rouge. Founded in 2003, Avita is a relatively young company which has experienced significant growth over the last few years.

Outcome: Since 2007 revenues have almost tripled, providing for a revenue rate of $50 million at the end of 2009.

As viewed by the Founder:

“When Avita began the process of identifying potential partners to help with the expansion and growth of the company, we met with many public and private equity firms. We immediately liked the experience, personality, and interest that John and Harry expressed during those initial meetings. Over the next several months it became apparent that other firms were only interested in balance sheets and what Avita could bring to their organization. Harry and John appeared to be much more interested in what value they could provide to Avita, its patients, providers, and clients.

Since partnering with Argenta Partners, they have provided invaluable expertise, resources and experience to Avita. We meet quarterly to discuss business opportunities and growth strategies, yet they always allow us the autonomy to run the business. Their door is always open; they always make time for discussions, and genuinely want to provide value without changing the very thing that has made Avita successful – namely, the quality of care we provide to the patient, provider, caregiver and client.

It was critical for us to partner with an organization that believed in the core values of our success, while helping us expand our care through added disease state therapies and geographic growth. Our vision for the future would not be possible without the strength, experience and value that Argenta has brought to Avita.”

Jerry Purcell
Founder, Avita Drugs, LLC