News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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Prior to IPO Pathology Company Aurora Diagnostics Gets New $335 Million Credit Line

Anatomic pathology firm hopes proposed sale of stock will bring in up to $150 million

Anatomic pathology company Aurora Diagnostics, Inc., of Palm Beach Gardens, Florida, just announced a new credit facility that will give it access to as much as $335 million should all conditions be met. Aurora Diagnostics hopes to raise $150 million from an initial public offering (IPO) of its stock, for which it filed registration documents in April.

Aurora Diagnostics was founded in June 2006, by former Ameripath, Inc., executives James New and Marty Stefanelli and was originally funded by Summit Partners and GSO Capital Partners. Over the past four years, Aurora Diagnostics says it has acquired 17 pathology practices. Its revenue for 2009 totaled $171 million, with EBIDTA (earnings before interest, depreciation, taxes, and amortization) of $28 million and net income of $9 million.


New AP Company Buys Five Pathology Group Practices

It may be a good news/bad news development for the anatomic pathology profession. This week a new anatomic pathology company made itself official and announced that it had already signed letters of intent to purchase five pathology laboratories. Aurora Diagnostics, Inc. is the new firm. Based in Palm Beach, Gardens, Florida, it was launched by four lab industry veterans.

Aurora Diagnostics represents good news in anatomic pathology because it wants to buy anatomic pathology groups and laboratories that meet certain criteria. It has $300 million in funding to execute those acquisitions. For pathologists looking to realize cash from their practice, as well as tap a new source of growth capital and management resources, the newly-formed Aurora Diagnostics may be an interested acquirer.

Aurora Diagnostics represents bad news in anatomic pathology because it means a new competitor will soon be putting sales reps on the street to compete for referrals from office-based physicians. For pathologists already facing sustained competition from national AP companies in the market, Aurora Diagnostics may soon be a competitive threat in their market.

The executive line-up at Aurora Diagnostics is comprised of familiar names. Founders of Aurora Diagnostics are James New, Chairman and CEO; Martin Stefanelli, Chief Operating Officer; Chris Jahnle, Business Development; and Kirk Rebane, Business Development. Aurora launched operations in July 2006 and has lined up $300 million of funding from Summit Partners and GSO Capital Partners, LP.

All four individuals are well-known to the laboratory profession. New is the former Chairman and CEO of AmeriPath. In that role, he built the company into a $500 million enterprise before it was sold to Welsh Carson Anderson & Stowe in early 2003. Stefanelli was COO at AmeriPath. Jahnle and Rebane are principals with Haverford Healthcare Advisors in Paoli, Pennsylvania. For more than a decade, Haverford has done business valuations and helped laboratories and pathology group practices in merger and acquisition negotiations.

There are several intriguing aspects to the business plan of Aurora Diagnostics. Expect a more detailed assessment on this nascent company in upcoming issues of The Dark Report. Should you have information or questions about Aurora Diagnostics, e-mail Robert at