Valley Healthcare fuels growth with acquisition

Provider also intros Great Elm Capital Group to health care
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Friday, September 21, 2018

MESA, Ariz. – Valley Healthcare’s growth plans got a big boost recently when it partnered with Great Elm Capital Group to acquire Portland, Ore.-based Northwest Medical.

“We’ve held out longer than most companies our size, but it was the right opportunity with someone who is equally as motivated as we are to continue to grow and grow stronger,” said Ron Evans, co-founder and CEO of Valley Healthcare. “They are very respiratory focused, very patient focused. To me, that’s important.”

Northwest Medical is Valley Healthcare’s eighth acquisition since Ron and Pam Evans co-founded the company in 2006. Combined, the companies, which will continue to operate under local brand names, will serve 70,000 patients annually across Arizona, Nebraska, Washington, Oregon and Alaska. They generated revenues of $43.6 million in 2017.

Despite the challenges of competitive bidding, Valley Healthcare, which is a contract supplier, has maintained yearly growth rates of 10% to 15% by leveraging scale and technology. Evans plans to apply those same principles to Northwest Medical.

“Valley’s compliance rate averages 93% to 95% at three months using technology and a lot of follow-up,” he said. “Northwest’s is 75% to 80%.”

Although Valley Healthcare’s main focus is respiratory, the provider has diversified into power mobility, which is growing at a rate of 25% a year in Arizona, said Evans. The company is also doing more work for hospice agencies.

“We may or may not expand those programs to Northwest Medical,” he said. “For now, it’s concentrating on what we know best: respiratory.”

This is Great Elm Capital’s first foray into health care. The respiratory focus of Valley Healthcare and Northwest Medical was a big attraction, says John Ehlinger, managing director, and Great Elm looks forward to growing the reach of both companies.

“We like some of the financial characteristics of respiratory and we like the competitive landscape,” he said. “We think there’s opportunity for both companies to grow organically, but we’ll also look at doing tuck-in acquisitions in the markets they are in now, and growing over the next several years and then spread out to a broader footprint.”