Partner Company Overview
Clarient combines innovative diagnostic technologies with world class pathology expertise to assess and characterize cancer. Clarient's principal customers include pathologists, oncologists, hospitals, and biopharmaceutical companies. The rise of individualized medicine as the new direction in oncology has created the need for a centralized resource providing leading diagnostic technologies, such as flow cytometry and molecular testing. Clarient is that resource, having created a state-of-the-art commercial cancer laboratory providing the most advanced oncology testing and diagnostic services.
Partnering with Safeguard
Clarient was originally founded in 1996 as MicroVision Medical Systems, later known as ChromaVision, which developed and manufactured digital microscopes that would help diagnose various diseases and medical conditions by analyzing tissue and blood samples. Beginning in late 2004, under the leadership of the then new CEO, Ron Andrews, and with direction from Safeguard’s current management team, the company repositioned and rebranded itself as Clarient. Refocusing the business on cancer diagnostic services, Clarient sold its ACIS® and Trestle® Instrument Systems business assets and related intellectual property to Carl Zeiss MicroImaging, completing its evolution from an equipment sales model to a diagnostic services model.
“Partnering with the Safeguard team helped Clarient accelerate its growth, maintain a clear strategic vision and operating focus, and ultimately realize the value we created together.”
Ron Andrews,
CEO & Vice Chairman, Clarient (December, 2010)
Throughout Clarient’s transformation, Safeguard worked as an active partner to support Clarient’s growth. Safeguard’s support has taken many forms, including: initial and follow-on rounds of equity capital, mezzanine debt facilities, lines of credit guarantees, executive management recruitment, sales and marketing expansion, facilities project management, strategic communications and partnerships.
In addition to the above, Safeguard facilitated a private placement of $40 million in Clarient convertible preferred stock by Oak Investment Partners during the first quarter of 2009. The transaction allowed Clarient to retire all of its outstanding debt except for receivable financing, reduce annual interest expense and fees, add working capital to drive growth, and propel the company toward net income. The effect of the private placement, combined with a subsequent public sale of a portion of Safeguard's holdings in Clarient for net proceeds of $61.3 million, reduced Safeguard’s stake in Clarient to approximately 28% outstanding shares on an as-converted basis, down from 60% at year-end 2008.
Results
In December 2010, GE Healthcare, a unit of General Electric Company (NYSE: GE), acquired Clarient (then public on NASDAQ under the ticker CLRT), for $587 million, which represented $5.00 per common share and $20.00 per preferred share of CLRT, payable in cash. The net proceeds for Safeguard were approximately $147 million, which represented a 3x cash-on-cash return on Safeguard’s remaining cost basis in its holdings in Clarient at the time of the acquisition.
Since the time Clarient repositioned itself to the time it was acquired by GE Healthcare, Clarient realized a tenfold increase in its revenues and a $476 million increase – or 5x – in market capitalization, based on the $587 million acquisition price. Safeguard played an integral role to enhance Clarient’s financial strength and develop alliances and syndication partnerships with top-tier partners that set the stage for GE Healthcare’s strategic acquisition.
