The financing, which closed on Jan. 15, included $150 million, composed
of first and second secured credit facilities worth $100 million and
$25 million respectively, and a $25 million revolving line of credit.
That capital was provided through a lending group led by GE Capital
Healthcare Financial Services and Silver Point Finance.
The fund-raising also included $25 million in new
equity provided by existing investors Altaris Capital
Partners, Three Arch Partners and Daniel D. Crowley,
chairman and chief executive of U.S. HealthWorks.
Previous investor Altaris purchased Salix's ownership
in addition to its new capital contribution, Crowley
said, in what should provide a "great" return.
Salix, which did not return a call for comment, first invested in
U.S. HealthWorks in 2001.
The new deal refinances U.S. HealthWorks' 2006 leveraged buyout, valued
at $185 million. Companies have been seeking to take advantage of improving
credit markets in the last six months, said Bob McCarrick, senior managing
director of GE Capital Healthcare Financial Services, which represents
a group of banks and institutional funds.
U.S. HealthWorks' new fund-raising is aimed at providing the company
with fresh capital for acquisitions, Crowley said. U.S. HealthWorks,
which operates 155 occupational health centers nationally, has closed
on about 26 new locations in the last 18 months. The new funds should
enable the company to continue that pace, with plans to add 35 new
centers a year for the next two years.
The occupational health center market is ripe for this kind of consolidation
as independent physician owners of centers increasingly look for acquirers
when planning to settle their estates, Crowley said.
"The down economy is spurring more people to become a seller," Crowley
said. "That spurred me to raise more money to become a consolidator."
In taking an independent center into its network, U.S. HealthWorks
brings certain advantages, Crowley said, by saving costs through access
to a larger corporate infrastructure and making it more affordable
to add services by sharing specialists among various locations. That
can result in new clients, growth that could result in a 15% field
margin rising to almost 30% in less than a year, Crowley said.
U.S. HealthWorks was cash flow positive, with earnings before interest,
taxes, depreciation and amortization up 20% in November from previous
years, Crowley said. The company will likely consider new funding alternatives
starting in 2011.
"Some would say that this is a company that could and would explore
an IPO," Crowley said. "I don't envision us doing that in
the near term. We would like to grow it and demonstrate
our platform for awhile."
Three Arch Partner Wilf Jaeger credited Crowley for coming on and
rejuvenating the company after its 2001 merger with HealthSouth's occupational
medicine division proved more difficult than expected. Like Crowley,
Jaeger sees potential for an eventual IPO or corporate acquisition
in the company's future.
"When we looked at this company we decided there was considerable
upside from where we are now," Jaeger said of the decision to
participate in this transaction. Three Arch led the
company's 2001 investment that also brought Salix
on board.
U.S. HealthWorks plans to focus most of its expansion into existing
state markets in Alaska, Arizona, California, Florida, Georgia, Indiana,
Maine, New Jersey, North Carolina, Ohio, Pennsylvania, South Carolina,
Texas and Washington. U.S. HealthWorks could close on eight new locations
in the next two weeks, according to Crowley, including three centers
in Arizona, three in southern California and two in northern California.
