Race to be biggest

ROCKY HILL, Conn., and ST. LOUIS - Within months of each other, two national complex rehab companies received injections of capital from private equity firms, allowing them to speed up their growth.

In January, Rocky Hill, Conn.-based ATG Rehab brought on Boston-based Audax Private Equity as a majority partner. In November, St. Louis-based United Seating and Mobility (USM) brought on Philadelphia-based LLR Partners as an equal partner.

"This will give us the cash to continue to grow, but do it a little bit more quickly," said Bob Gouy, co-founder and CEO of USM, which has 31 locations in 16 states.

ATG Rehab isn't a stranger to private equity. It was created when outside investors put up the cash to roll up several complex rehab companies, including Connecticut Rehab and AAA Medical. But it's USM's first brush with private equity. Until now, Gouy and co-founder Bill Rubin have owned the company outright.

Company officials at both ATG Rehab and USM say they're responding to growth opportunities driven by a consolidation in the complex rehab market. While there'll always be small- to medium-sized companies, it's the larger companies that are better positioned to absorb current and future pressures, they say.

"There are a lot of companies out there without scale having difficulties because of reimbursement changes," Gouy said. "That creates opportunities."

While private equity firms can be demanding of the companies they invest in, officials at both ATG Rehab and USM say adding Audax and LLR to the picture doesn't change the game much.

"ATG has always been a company about efficiency and process and metrics that allow us to measure our business and continue to advance our position," said Cody Verrett, vice president of sales and marketing for ATG, which has 26 offices in 19 states. "Audax will help us predict and project our business with a better level of focus and precision, but it's something that we've been focused on all along."

That private equity firms are looking to complex rehab companies as investments is a good sign, say company officials at both ATG Rehab and USM.

"It's an important business," Verrett said. "This infuses true credibility in the market from a financial perspective that we're not all just mom-and-pops, that we're sophisticated companies with strong financial backers that believe there is growth here."