Coltala acquires Choice Health at Home: “We saw an opportunity – and we paid a good price for it”
Private equity firm Coltala Holdings has acquired Choice Health at Home, a growing home care provider based in Texas. Financial details were not disclosed.
Coltala’s capital and other resources will help Choice become a bigger player in home health care in the South. Other aspects of the agreement also reflect major industry trends.
Coltala executives have said they are “lucky” to be the acquirers of Choice, a sentiment that reflects how hot and competitive the current home health care market is today.
“We were certainly looking, but we weren’t optimistic about finding the right one,” Ralph Manning, co-founder and CEO of Coltala, told Home Health Care News. “And it’s really because the market has become so competitive. Finding an entry point, with any kind of momentum and scale – that you can afford – is really difficult. I’m not going to say we gave up, but we just had hope.
Dallas-based Coltala is a holding company focused on acquiring controlling interests in companies in the healthcare, manufacturing and business services industries. In addition to Choice, its investment portfolio includes services company CVC Trudela and Revere Packaging.
For its part, Choice, based in Tyler, Texas, is a provider of home health, palliative care and rehabilitation services. It has 40 total locations in Texas, Louisiana, and Oklahoma, with more than 800 licensed healthcare workers.
“Coltala has endorsed our leadership team’s vision for development plans for the company to become a leader on the post-acute care continuum,” Choice Founder and CEO David Jackson told HHCN. “The partnership provides access to significant capital, but the importance of a shared vision and path was imperative. “
The home care provider acquired Home Therapy of Austin last year and Shawnee, Oklahoma-based Angelic Hospice in January 2021. As of June 1, it also acquired Restore Home Health, which provides home health services. in central and northeastern Oklahoma.
Coltala has funded Choice’s recent growth and is actively helping Choice grow further. The tandem is currently seeking home care and hospice acquisition opportunities in Texas, New Mexico, Oklahoma, Louisiana and Arkansas.
To get their hands on a supplier with the potential of Choice, Coltala knew it would have to pay a hefty price. But he was willing to do so, given the mergers and acquisitions environment and favorable winds the home health industry is currently experiencing.
“I think we expected a [inflated price]”Manning said.” We probably invested in Choice sooner than maybe a lot of companies would. “
The choice was growing fairly quickly under the leadership of the founder and Jackson, however, Coltala felt it was a good time to catch up with the company on its upward trajectory.
“Home health care has become more expensive than most of the other asset classes we look at,” Coltala president and co-founder Edward Crawford told HHCN. “We recognized the opportunity and paid a good price for it, but we were always willing to pay the right price for the right opportunity. And we saw that as the right one.
There are many challenges in home health care. But the opportunities outweigh these challenges for private equity firms and other buyers.
“It’s about finding a company like Choice that has tremendous potential for scalability,” Manning said. “[With] market opportunity to really go and execute this. With Choice, David Jackson is an incredibly talented entrepreneur. He knows exactly where he wants to go, recognizes what the market opportunity is today and now has the resources and capabilities we can bring, so he can get there much faster.
Home care transactions declined significantly in the first quarter of 2021 compared to the first quarter of 2020, but this can be attributed in large part to the fact that buyers finalized deals made in the second half of last year, according to mergers and acquisitions consultancy Mertz Taggart.
Overall, in the first quarter there were 23 combined transactions between the home health, hospice and home care segments.
“Demand is at an all time high,” Cory Mertz, managing partner of Mertz Taggart, recently told HHCN. “I’ve been selling home care businesses for 15 years and I’ve never seen a market like this. Like everything, that too will cycle.
The home health opportunity
“Margin and Mission” is Coltala’s motto, as Manning and Crawford – now in private equity – both come from nonprofit and mission-driven backgrounds.
Home health is, for them, a place where building a great business also means touching more lives in a positive way.
“This approach applies well to any business, but especially home health care, where you take care of patients and try to provide better quality care,” Crawford said. “You notice that the best companies are the ones that end up being the most profitable, but they are also the ones that provide very high quality care and take the best care of our mothers and fathers. ”
But one of Coltala’s main concerns during the on-scene investigation for post-acute care organizations like Choice was staffing.
Both had previously worked with home health agencies. They already knew that the potential for growth meant nothing without the right staff.
“They moved up really quickly, they put together a finance team and they really hired some amazing people,” Crawford said. “When we first met Choice, they were in the double digits for offices. And now they have 40 offices with 800 employees in three different states. And so the fact that they were able to hire the right people and grow quickly was great to see. “
Part of Coltala’s confidence in Choice comes from the experience of its leaders. Jackson is a physiotherapist by training and Trina Lanier, the COO, is a registered nurse.
“Choice has a history of recruiting capabilities exceeding industry averages,” Jackson said. “The public health emergency has also pushed the company to develop some of our applications with technology and interdisciplinary communication. “
Another reason Coltala was happy to invest its resources in Choice was these opportunities for technological advancements in home health care.
Choice’s remote patient monitoring (RPM) platform has enabled it to be successful during the pandemic in ways other vendors could not.
“During COVID, there were doctors who couldn’t see their patients unless they went through Choice,” Crawford said. “So we also see this as a great opportunity to touch more lives and help more people, and also allow more people to be in their homes rather than in institutions.”