Thoma Bravo partner Hudson Smith discusses the private equity firm’s recent acquisition of clinical trial workflow software provider Greenphire in an interview with Mergers & Acquisitions. A rebound from Covid-related trial delays and secular tailwinds for healthcare IT can buoy the firm’s new investment and the broader market.

“We believe Greenphire has an incredible market penetration opportunity as the pharmaceutical companies and [contract research organizations] realize the strong [return on investment] that comes from improving the patient experience with Greenphire: better patient retention, shorter clinical trial length, etc,” Smith tells Mergers & Acquisitions.

Covid’s impact on the clinical trial software company wasn’t entirely straightforward.

“With Covid, there were puts and takes for the clinical trial software market,” Smith explains. “Greenphire did benefit from some Covid-related trials and some increased adoption of their participant travel module but they also saw some slowdowns as some non-Covid clinical trials were put on hold. We expect 2021 and 2022 to be strong years for the clinical trial market as these trials get back to a normal pace.”

More than its implications for future dealmaking, the Greenphire sale is a milestone for former owner The Riverside Co. The lower middle market financial sponsor notched one of its largest exits on the sale to Thoma Bravo after shepherding Greenphire to an 8-fold increase in revenue over seven years. 

“We were blown away by Greenphire’s historical growth rate and believe that we can accelerate it with more investment,” Smith says.

Future investment could focus on markets adjacent to the portfolio company’s software solution, he adds.

It’s a market Thoma Bravo has experience facing. The firm acquired medical supply procurement software provider Global Healthcare Exchange (GHX) in 2014, in what Smith calls a “very successful investment.” GHX links medical service providers with suppliers, group purchasing organizations, and distributors. Thoma Bravo sold its majority stake three years later to Temasek for an undisclosed consideration, retaining a minority stake.

Just last December, the private equity fund announced an investment in Zipari, a software platform connecting healthcare payers and third-party administrators. The investment valued Zipari at over $500 million and facilitated the company’s merger with Healthx.

Other recent Thoma Bravo software plays with healthcare exposure include its 2016 take-private of Imprivata for $544 million and its investment in Syntellis Performance Solutions alongside Madison Dearborn Partners in 2020.

For more on the deal, see Thoma Bravo acquires Greenphire.