Ark Holdings Inc., which is backed by New York and San Francisco-based buyout firm Behrman Capital, has acquired HMR Advantage Health Systems for $143.8 million. Easley, South Carolina-based HMR is an owner and operator of long-term care centers. Ark Holdings owns skilled nursing homes, and is based in Memphis, Tenn.
Behrman Capital, a private equity investment firm based in New York and San Francisco, today announced that its Ark Holdings Inc. platform of skilled nursing homes has acquired HMR Advantage Health Systems, a South Carolina-based owner and operator of long-term care centers, for a total consideration of $143.8 million. Through the transaction, which closed on December 29, 2010, Behrman also acquired a hospice company, Hallmark Hospice, previously owned and operated by HMR.
Founded in 1994 and headquartered in Easley, South Carolina, HMR has built a superior reputation for improving quality of life for seniors, from post-operative therapy to long-term skilled nursing. The company has 21 centers located in South Carolina, North Carolina and Georgia. As one of the Southeast’s largest providers of skilled nursing, it offers specialized rehab care, assisted living, long-term care and hospice care.
“The addition of HMR significantly enhances our Ark platform,” said Grant G. Behrman, Managing Partner of Behrman Capital. “HMR is a best-in-class organization that not only expands our footprint in the Southeast but also provides access to key ancillary opportunities through its hospice care operations. We look forward to working with Ark’s current leadership as well as HMR’s exceptional management team to continue to grow the business.”
Behrman Capital established Memphis, TN-based Ark Holdings in July 2007 through its acquisition of Covenant Dove Holding Company, LLC for approximately $250 million. Since that time, Ark has continued to execute a build-up strategy in the post-acute care sector with several smaller scale acquisitions, including the operations of 7 facilities formerly managed by Mariner in January 2008 and 3 Texas-based facilities owned by Sulik Healthcare Services in June 2008. In addition, Ark has made significant capital investments at several of its facilities as well as in a state-of-the-art information technology system. Following its acquisition of HMR, Ark will own and operate one of the largest privately held platforms of skilled nursing facilities in the country, with 59 homes and more than 6,000 patient beds.
Larry Deering, Chairman of Ark Holdings, said, “HMR, with its reputation as one of the Southeast’s premier long-term care providers, is the perfect addition to the Ark platform. The combination will enable us to leverage our deep management expertise and collective industry experience. We will also benefit from HMR’s complementary geographic footprint and the favorable reimbursement environment in which it operates. HMR represents the next step in Ark’s growth trajectory, which to date has mirrored our success with Tandem in creating a first-class organization for all of our patients, employees and investors.”
Mr. Deering is a Behrman Capital Operating Partner with more than 25 years of experience in the long-term care industry. He previously served as Chairman and CEO of Tandem Healthcare, a former Behrman Capital portfolio company. During Behrman’s 8-year ownership, Tandem’s revenues and profitability grew from $25 million and $3 million, respectively, to more than $550 million and $84 million.
Ark’s acquisition of HMR was primarily financed by Walker & Dunlop, utilizing the U.S. Department of Housing and Urban Development’s 232/223(f) loan program, which provides low-interest-rate, long-term financing with flexible prepayment options and no financial covenants. In addition to the HUD financing of $104.7 million, Capital Source also provided a 5-year $35 million revolving credit facility.
Goodwin Procter LLP and Buchanan Ingersoll & Rooney PC served as legal advisors to Behrman Capital for the transaction.
About Behrman Capital:
Based in New York City and San Francisco, Behrman Capital was founded in 1991 by Grant G. and Darryl G. Behrman. The firm invests in management buyouts, leveraged buildups and recapitalizations of established growth businesses. The company’s investments are primarily focused in five industries: health care, specialty manufacturing, outsourcing, defense and information technology. The firm currently has a combined capital base in excess of $2.0 billion. For more information, please visit www.behrmancap.com.