Sponsors circle 3 Rivers Capital’s Phoenix Rehab

  • 3 Rivers investment dates to Nov. ’13
  • >70 physical therapy clinics in PA, AL, DE, MD, VA
  • Process follows Lindsay Goldberg purchase of New Harbors

Nearly five years into its investment, 3 Rivers Capital is exploring the sale of Phoenix Rehabilitation and Health Services, four sources familiar with the matter told Buyouts.

Cain Brothers is offering financial advice to the Blairsville, Pennsylvania, network of outpatient physical and occupational therapy clinics, the sources said.

Phoenix Rehab produces adjusted Ebitda a little south of $10 million, they added.

Financial buyers have expressed significant interest in Phoenix Rehab, which sources described as a stable, professionalized company with a strong management team.

Scarcity value is also likely to bode well for the company, given that few platform-size groups are currently available for picking, sources said.

Phoenix Rehab would also be a great fit for existing PE-backed platforms wanting to build density in Pennsylvania, as the asset would fill East Coast providers’ gap in rural Pennsylvania markets, one of the sources added.

The pool of logical sponsor-owned platforms could include the likes of Advent International’s ATI Physical Therapy, BDT Capital Partners-backed Athletico Physical Therapy, Pivot Physical Therapy and Revelstoke Capital PartnersUpstream Rehabilitation.

In addition to Pennsylvania, Phoenix Rehab’s more than 70 locations 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 D. 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 the equity for the transaction, an announcement at the time said. First Commonwealth Bank and FNBCP provided debt financing.

3 Rivers focuses on equity recaps and buyouts of small family-owned companies producing $3 million to $10 million of Ebitda.

This year has seen a pickup in physical therapy activity following a relatively quiet 2017 outside of add-on M&A.

Among the most notable, Lindsay Goldberg in June bought New Harbor Capital’s PT Solutions following a highly anticipated Jefferies-run auction.

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.

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 and Phoenix Rehab didn’t immediately return requests for comment.

Action Item: View 3 Rivers’ full portfolio