21st Century Oncology, owned by debt holders, launches auction amid comeback

Almost two years after emerging from Chapter 11 bankruptcy, 21st Century Oncology is evaluating a sale that could ultimately value the newly-led cancer treatment company around $1 billion, according to people familiar with the matter.

Initial bids are due in the next couple of weeks for the Fort Myers, Florida, company, one of the people said. The sales process is anticipated to encompass a broad range of financial sponsors, with no strategic buyers in the mix.

21st Century, which bills itself as the largest integrated cancer-care network and radiation oncology provider in the country, is receiving financial advice from Jefferies, three of the people said.

21st Century is marketing approximately $120 million in Ebitda, the people said, suggesting the company could command a high single-digit to 10x multiple. That implies a deal could value 21st Century around $1 billion.

A 21st Century spokesperson wrote in an email to Buyouts: “21st Century Oncology is excited about extensive platform expansion opportunities and partnerships across the U.S. Over the last 10 months, the company has been in strategic dialogue with several oncology groups and partners interested in joining our platform to create an expanded physician network and synergies to the company’s business lines.”

“These initiatives are supported by the company’s board of directors and largest shareholder, Beach Point Capital Management,” the spokesperson said.


21st Century emerged from Chapter 11 bankruptcy in January 2018, cutting its long-term debt by more than $500 million. The company initially filed for bankruptcy in May 2017.

In connection with its plan to emerge, funds managed by Beach Point, J.P. Morgan Investment Management, Governors Lane, Morgan Investment Management, Oaktree Capital Management, Roystone Capital Management and HPS Investment Partners, provided 21st Century Oncology with fresh capital.

21st Century’s previous private equity owners are Vestar Capital Partners and Canada Pension Plan Investment Board.

Vestar in February 2008 completed its $1.1 billion leveraged buyout of the company, then known as Radiation Therapy Services. In 2014, CPPIB invested $325 million in the business through a series of convertible preferred shares.


21st Century’s troubled history resulted from a mix of reimbursement issues and legal challenges, including ongoing lawsuits brought by the former founder and leaders of the company.

Potential reimbursement challenges will remain top of mind for lenders and sponsors in the current process, sources said, as the Centers for Medicare and Medicaid Services plans to set a new bundled payment model for radiation oncology, effective Jan. 1.

Potential bidders are likely to take a more conservative approach to the company because of its past issues. However, 21st Century’s debt holders installed an entirely new management team, led by CEO Kim Commins-Tzoumakas. The company’s strong acquisition pipeline is also adding fuel to the process, one source added.

General Atlantic’s $200 million investment in OneOncology in September 2018 also sparked more PE interest in the broader oncology sector, this source and another noted. While it operates a much different business model, the company has created buzz as it aggressively pursues an oncology practice roll-up, they said.

In other relevant activity, Integrated Oncology Network, backed by Silver Oak Services Partners, acquired e+CancerCare in June. e+CancerCare’s former owner, Kohlberg & Co, previously agreed to sell the company to Tahoe Investment Group’s Alliance HealthCare Services, but the deal ultimately fell apart.

Representatives of Beach Point, J.P. Morgan, Governors Lane, Morgan Investment Management, Oaktree Capital and Roystone did not immediately return requests for comment. HPS and Jefferies declined to comment.

Action Item: Read more about the 21st Century bankruptcy case: https://bit.ly/2VTIDDD