Cardon Outreach, a portfolio company of Serent Capital, has merged with Diversified Healthcare Resources (DHR), a California-based provider of eligibility and enrollment services for hospitals and healthcare facilities. Serent Capital remains the majority owner of the combined company.
Serent originally invested in Cardon Outreach, a provider of third party eligibility and other revenue cycle management services for hospitals, in January 2011. Since Serent’s initial investment, Cardon Outreach has recorded strong organic revenue growth, invested in its technology platform, and completed three add-on acquisitions. As a result, Cardon Outreach is growing at over 20% per year organically, and has achieved overall revenue growth exceeding 30% annually since 2011.
According to Serent, the merger with DHR creates a leading independent, national provider of technology-enabled eligibility and revenue cycle management services, with a suite of service offerings that includes patient eligibility, third-party liability, disability, and accounts receivable collection. As one entity, the companies will serve over 600 hospitals and 300 clinics and will have more than 1,100 employees. Cardon Outreach is based in Houston (www.cardonoutreach.com) and DHR is based in Anaheim (www.diversifiedhealthcare.org).
Specific benefits to the merger include providing Cardon Outreach access to the California market, the country’s largest and most complex Medicaid market; cross-selling Cardon’s services to DHR’s client base; and realizing benefits of scale from each company’s investments in technology. Looking towards the future, Serent sees significant organic and acquisition-driven growth opportunities in this highly fragmented market.
Serent Capital invests from $10 million to $50 million in service businesses with revenues of $10 million to $100 million and EBITDAs up to $15 million. Transaction types include buyouts, recapitalizations and growth capital. The merger with DHR represents Serent’s sixth healthcare investment since 2010. The firm is based in San Francisco (www.serentcapital.com).
Cain Brothers, a Chicago-based investment bank specializing in the healthcare industry, advised Serent and Cardon Outreach on this transaction (www.cainbrothers.com).
© 2015 PEPD • Private Equity’s Leading News Magazine • 9-10-15