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It was amazing how many of the thought leaders in cardiovascular health that we spoke with mentioned that circle was a need to have. It wasn’t a nice to have, it was a need to have.
My absolute favorite part of being associated in a founder's circle is what we've accomplished to really improve patient outcomes around the world. And I think for me that's the biggest one and somebody ask me the short snappy one, my answer is we save lives. That's what this company does and we do it in so many different ways and from a career standpoint and a job perspective, if that doesn't get you going in the morning, nothing will. Absolutely nothing will.
Welcome to another episode of Thoma Bravo's Behind the Deal. I'm Thoma Bravo founder and managing partner, Orlando Bravo and in the spring of 2022, Thoma Bravo partner Carl Press helped lead a strategic acquisition of Circle Cardiovascular Image, also known as Circle, with the company's co-founder and CEO, Greg Ogrodnick who you just heard from.
And a little over one year into the partnership, Circle has streamlined its mission and focused its product offerings to become a global leader in cardiac imaging solutions, which provide life saving analysis to cardiac patients at hospitals around the world.
When we decided to back Circle CVI, it was a case of Thoma Bravo being able to back a leader in a small, but growing category in healthcare IT and that's a tried and true approach that we've taken with software companies many, many times in the past and this was no different. This was a classic case of an investment and a deal where the deeper we went and the more diligence we did, the more we liked it.
As soon as we looked into the deal, we knew this was our kind of transaction. Vertical category leader, really high quality of revenue, a CEO that we really liked right from the beginning and an opportunity to improve on a number of fronts in areas that we're good at improving companies in, like driving profitability, driving TAM expansion through M and A and increasing margins.
Overall, the theme here is consistent with what Thoma Bravo believes in. We worked on turning this company's growth story into a profitable growth story. So today, you'll hear the story behind the deal of Circle from Thoma Bravo partner, Carl Press, followed by a conversation between Carl and Circle CVI CEO, Greg Ogrodnick. Here's Carl.
My name is Carl Press, I'm a partner at Thoma Bravo, I've been with the firm now for almost eight years exactly and I co-lead our explore funds which are our middle market bio funds that we launched in early 2020.
One thing that's great about what we do in the explore fund is it's really a continuation of everything we do broadly at Thoma Bravo. The things we love in the flagship fund are the things we love in the explore fund and in the discover fund. And so, we're typically looking for the same thing, just at a different scale and that's exactly what we saw in Circle is we saw a category leader with high quality of revenue, with great unit economics and a really strong management team. And when you start with that, we know we can make a great investment out of that. We've done that enough times and so it checked all the boxes for, for what we love.
The official name of the company is Circle Cardiovascular Imaging. We found Circle at a conference. Actually I'll credit my colleague Adam Kinalski who is a senior member of our explore fund. He went to a conference in Boston, met this company and I very distinctly remember he called me late that evening. I was at home already and we started going through the names of the companies that he met and as soon as he started talking about this one, both him and I immediately knew this was, this was our kind of deal.
Vertical category leader, really high quality revenue, a CEO that we really liked right from the beginning, in Greg, and an opportunity to improve on a number of fronts, in areas that we're good at improving companies, driving profitability, driving Tam expansion through M and A, expanding margins. So we knew right away when we started talking about it that this was gonna be one of our deals.
Circle is the leader in post processing of cardiac images. So if you think about cardiac MRIs, cardiac CTs, these imagines are really complicated, they're hard to take, they're even harder to process and often difficult to interpret if you're the radiologist or cardiologist, so you need really sophisticated software to do that, particularly around MRI which is a modality of imaging that's growing rapidly in cardiac care. 15-20 years ago, there were very few cardiac MRIs that were taking place at least in North America and today, because of changes in reimbursement, but more importantly because of changes in guidance and guidelines from the American Heart Association and from other cardiology groups. It's starting to become the gold standard of cardiac care and cardiac imaging. And so it started as this really kind of almost cottage sector of imaging and it's now becoming increasingly more important and Circle is sitting right in the middle of that.
It is the market leader in processing these images, if you are a major hospital in the United States or even globally. And we're talking about folks like the Cleveland Clinic, the Mayo Clinic, Cedar Sinai, you need software like Circle to process your cardiac MRIs and that's exactly what we do and we're the best at that.
Probably a week after that conference, we got on the phone with the CEO Greg Ogrodnick and started to tell him about Thoma Bravo and, you know, a little bit more about how we could engage with him and how we might be a great partner for the next leg of the journey and the venture investors that had backed Greg and the Circle Team were ready to get some liquidity and to recap the business and so it was right company at the right time, which is usually a good thing for us.
You know, every deal dies 1000 deaths, we always joke about that, and there's kind of two ways that a diligent process can go on any deal. The company can look better over time or it can look worse over time. It's sort of as you peel the onion and the layers of the onion, what are you finding in this business?
With Circle, as we peel back the layers, we found more that we liked and that was a great sign for us. So this deal kind of gained momentum week after week (laughs). In this case, month after month. Where we felt better about it in February and March of '22 than we did in December of '21 and that's usually a really good sign.
This deal did not come together quickly unlike some of our other deals. This one took a long while. It started in late fall of 2021. We started to get to know the company, we started to get some data, we started to meet some folks from the team. I think it was at the very end of 2021, we took a trip out to Calgary to meet the team. Wonderful time to be in Calgary, by the way, in December. And that trip confirmed everything that we thought would be true about this company. Great team, great market position and would be a really great partner for us because they sounded like they were ready to work with a private equity group like us. And from there it was just a sprint to try and get the deal done.
Now, the company's data and systems, we needed to do a little bit of work there to get the data into a place where we felt comfortable with what we were looking at and we felt really comfortable with the numbers. That took some time. You know, maybe more time than it typically takes but we got through that and by, I think it was March of 2022, so just about a year ago is when we were able to sign the deal and then we closed it about a month later.
It's been a really busy but productive year with Circle. One is shifted the company's focus from strictly being on growth to being profitable growth. That was a change that many of our companies go through and, I think Circle handled it as well as almost any of them. Greg really embraced what we were trying to do. Mike Little, our CFO, really embraced the way we do things so we quickly focused on that. We got really tight on systems and process. We spent a lot of time and money making sure that our sales teams had the right systems in place, that our finance teams had the right systems in place, that we could report out at any given point, you know, how we're doing on, say, bookings or renewals or pipeline development and so forth and so there was a lot of time and effort spent on that. I give our operating partners on this investment a ton of credit for helping to shepard a lot of that effort. And finally, we got the company focused a little bit more.
I'd say when we made the investment, Circle was trying to do four or five really important things and we decided, "Hey, we're gonna do two things really well and then if we need to go back to some of those other opportunities, we'll go back to them and we can invest in those down the road or we can acquire into those through M and A but we felt like focus was gonna really benefit this investment in this company and so far, it has.
My first impression of Greg was this is a CEO that we can work with. We knew right away he listens, he's not quick to dismiss. He's very open to feedback, but he's also very, very deep in the industry that he plays in.
My name is Greg Ogrodnick. I'm the CEO and cofounder of Circle Cardiovascular Imaging. The company was founded in 2008 so I've been there from the very beginning. You know, my background is really on the business side of medicine. I've been involved in cardiology on the, uh, business side for a long period of time with some great companies and also my previous company was a company called Conceptus Technologies. We built a franchise in cardiology called TheHeart.org and today it's still the CNN of cardiovascular information and education so it's a field that I know well and one that I've grown up in and so Circle was certainly a nature, uh, next step for me in terms of a company and founding a company and one which has just been an absolute joy to be a part of over the last 15 years.
He brings the industry expertise, he brings the deep product background and he surrounded himself with really fantastic people. But operationally, he knows that there are things that we've done in the past with some of our companies that can really benefit Circle. And so it's been a fantastic relationship from the beginning. I wish they all went this way but Greg has just been a joy to work with.
Coming up next, my conversation with Greg Ogrodnick, CEO and cofounder of Circle. Thoma Bravo's Behind the Deal will be right back.
You are listening to Thoma Bravo's Behind the Deal. Here's my conversation with Greg Ogrodnick, CEO and cofounder of Circle.
Good afternoon. How's it going?
Ah, good, we gotta stop meeting like this, Carl.
(laughs) We gotta stop doing so many podcasts together, Greg.
I am dying to know because we never, I've never asked you thins but what were you first impressions of meeting myself, Adam Kinalski, you know, you, I think you first met Adam at a conference, we then had a call together probably a week later and thus began the, you know, four or five month journey of doing a deal together, but what were your first impressions of us?
Well, Carl, I have to say the first impressions were, which I'll describe in a second, but I have to say first impressions for me are really important in terms of establishing a, a really strong relationship. I mean, if you don't hit it off in the right way, it can be a little bit more difficult moving forward from a spot where maybe it wasn't that good. But basically first impressions, uh, first of all with Adam, I met him at the AGC Conference in Boston and was in a 30 minute speed dating session and I had opportunity to pitch him on, on Circle and, and what we'd accomplished and through the whole conversation he kept leaning further and further and further over the desk 'cause I, I could tell that he was, he was really excited and really interested.
And at the end of that discussion, his reaction was that he wanted to come up to Calgary immediately. That was the whole deal and so that was a bit of a surprise to me. I really wasn't expecting that sort of a... you know, shall we say a very upfront and very aggressive approach to, you know, kind of next steps and so I think we kind of put you guys off for a little bit. I think for maybe almost a month I think 'cause we weren't quite ready to engage in a way that you would expect us to engage. And then you all came up, I think it was December 9th of 2021. That was, I'll never forget that date and you know, you came up with the whole crew and that was the first time I met you. We had the whole Circle management team together and I think we put a, you know, pretty good foot forward, but really I think the first impressions were how much knowledge you actually gained in that very short period of time between that meeting in October to the meeting in December.
Now we didn't get into the meat of the diligence probably, to your point, until about a month after, but we started doing a lot of research on cardiovascular imaging, imaging modalities. I got a mini bachelor's degree in MRI (laughs) that following couple months. Just try to talk to different physicians at hospital systems to try to figure out how important is cardiovascular MRI and CT and relative to the other modalities and what are the reimbursement trends and where does Circle fit into this and where do the OEMs fit into this?
And then, I'll never forget it, Carl, you kind of took me aside and you said, "We really like this. This is really good. We really do like this." And that was also certainly a good step in the direction of the relationship, so.
I don't use my we really like these conversations too liberally. I only use those when-
It's really, really good, so-
Yeah, no, that's good. Carl as you know, you know, now that we've been kind of looking around for different opportunities in the space that Circle operates in in, you know, diagnostic imaging, there's not many Circles out there and we haven't actually found another one, so the fact that you were excited was well warranted.
This was a classic case of an investment, a deal where the deeper we went, the more diligence we did, the more we liked it and that's usually one of the best signs (laughs) of a process and the further we dug and the more we learned and then getting into the data specifically, the better the story got and you know, we felt like this was a team that we could work with. This was a category leader with very, very deep industry knowledge, as deep as you could possible imagine in a particular, you know, subcategory, with a market leading product that was willing to work with us and to listen to us and to take our advice on things that we've done before, driving profitable growth and doing M and A and, you know, focusing the company on a core couple-
Products in a more streamlined mission. So our first impression of you guys was this is exactly what we were hoping for, is a team that we could really work with.
Yeah, and you know, on that point Carl, you know, I have to say that the decision that, you know, the management team made along with the board, on, you know, wanting to find the right strategic partner was really driven by a lot of things you had just described. I, you know, we had certainly in the 13 or 14 years we'd been operating, I think we've created a really, really great footprint and a great brand and great business, but really there was more that, that needed to get done and there was a, a certain level of discipline and I think a bit of a change of focus that needed to actually take place and I think all of those points really resonated, you know, with myself and, and, and the rest of the management team. We really felt that a lot of the macroeconomic environments were changing and you know, that was a time when the whole IPO market was shaky at that point in December. It was very hot but, you know, come December you could actually see everything changing.
And so, the whole notion around growth in all expense was something that was really falling out of favor for sure. And the whole ability to latch our wagon to, to a group that had run numerous companies and actually accomplished a lot of what we needed to accomplish as a company and had that experience. You know, I come to work every day with a smile on my face and, you know, I get asked the question by many, many people about what it's like to work with you all in quote, unquote a private equity firm and my answer is it's just a new board, but it's a board that's really aligned with what we all agreed to 12 months ago. And so there's been no surprises, quite frankly, and maybe the only surprise was just I think how much we've actually come together as a working group in terms of overcoming a lot of the challenges that we face in the business day to day.
So for me, at least from the Circle perspective, my perspective is just great.
That's awesome to hear. Greg, I think one of the things that distinguishes you even within our portfolio and the CEOs that I've worked with is your ability to make difficult decisions very quickly and execute upon those. And we've had a few of them that we've had to do in the first year of working together and that's what struck us most about you and your team is we'll present some challenge to you guys, even when we were just closing the deal and we had to make some decisions about what to do with parts of the business and where to streamline and we presented you the options and what our suggestions were and you very calmly executed upon them in short order.
For example I, you know, when we made the investment, Circle had already built out quite a bit of infrastructure around the neuroimaging business and we knew that there was an opportunity there. We still do and we're seeing it in the market, but we also knew that we needed to right size the investment in that product relative to, you know, what we were seeing in the market and make sure that we were matching investment with opportunity. And, you right sized that piece of the business extremely quickly and that was huge because that could have been a big roadblock that we struggled with for six or 12 months and became a constant point of dialogue in the board meetings. We've lived this with other companies. With you it was quick, it was decisive and in my mind, that's what distinguishes you from even some of our best portfolio company CEOs in the past.
Well I appreciate that Carl. I think a lot of that comes from I wanted to go into what we call Circle 2.0 with a clean slate and as much as you didn't wanna have these things kind of lingering over you, I didn't either. And so I think we're aligned on that and so it was just one of those things where okay, we, we gotta make those changes and we did them. Again, I think that's what your board is for, but it was just indicative of, of what I would expect from a really good board who's engaged and who knows things and that's ultimately what you look for as a CEO of a company.
Yeah, well said. The other thing that strikes me about this business is how global it is for it's size. We have only about 35%-40% of the business in North America and the rest of it being, you know, spread across Europe and Asia and all in really major hospitals and healthcare institutions around the world and that's how the company has grown up and certainly every day that goes by we're seeing more and more opportunity internationally. I'm curious, like, how do you think about managing a business with so much global spread and, and so much opportunity everywhere? That's gotta be a challenge given our size, right? Which is, you know, we're still a, an emerging category leader.
Uh, I mean, ultimately Carl, it boils down to people and we're seeing a bit of a shift in terms of our revenue mix. We used to be more dominated on the direct side, you know, now going more on the OEM where our partner side is becoming, those revenue streams are almost equal now. But had we not taken the steps in terms of putting good people geographically in positions at which they could build the relationships with customers, we would never be in that position. And so I think ultimately, when you look at global expansion, I think the, the partnership aspect will become more important over time, but we can't minimize the impact of the people that we have in the field, [inaudible 00:21:00] that's in Europe or the [inaudible 00:21:02] in Asia, [inaudible 00:21:03] in the United States. Uh, I mean you, you have to have very strong local representation.
You know, then the other piece of it is that our brand is actually... it's actually huge. Just last week I was having a discussion with a physician who, he's the president of the, uh, Society for Cardiac MR and we were having a discussion about, you know, how do we get quantitative profusion to market and how do we work through all the regulatory challenges that are associated with that. And my challenge to him was that really we needed a voice from the community. You know, the thought leaders in, from the physician community to go back to the Semen's, GE and Phillips and indicate that we need to work together on this one versus having them all work independently.
His come back to me, he said, "You're underestimating the power that your company actually has with all three of them." He said, "If you, if Circle decides that this is the direction that they wanna go and this is how the OEMs need to get in line," he said he thinks that would resonate a lot better with the three partners than having the community do it.
And coming from him it was, it was eye opening for me, you know, in terms of the influence that we actually have in the space which we operated in. That was a pretty incredible statement on his part.
Yeah, that's incredible. That's great. Greg, as we think about now you describe it at Circle 2.0, it's the future of our company and it's the path to becoming $100 million business and, you know, expanding our product set. In your mind, what does that look like and where are we in 24, 36, 48 months?
Yeah. Great question, Carl. Obviously you know, we want to take advantage of our market position in, in the area where we're strongest which is in cardiac MR and, and so where's that gonna come from? Well, a few places. You know, number one, we just talked about geography so I think we, we have lots of opportunity for geographic expansion, there's no question about that. The other one is, you know, in conversion of some of our competitors that are out there. You know, there's probably, you know, a couple of them that are left. Their influence has been minimized to a great extent over the last couple years and maybe even more so over the last 12 months. But I think we have an opportunity to kind of convert that business and, and move that over.
Meanwhile, the other one is that some of the large markets in the United States, as an example, you know, there is a huge opportunity because you have large numbers of machines, you know, the MRI scanners that are out there that are capable of doing cardiac or more cardiac but there are barriers that currently exist that are somewhat restrictive, whether they be on the training side, whether they be on the business side reimbursement or building a business case or the like. One of the things that we've been working on feverishly over the last few months is a program called Cardiac Catalyst which is really focused on market development. This is an initiative which in a very short period of time we've rallied support from multiple, uh, jurisdictions including society for MR, from our partners GE and Siemens, as an example, and a group of advisors, and so kind of going down that road is, is certainly a good one.
So I think those are the sorts of things that are gonna drive the organic growth within Cardiac MR.
It's worth noting, I mean, the problems that we solve for our customers are really deeply technical ones. Our engineering team, I think Chow, our CTO once told me over a board dinner that two thirds of our engineers have advanced degrees, including a third that has PhDs and you need a really multi-disciplinary set of technical capabilities. You need to be very deep in cardiovascular health, you need to be really deep in computer science and artificial intelligence, and we wrap all of that together into our processing software and it strikes me that being able to solve challenges this deep has been a real mote for us. Can you maybe talk about some of the advancements we've made in AI specifically over the last many years that have led us to having this market leading position and, and really now with AI coming to a head more broadly across enterprise software, how that positions us for the future.
Yeah, I mean, no question, Carl, 'cause we, we entered, um, when we founded the company we were certainly not the first to be a company that was building a software to compete with scanner manufacturers. There were others that were out there. We started hiring our engineering team [inaudible 00:25:14] chief technology officer, he has a PhD in artificial intelligence when he joined us and so right from the get go, that would have been back in 2009 or 2010. It was always a focus of what we could build into the software to really make what was complicated and time consuming very simple and fast.
And then the other notion around that was the ability to validate that amongst the community to ensure that people would trust the results and, and one of the early things that we did as a company was that we really knew our customers. Like, you know, I've worked with cardiologists most of my professional life and one of the things I knew that would not fly would be a black box approach to artificial intelligence where you basically, you put data in and, and get an answer out. So everything we did in terms of product and product development was we left the control to the practicing physician, either radiologist or cardiologist, but we made it for the point where we, we could make their life easier and simpler and faster, but all the while they maintain control of what was happening with their patients. There was no black box approach.
And so I think that was one of the key decisions that we made early in terms of our approach to AI which was a little bit different than, than others. And I think to some extent, things are changing a little bit now where maybe black box approaches validated for long clinical trials are becoming more accepted, but back when we were, you know, kind of forging our brand and that was an important point.
You know, the other piece was the access to data and, and again, very much a touchy subject with most hospitals from a patient confidentiality perspective. And, and so again, I think the fact that we had actually built very strong relationships and built very trusting relationships with the leading academic sites around the world, that they were willing to work with us in a very up front, uh, way to give us access to data to be able to do what we actually accomplished with the software. So it was really those things and even today, the list of reference sites who are not just customers but more collaborators is impressive. Our reputation is let's find out what's new with Circle and so we wanna make sure that that continues.
And a lot of that is just related to the advancement of the field. We talked about profusion, that's one, but then there's, there's just a whole notion around how do we make things safer for patients? And so how do we actually build a software where you don't need to deliver contrast agents or stress agents, you can do that without pharmacologic intervention. You know, all those sorts of things are really important and build on your point Carl, which, you know, we have that broad and intensive and deep understanding of the field and that's, I think, a key ingredient for success and, and actually, it's one of the ones that when we start looking outside of, you know, our vertical that I get a little antsy about 'cause we don't know all those ne- nuances and some of those other fields and so-
Hard to replicate that depth, yeah.
It is hard to replicate.
It was amazing how many of the thought leaders in cardiovascular health that we spoke with mentioned that Circle was a need to have. It wasn't a nice to have, it was a need to have. That struck us during diligence, how many times we heard that, and this was at some of the most well respected healthcare institutions around the world, many of which are, are academic in nature.
And, what's even more impressive is how we retain these customers. I think at last check, our logo customer retention is around 97-98%.
Yeah, that's right.
Which is just off the charts good. Once these hospitals embed us into their, their processes and once they've really adopted cardiac MR as a modality and as a way of treating patients, it's hard to get rid of Circle and that's a special thing.
So I thought we'd wrap up with a little bit of lightning round. How 'bout that?
The first thing you do in the morning when you get into the office is?
Well it's never the same, Carl. It depends on the day. I would say on a normal day would be check my email, that's the first thing you always do when you get into the office in the morning. And then the second thing I do is I walk around the office and say hello to everybody and have a chat and see how they're doing and kind of go from there.
Your absolute favorite part of being the CEO of Circle is what?
My absolute favorite part of being associated in a founder's circle is what we've accomplished to really improve patient outcomes around the world. I think for me that's the biggest one and when, when somebody asked me the short snappy one, my answer is we save lives. That's what this company does and we do it in so many different ways and from a career standpoint and a job perspective, if that doesn't get you going in the morning, nothing will, absolutely nothing will.
That's awesome. Last one, when you're not thinking about the company or working on the company, you're doing what?
I am managing my personal life with my lovely wife, Sandy. When you do what I do and probably what you do, Carl, you know, you can be successful in your business life but as important for me is being successful in my personal life. So managing and taking advantage of my wife and my kids and my grandkids and being able to fit that in for me is really what makes me a whole person and, and really one that allows me to do what I do. I mean, if you didn't do that, then you just become a person which... you just don't have the depth of personality and the depth of desire to live a full life.
Well said, I think that's great. Greg, thank you so much for making this time. Uh, it's a joy and a pleasure to work with you and the Circle team. The last year has been extremely busy, uh, it hasn't been a straight line, but it never is, but I am so pumped about the journey ahead of us and, you know, building Circle 2.0 to your point. So thank you for everything.
It's too easy to get tied down with the day to day and lose track of really what's in front of us and I think that's the stuff we need to, to really be focused on I think. So, I think we have a healthy balance for that, but, uh, this was fun, Carl, we should do it more often. (laughs)
(laughs) Let's do it.
Thanks for listening to Thoma Bravo's Behind the Deal and thanks to Greg Ogrodnick for taking the time to speak with me. To learn more about Circle and how they're transforming the cardiovascular healthcare industry, head to circlecvi.com. I'm Carl Press, stay tuned for more stories Behind the Deal on our next episode.
Thoma Bravo's Behind the Deal is produced by Thoma Bravo in partnership with Pod People. Join us next time for more stories behind the deal. I’m Orlando Bravo, thanks for listening.
Certain statements about Thoma Bravo made by portfolio company executives are intended to illustrate Thoma Bravo's business relationship with such persons rather than Thoma Bravo's capabilities or expertise with respect to investment advisory services. Portfolio company executives were not compensated in connection with their podcast participation. Although they generally receive compensation and investment opportunities in connection with their portfolio company roles. And in certain cases are also owners of portfolio company securities or and investors in Thoma Bravo funds. Such compensation and investments subject podcast participants to potential conflicts of interest.
Certain statements about Thoma Bravo made by portfolio company executives are intended to illustrate Thoma Bravo's business relationship with such persons rather than Thoma Bravo's capabilities or expertise with respect to investment advisory services. Portfolio company executives were not compensated in connection with their podcast participation, although they generally receive compensation and investment opportunities in connection with their portfolio company roles, and in certain cases are also owners of portfolio company securities and/or investors in Thoma Bravo funds. Such compensation and investments subject podcast participants to potential conflicts of interest.