PE Deals

PE-backed RHA Health Services weighs sale

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Frontenac, Behavioral Health Group, opioid, addiction treatment, private equity, merger, M&A
  •  Asheville, North Carolina, company provides support services in N.C., Tenn., GA and UT
  • Formation, Safaned investment dates to Nov. ’15
  • Process comes as Onex-backed BrightSpring evaluates sale

RHA Health Services, whose support services are tailored to those with intellectual and developmental disabilities or behavioral health needs, is exploring a sale, according to four sources.

The Formation Capital-backed company retained Moelis for financial advice, the sources said.

Marketing materials have been distributed, but discussions with potential financial buyers remain in early stages, sources said.

Some sources pegged the asset’s Ebitda at about $30 million to $35 million.

RHA, Asheville, North Carolina, was acquired by funds managed by Formation Capital and Safanad Ltd in November 2015. Capital One supported the acquisition with a $68.1 million secured term loan and a $30 million revolving credit facility.

Founded in 1989, RHA offers a range of community- and residential-based services, including supported living, waiver programs and employment services tailored to individuals living with intellectual, physical and developmental disabilities, or IDDs.

The company in 2006 expanded its offerings to address mental health and substance abuse needs, and today provides various clinical services, prevention and recovery programs, outpatient care and crisis services.

RHA offers services in North Carolina, Tennessee, Georgia and Utah.

The process is kicking off about a year after company President Jeanne Duncan took the helm as CEO following the October 2017 retirement of RHA’s longtime chief Gordon Simmons.

While RHA is likely a better fit for sponsors seeking a growth platform, sources also suggested it could fit with larger strategic platforms offering similar services.

One is Onex Partners’ BrightSpring Health — formerly ResCare — which is working with Goldman Sachs and Guggenheim Partners on a sales process of its own, Buyouts reported in early September.

There’s also publicly traded Civitas. Vestar Capital Partners in 2006 purchased the company, then known as National Mentor Holdings, and in 2014 took the company public. The PE firm continues to hold a minority investment in Civitas.

Representatives of Formation, Safanad and RHA didn’t return requests for comment, while a Moelis spokesperson declined comment.

Action Item: Read more about ResCare’s process