Gryphon’s CORA Physical Therapy taps adviser for potential sale

The San Francisco PE shop's investment in the physical therapy provider dates to June 2016.

Gryphon Investors is preparing to bring physical therapy provider CORA Health Services to market, according to people familiar with the matter.

Jefferies has been enlisted for financial advice on an upcoming sales process, the sources said.

A formal auction for the Lima, Ohio, company – which does business as CORA Physical Therapy – is expected to kick off in late Q1 or early Q2, or late March to early April, one of the people said. The process will target financial sponsors, the person said.

While marketing materials for the company have yet to be distributed, the sources placed estimated 2020 Ebitda at $40 million to $45 million. While too early to determine price expectations, the asset is expected to command a double-digit Ebitda multiple, they said.

Led by Co-founder, CEO and President Dennis Smith, CORA employs more than 1,800 and operates more than 200 outpatient physical therapy clinics across Florida, Georgia, Illinois, Kentucky, Missouri, North Carolina, South Carolina, Tennessee and Virginia, according to its website.

CORA provides outpatient treatment for orthopedic issues, work and sports injuries, as well as neuromuscular and neurological conditions. Its specialty clinics operate under the Body Gears Brand.

While the physical therapy sector saw minimal large-scale activity in 2019, Revelstoke Capital Partners in December completed its process of moving Upstream Rehabilitation out of its debut fund and into a newly created vehicle. Coller Capital was lead investor on the deal, a source told PE Hub sister publication Buyouts. The total value of the deal is not clear; however, sources previously told Buyouts Revelstoke needed up to $1 billion for the deal.

One source told PE Hub the deal valued Upstream around an Ebitda multiple of 14x to 15x.

In other recent activity, Partners Group in March 2019 made a significant equity investment in PT provider Confluent Health. Financial terms weren’t disclosed, but the deal was said to command a 14x to 16x Ebitda multiple, another source told PE Hub.

Gryphon, a middle-market private equity firm based in San Francisco, invested in CORA in June 2016.

The firm has backed many healthcare services companies, with new platform investments in 2019 including its acquisition of LLR Partners’ LEARN Behavioral, a provider of autism-treatment and educational services.

Gryphon engaged Moelis in 2019 to find a buyer for dental support organization Smile Brands, PE Hub reported. The auction has yet to produce a transaction.

Other existing portfolio companies include Water’s Edge Dermatology and OB Hospitalist.

Gryphon and Jefferies declined to comment. Cora’s Smith couldn’t immediately be reached.

Action Item: Check out Gryphon’s latest Form ADV: