Audax nears deal for 3 Rivers’ Phoenix Rehab

  • 3 Rivers recapped PT company in November 2013
  • Expected to command Ebitda multiple around 12x
  • Phoenix formed in 1997

Audax Group is nearing a deal to acquire Phoenix Rehabilitation and Health Services from 3 Rivers Capital, according to four sources.

The expected deal would conclude a Cain Brothers-run sales process for the Blairsville, Pennsylvania, network of outpatient physical and occupational therapy clinics.

Phoenix Rehab produces adjusted Ebitda just south of $10 million, sources said previously.

The company was expected to command a multiple of Ebitda of around 12x, one source said, which suggests a valuation around $120 million.

The auction for Phoenix Rehab was characterized as robust, with the asset having benefited from scarcity value. With strong market density in Pennsylvania, Phoenix Rehab’s more than 70 locations also span Alabama, Delaware, Maryland and Virginia.

Phoenix Rehab’s range of outpatient services includes physical therapy, occupational health, occupational therapy, athletic training, massage therapy, Pilates and chiropractic care.

The company was founded in 1997 by CEO David Watson, a former executive of Northstar Health Services and Keystone Rehabilitation Systems.

3 Rivers Capital, Pittsburgh, completed a recapitalization of Phoenix Rehab in November 2013.

3 Rivers, alongside existing management and F.N.B. Capital Partners, provided equity for the transaction, a statement at the time said. First Commonwealth Bank and FNBCP provided debt financing.

In other recent sector activity, Sheridan Capital Partners in October invested in Empower Physical Therapy of Phoenix. Atlantic Street Capital in September acquired Washington’s OrthoBethesda.

Pamlico Capital in July merged One on One Physical Therapy with JAG Physical Therapy to create JAG-ONE Physical Therapy.

In February, Alliance PT, an affiliate of GPB Capital and Alliance Physical Therapy Partners, purchased the U.S. operations of Agility Health for $45 million. Alliance less than a week ago sold its long-term care unit to Beecken Petty O’Keefe’s HealthPRO Heritage.

In January, Revelstoke’s Upstream bought Drayer Physical Therapy, while the latter’s existing shareholder, Goldman Sachs Merchant Banking, rolled over equity in connection with the transaction.

Representatives of 3 Rivers Capital, Cain Brothers, Audax and Phoenix Rehab didn’t return requests for comment.

Audax, with offices in Boston, New York and San Francisco, closed its sixth private equity fund in September, collecting $3.5 billion.

The middle-market firm’s latest healthcare-related investment came in July, when it purchased Riverside’s MNX Global Logistics, a provider of logistics services provider for the healthcare and aviation markets.

Action Item: Get in touch with 3 Rivers Capital at +1 412-765-2491