A young but rapidly growing in-home care business headquartered in Nashville, Tennessee, has secured millions of dollars to further fuel its expansion.
The Atlanta-based Fulcrum Equity Partners announced Thursday the investment of $11 million into HomeFirst Home Healthcare, a home-based care platform company formed in September 2020 by a team of home health veterans.
The investment included support from existing investors, including Harpeth Ventures.
“Given our vast experience with larger-type organizations, the plan always was to expand the business by using our first acquisition as a platform,” HomeFirst CEO Jim Happ told Home Health Care News. “And to expand the business through not only growing in the markets that we’re in, but through strategic acquisition.”
HomeFirst Home Healthcare teamed up with Harpeth to launch its business a little over a year ago, with a concentration in Middle Tennessee. Specifically, the pair had purchased two home health operating licenses to serve a total of 24 counties.
Happ has held various home health leadership roles throughout the years, including serving as COO at SunCrest Home Health.
“I have over 30 years in the home health industry, working in different executive roles,” he said. “I’ve served as a chief financial officer, being a CPA. I’ve served as the chief executive officer for a large national company as well.”
With roughly three decades of experience, Happ’s thesis for HomeFirst was to establish an immediate presence in a Certificate of Need (CON) state and expand in that home market, then move into neighboring CON states.
The $11 million investment from Fulcrum – a growth equity firm that manages over $600 million in assets with a focus on health care services and IT companies, among others – allows HomeFirst to do just that.
The infusion of capital enabled the home health provider to acquire Mountain Home Health, which has multiple locations in North Carolina and Georgia, and BridgeWay Home Health, which has two locations in the Atlanta area. The financial terms of those transactions were not disclosed.
Overall, Happ and his team acquired five provider numbers through the moves.
Mountain Home Health and BridgeWay Home Health shared the same owner.
“For probably eight months, we had been looking at ways to get Fulcrum involved in investing in our business,” the CEO told HHCN. “When the opportunity came along for us to acquire these [assets], it was the perfect time.”
In addition to the investment news, HomeFirst has added two new members to its board: Wally Dant, who was CEO of SunCrest, along with Tom Greer, a partner at Fulcrum.
“I have worked together with Wally for many years, and he’s been extremely successful in the home health and health care industry, in general,” Happ said. “He adds tremendous value in many ways. And I’m really excited about having Tom Greer join our board.”
Moving forward, HomeFirst plans to continue exploring M&A opportunities in its current CON states, along with neighboring ones. It’s also looking at ways to add to its portfolio of services by potentially adding hospice in the near future.
The provider has already added private-duty services to complement its core home health offerings.
“We started out by essentially buying a very small revenue base, and we’ve basically rebuilt the platform,” Happ said. “We feel very, very good about what we’ve accomplished in the last 12 months, to really put together a very strong foundation, with a strong leadership team and an excellent employee base.”
While HomeFirst isn’t the largest home health player around, it’s bullish on its ability to gain market share and add scale in a highly competitive landscape.
It sees its concentrated focus and local presence as a strategic advantage, Happ explained.
“I think what’s really unique about us today is we’re not part of a large corporate chain,” he said. “I think that gives us a lot of local flexibility in many ways – in working with our referral sources, working with our employees and working with our patients.”
“Corporations do tend to have decisions made at a central place, someplace far away from where the business is taking place,” he added.
June 23, 2022 Update
Fulcrum Equity Partners, an Atlanta-based growth equity firm, has recently announced a follow-on investment for Nashville-based HomeFirst Home Healthcare with support from existing investors Harpeth Ventures. This follow-on round supported the recent acquisition of CV Home Health based in Centreville, Alabama, effective June 1, 2022. This investment comes closely after the initial $11 million investment in January 2022.
HomeFirst has seen consistent growth since its initial investment, with acquisitions in two new markets: North Carolina and Georgia. Building on its existing footprint in Tennessee by expanding where they currently serve, HomeFirst plans to acquire agencies in neighboring certificate-of-need (CON) states. They also plan to extend the spectrum of care and potentially add hospice and other ancillary services.
Although some home health providers favor Medicare or other commercial fee-for-service insurance payers, HomeFirst, in addition, plans to drive efficiency through proprietary software to work with the Medicare Advantage rates which operate on a per-visit payment basis.
According to CEO Jim Happ, “Our software system drives organizational efficiency. This means we can work to reduce our operating costs to generate a profit margin on a “per visit” basis. This system allows us to adapt to the rates while also actively pursuing new acquisition opportunities to grow our home health business. We plan to continue our mission of becoming one of the Southeast’s most trusted home healthcare providers.”
Fulcrum Partner Tom Greer has seen the healthcare industry evolve at an accelerated pace and is excited about the growth of healthcare service businesses via acquisition. “Fulcrum’s years of healthcare services investing experience enables us to partner well with companies like HomeFirst. We help them grow by increasing economies of scale and purchasing power and expanding into new or adjacent markets and new services lines while also improving outcomes,” says Greer. “We are excited to see HomeFirst’s acceleration and looking forward to our continued partnership with their strong leadership team.”
The M&A market for healthcare companies continues to strengthen in 2022 ahead of projected increases in US capital gains taxes. There is unprecedented capital in market, the lowest interest rates in US history and strong acquirer motivations for high quality healthcare companies. Across the continuum of care, buyers and investors are looking for well established, profitable businesses and offering strong valuations and options for management.
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