When putting together a list of home health giants, Intrepid USA Healthcare Services sometimes gets overlooked.
The Texas-based Intrepid USA has more than 60 locations spanning 17 states and a company history that goes back over five decades, but it mostly operates in rural areas. Its CEO, John Kunysz, often refers to Intrepid as a “flyover-state home health company,” in fact.
If all goes according to plan, however, it will soon be difficult to look past Intrepid. The large and highly diversified in-home care provider is gearing up for a major growth push, one that includes finding a new private equity partner to help take it to the next level.
“The decision was made about two years ago to transition to new private equity money, bringing that in because this is a market that requires extensive capital,” Kunysz told Home Health Care News during a one-on-one conversation at FUTURE. “Our rural footprint, at scale in 17 states, with private duty, personal care, home health care and hospice, allows us to really be an ideal platform play for a new private equity sponsor.”
For the past 15 years, Intrepid has been backed by Patriarch Partners, a family-office PE group with investments in more than 75 companies across 14 industry sectors. Founded by polarizing businesswoman Lynn Tilton, Patriarch and its affiliated investment funds have held ownership in and restructured 240 companies, representing more than $100 billion in combined revenues, since 2000.
That arrangement has grown into a “very successful relationship,” noted Kunysz, who has served as Intrepid’s top executive since April 2018. But the time is right for Intrepid to now press the pedal to the metal and solidify its place in a rapidly changing home-based care landscape, he said.
“The future is very bright,” Kunysz explained. “It’s such a large industry that there’s plenty of room for all of us. And demand and interest, that’s just exploding.”
Private equity’s expanding role
Private equity interest across the home-based care continuum has steadily increased over the past few years, with many new firms pushed toward the home as a result of the COVID-19 pandemic.
On Monday, for example, PE group Wellspring Capital Management announced it has reached a deal to buy Caring Brands International, the parent company of Sunrise, Florida-based Interim HealthCare.
In June, Coltala Holdings acquired a stake in Choice Health at Home, an expanding home-based care provider based in Texas. Choice also received additional PE support from Trive Capital in September.
When it comes to hospice, PE-driven transactions rose nearly 25% between 2011 to 2020, HHCN sister publication Hospice News previously reported, citing statistics from M&A advisory firm The Braff Group.
Within the PE space, overall health care deal volume hit record levels in 2020, increasing by 21% to a total of 380 transactions, according to Bain & Company data.
Intrepid expects to complete recapitalization toward the end of this year or in early 2022, Kunysz said. It is currently working with specialty investment bank Ziegler and Co. to secure additional private equity partners.
As far as plans for that capital, Intrepid is looking to build out its management team, innovate on the technology front and add to its care delivery model. The ultimate goal, Kunysz said, is to grow an in-home care platform that proactively engages with patients and families alike.
“Private equity money will allow us to make important investments,” he said. “With that capital support, we can take everybody up from being very small, local home care agencies and companies to truly national or enterprise-level providers. The idea is to build this comprehensive concierge family medical home care continuum of care.”
Investing in Intrepid’s workforce will also likely be a priority, considering the strong comments Kunysz made during his August Fast Forward interview.
“The way I see it, we’re running a hospital with 7,000 beds in 17 states and a couple thousand care team members, and that’s a much more complex and challenging clinical environment than a single location,” he said. “Continuing to attract, motivate and retain that key talent is going to be our challenge, because working in post-acute and home health care is still not nearly as sexy as working as a barista at Starbucks, or as a genius at the Apple store.”
Co-locating hospice, home health care
Landing a new PE partner will also help Intrepid execute on its M&A strategy.
On its to-do list, Intrepid wants to acquire new hospice assets to co-locate with its home health footprint. Of Intrepid’s more than 60 locations, 17 are hospice offices, leaving plenty of ground to be gained.
“We have an ability to grow 50 or so hospice locations and co-locate with our home health operations,” Kunysz said.
Intrepid is likewise seeking personal care acquisitions of scale, leaning into its preventative approach to in-home care. That can be a difficult box to check, though, as many of the available home care organizations are smaller in size.
“It’s hard to find a personal care company of scale that you want to buy,” Kunysz said. “I know we’re going to buy something of a scale, and then roll it out with a different approach and model to the industry.”
For the most part, Intrepid plans to target acquisitions in the revenue range of $8 million to $40 million.
Yet more than financial figures or census numbers, Intrepid is looking for home health, hospice and personal care companies with strong reputations and a sense of mission.
“Most everybody wants to go out and do census, EBITDA acquisitions,” Kunysz said. “They just go in, then rip them and flip them, right? From our standpoint, instead of exclusively census and EBITDA, we’re looking at doing a heritage-and-heart acquisition strategy. I want companies with 30-, 40- or 50-year histories. They may be second- or third-generation owner-operators.”
Similarly, Intrepid is prioritizing organizations with leadership teams that want to remain in place and accomplish bigger goals.
“They don’t have to sell because they’ve been around a long time. They’re dominant in their markets,” Kunysz said. “They’re making money, but they would love to do something to monetize their family’s life efforts. They don’t want to give it all away and just turn the keys over to somebody else, though.”
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