Varsity’s Emergency Care Partners merges with northeastern peer, adds Regal Healthcare to investor base

  • Jon Santemma’s recently-launched Regal Healthcare Partners joins as co-investor
  • Bill Yarbrough, former longstanding CEO of EmCare, takes the helm
  • Combined company posts >$20 mln Ebitda

Five months after Varsity Healthcare Partners recapitalized newly created Emergency Care Partners, the company is adding a new investor while it more than doubles in size through its marriage with Progressive Emergency Physicians.

The newly combined provider of emergency medicine and emergency-department-management services will be based in Pensacola, Florida, servicing departments at 19 hospitals across Louisiana, New York and Pennsylvania. Emergency Care Partners enters the Northeast markets through the transaction.

Financial terms of the merger weren’t disclosed, but Emergency Care Partners post-transaction accounts for north of $20 million in Ebitda, according to people with knowledge of the matter.

Long Island, New York-based Progressive, which received financial advice from Nexus Health Capital on the transaction, had previously received inbound interest from strategic buyers, they said.

In connection with the transaction, Regal Healthcare Capital Partners, a New York healthcare-services firm launched just over a year ago, will join as a minority investor.

Regal was founded by Jon Santemma, former global head of healthcare investment banking at Jefferies, alongside David Kim, co-founder of CityMD’s predecessor, Premier Care Urgent Care. Kim also founded Progressive Emergency Physicians.

Regal’s Kim will join the Emergency Care Partners’ board. Progressive CEO Andrew Sama will remain on the new company’s executive leadership team and will also serve as a director.

In addition, Emergency Care Partners has tapped industry veteran Bill Yarbrough as CEO of the new company.

Yarbrough, who will also serve as a director, held the CEO post for close to 30 years at Envision’s physician practice management subsidiary, EmCare Physician Service. The executive most recently was executive vice president at Envision.

Emergency Care Partners will continue to differentiate itself through a focus on emergency medicine and related services within small- and medium-sized hospital departments.

Most players of scale — Blackstone’s TeamHealth, EmCare, Schumacher Clinical Partners, for example — concentrate on larger emergency departments and have tended to fuel growth largely via M&A.

Its strategy to win new business — or rather, unseat incumbent emergency department providers — will revolve around a focus on quality service and technology, physician-equity partnerships, as well as its ability to keep overhead costs and leverage levels low, one of the people said.

Both companies have grown entirely through organic efforts prior to the merger.

The new company will employ 194 physicians and 216 mid-level providers, treating more than 670,000 ER patient visits annually.

Varsity in September created Emergency Care Partners through the joint recapitalization and growth-capital partnership with the shareholders of Professional Emergency Medicine Management and Professional Emergency Physicians Associates.

The Los Angeles firm invested in Emergency Care Partners out of its second fund, which raised $300 million in January 2017.

In other recent platform investments, Varsity struck two deals in October, adding opioid-treatment provider Ideal Option and  Probo Medical, a reseller of refurbished ultrasound systems.

The firm also owns Orthopaedic Institute, the largest provider of orthopedic services and ancillary offerings in north-central Florida.

Sheppard, Mullin, Richter & Hampton provided legal advice to Varsity and ECP, while Greenberg Traurig provided counsel to Progressive.

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