MBF Healthcare, Kroviak get behind autism-treatment via newly launched Acorn Health

MBF Healthcare Partners, through one of three deals unveiled this week, is the latest sponsor to take a piece of the evolving autism-treatment market.

The healthcare-focused private equity firm teamed up with Vicki Kroviak, most recently CEO of eating disorder-treatment network Monte Nido, to form Acorn Health through two acquisitions.

The new platform provides applied behavior analysis treatment to children diagnosed with autism, serving more than 500 families in Michigan, Florida and Virginia. MBF is the controlling equity owner, while Kroviak serves as the second largest shareholder.

Since departing Monte Nido in May 2017, Kroviak said she knew she wanted to play an active role in the autism-treatment segment. She subsequently explored every permutation in which she could participate, whether as a board member, executive or otherwise.

She described her approach to the space as a mother, she said, as one of her three daughters has special needs. “It really informs everything I do and the work that we’re doing.”

And as Kroviak sees it, many of the challenges facing the autism-treatment industry are parallel to those she lived through during her years as an executive in the eating-disorder-treatment segment.

Initial foray

Kroviak initially entered the segment in 2007 when she co-founded Oliver Pyatt Centers alongside her college roommate. Oliver Pyatt in 2013 was purchased by Centre Partners via Monte Nido, which Levine Leichtman Capital Partners ultimately bought in 2015.

In both segments, the same issue applies: As underserved populations gain access to care amid increasing advocacy and legislative change, the industries are faced with a lack of standardization of care.

In other words, “as the floodgates open,” the autism-treatment industry will need to develop some consistent ways to measure clinical outcomes, Kroviak said. “I saw this in the eating-disorder sector and it feels very similar.”

The space has seen its share of high-profile sponsor activity in recent months, with valuations that speak to the sector’s need for more sophisticated models of care, said MBF Managing Partner Joseph Ibrahim.

“The purchase-price multiples that we’ve seen on a per-family basis reflect the massive growth opportunities in front of these platforms to really build out and provide the services of care that these families need, [as well] as a more professionalized structure and approach,” Ibrahim said.

For instance, Blackstone Group earlier this year bought founder-owned Center for Autism and Related Disorders in a deal valued at around $600 million, sources told Buyouts at the time.

KKR invested in Blue Sprig Pediatric through its strategic growth fund, while FFL Partners bought Autism Learning Partners from its backers for about $270 million, Buyouts reported.

MBF, for its part, about a year ago began evaluating investment opportunities in autism treatment and ultimately partnered with Kroviak in December following an introduction from Coker Capital’s Dan Davidson, Ibrahim said.

As the sharply fragmented industry continues to mature, Kroviak said, Acorn will focus on differentiating by emphasizing clinical talent and recruitment. Trained quality labor is among the industry’s greatest challenges.

In Kroviak’s view, clinicians are getting crushed trying to navigate payer dynamics, as opposed to spending time training, mentoring and collaborating with younger staff.

“That is what a lot of the clinicians in this industry are starving for,” Kroviak said. “We want to invest in the system and process so that we are empowering the clinicians.”

For MBF, which invests in middle-market healthcare-services companies, Acorn is one of a string of deals announced this week.

The firm invested in Rose Dental Group and formed Strive Dental Management, a dental service organization in Austin. It also acquired a majority interest in Affinity Hospice, which provides hospice care in Alabama and Georgia.

Action Item: Read more about sponsor interest in autism treatment here: https://bit.ly/2EbqYlJ