GHA Q&A with Martis Capital

Vertical: Private Equity
Author: JC Lupis
Date: April 2021
Sponsored by Martis Capital*

Martis Capital is a private equity firm focused exclusively on the healthcare industry. Our team shares a passion for helping build companies that seek to improve the quality of care and address the complex challenges facing the healthcare industry today. We do so by identifying exceptional investment opportunities and achieving shared growth objectives with founder-led companies and management teams.

Here, Martis Capital’s Vladimir Andonov talks with GHA’s JC Lupis about healthcare trends and Martis’ approach to the market.

GHA: Can you tell us a little about Martis Capital’s partnership philosophy?

Martis Capital: Martis embraces a flexible investment mandate and crafts tailored solutions across control buyout, minority recap / shared control, and buy & build investments.  Our goal is not to present founders with a constrained set of options, but rather work with them to determine the best one.  We focus on opportunities where we can create strong alignment (~40% average management post-close ownership across our last two funds) so that founders can participate in a meaningful portion of the economic upside.

Additionally, Martis is a reliable partner that gives founders and executives the resources, expertise, and confidence to fuel growth and navigate challenges.  Our comprehensive approach begins with understanding the needs of a business. We translate these findings into a strategic plan that we collaboratively execute upon in partnership with management.

Finally, Martis is a transparent investor – we believe in doing what you say, and we lead by example.

GHA: What would you describe as Martis Capital’s main differentiators?

Martis Capital: Martis prides itself on being a sector specialist and a flexible investment partner to middle-market healthcare companies.  We believe this combination creates a unique firm strategy that has yielded strong results for our portfolio companies and investors alike.

We have collectively spent decades working with middle-market companies, entrepreneurs, and management teams across key sub-verticals of the healthcare industry, including (i) services, (ii) information technology, (iii) consumer & wellness, and (iv) products & diagnostics.  Martis does not look to invest in biotechnology, early life sciences, or developmental pharmaceuticals.

Within each of these four main areas, we identify themes that our team builds conviction around and seeks executives and businesses to partner with.  Our thematic investment approach is grounded in detailed research, and we leverage our extensive relationship network to ultimately yield investment opportunities that are largely proprietary in nature.

Today, fund specialization has advanced to a level beyond simply focusing on a specific sector – PE firms are now working closely with industry executives during thesis development, market mapping, target due diligence, and post-close value-creation.  We believe this is another differentiator that sets Martis apart, and we are always looking to add additional executives to our growing relationship network.

GHA: How has the COVID-19 pandemic affected your portfolio companies and your approach to investing in healthcare businesses?

Martis Capital: Being in healthcare helped us avoid the most adverse impacts of the pandemic.  In fact, some businesses benefitted from being designated essential services. One such business was our pet health platform, which was further strengthened by the rapid increase in pet ownership during 2020.  As with all businesses, our companies have had to adjust to COVID-19; for example, all our provider-based / patient-facing portfolio companies ramped up their use of telehealth, which we believe will serve them well given patients’ increasing comfort with this method of care delivery.

Our investment focus today remains the same as it was prior to the pandemic.  We seek to partner with companies that enhance clinical outcomes, reduce costs, and improve compliance and transparency – all with a great patient experience.

GHA: Where do you forecast increased investment in the year ahead, both for Martis Capital and the wider industry?

Martis Capital: We spoke earlier about the theme-driven investment approach Martis follows.  Some of our current themes include enhanced primary care, outsourced services (across various end markets), behavioral health, pet heath, and HCIT / tech-enabled services.  We are in active conversations with founders as well as deal intermediaries to find opportunities across these areas where Martis can be a great long-term partner.

More broadly for the healthcare sector, we believe 2021 will be a year of heightened M&A activity. Even though the first quarter came off an incredibly busy Q4 2020, the expectations for a continued economic recovery, the record dry powder of private capital as well as strong corporate balance sheets, and accommodating credit markets will all lead to more companies looking to explore their strategic options. Some of the areas we expect to see increased investment activity include home-based care models, virtual care models, employer-oriented preventative health, and value-based care.

Contact Vladimir Andonov to learn more about Martis Capital.

For questions about this Q&A, please contact GHA Managing Director JC Lupis at jclupis@ghadvisors.net.

*This communication does not constitute a solicitation for advisory services by Martis Capital. 
Global Healthcare Advisors received compensation in connection with the publication of this Q&A.