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Elm Creek Partners Acquires The Care Group of Texas

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texas care group nf2Elm Creek Partners has acquired The Care Group of Texas, a provider of in-home health services.  Bowside Capital, 747 Capital, and industry executive Roy Spradlin invested in The Care Group alongside Elm Creek.

The Care Group of Texas (CGT) is one of the largest providers of in-home, pediatric respiratory therapy and enteral feeding services and supplies in the greater Houston, Texas market. The company was founded in 1987 and is headquartered in Houston (www.caregrp.com).

Upon closing of the acquisition, Elm Creek appointed Mr. Spradlin as the company’s new chief executive officer.  Mr. Spradlin is the former CEO of Senior PsychCare and US Physical Therapy.  He has over thirty years of healthcare industry experience and an extensive track record of successfully growing and developing various healthcare related businesses.

Elm Creek Partners and The Care Group are looking to grow CGT through geographic expansion and additional services and Elm Creek has additional committed equity capital available to support these future initiatives.

Elm Creek Partners invests from $3 million to $6 million in companies with $5 million to $50 million in revenues and cash flow of at least $1 million. Sectors of interest include niche manufacturing, aerospace & defense, industrial services, healthcare services, and non-bank transaction processing.  The firm has no geographic limitations but prefers to invest in companies based in Texas and the surrounding states. Elm Creek Partners was founded in 2007 by Aaron Handler and Zach Wooldridge and is headquartered in Dallas (www.elmcreekpartners.com).

Bowside Capital invests in US and Canadian private equity funds with less than $150 million in committed capital, makes secondary purchases of limited partner interests in funds that meet its target criteria, and co-invests with these small funds and independent sponsors in direct transactions.  The firm was founded in 2009 and is headquartered in Charleston, SC (www.bowsidecapital.com).

747 Capital, through co-mingled funds and managed accounts, focuses exclusively on the small-cap private equity market in the US and Canada.  The firm invests in new private equity funds as well as select secondary opportunities and also makes direct investments.  Typical direct investment targets are US or Canadian based companies that have enterprise values under $100 million and cash flow under $10 million. The firm is based in New York (www.747capital.com).

Tangent Capital Partners (www.tangentcapital.com), a New York-based investment bank, was the exclusive advisor to the sellers on the transaction.

© 2014 PEPD • Private Equity’s Leading News Magazine • 12-3-14

Cressey & Company Exit Encompass Home Health and Hospice

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encompass nf1HealthSouth Corporation, the nation’s largest owner and operator of inpatient rehabilitation hospitals, has entered into an agreement to acquire Encompass Home Health and Hospice, a portfolio company of Cressey & Company, for approximately $750 million.  The transaction was approved by both companies’ boards of directors and is expected to close before the end of 2014.

Encompass is the fifth largest provider of Medicare-focused, skilled home health services in the United States. It operates in 140 locations across 13 states, with approximately 5,000 employees making more than 2.1 million patient visits annually. The company was founded in 1998 and is based in Dallas (www.ehhi.com)

Cressey & Company makes equity investments of $5 million to $100 million in healthcare services, providers and facilities that have at least $5 million of EBITDA. The firm has offices in Chicago and Nashville (www.cresseyco.com) .

Jay Grinney nf1“One of our stated strategic objectives has been to expand into home health, assuming we were able to acquire a high-quality, scalable asset that was capable of consolidating the highly fragmented home health industry. Today we are very pleased to announce the acquisition of the company we believe fits these requirements,” said Jay Grinney, HealthSouth President and Chief Executive Officer. “In addition to being best-of-class operators, Encompass also has demonstrated an ability to acquire under-performing home health entities and incorporate them onto their operating platform: since 2005 the company has successfully integrated 45 separate acquisitions. By utilizing HealthSouth’s strong free cash flow, we believe we can accelerate this pace of consolidation while, at the same time, continuing to expand our inpatient rehabilitation portfolio.

Harris Williams & Co. was the exclusives financial advisor to Encompass on this transaction.  Turner Bredrup, James Clark, Paul Hepper and Nick Owens of Harris Williams & Co.’s Healthcare & Life Sciences (HCLS) Group composed the transaction team.

“We have known April Anthony and the Encompass team since advising the company on its sale to Cressey in 2007. It has been exciting to see the team execute its patient-centered care model and growth strategy to become one of the five largest home health and hospice providers in the U.S.,” said Turner Bredrup, a managing director in Harris Williams & Co.’s HCLS Group. “Through their partnership with Cressey, Encompass has grown both organically and via acquisitions. We are pleased to have found the team another great partner in HealthSouth that brings incredible strategic synergies to bear as the team continues to execute on building the premier home health and hospice platform.”

J.P. Morgan Securities is acting as exclusive financial advisor to HealthSouth. Skadden, Arps, Slate, Meagher & Flom is acting as legal advisor to HealthSouth.

2014 PEPD • Private Equity’s Leading News Magazine • 11-25-14

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