Blue Wolf buys PE-backed RHA Health in ~$300 mln deal

Blue Wolf Capital has acquired RHA Health Services in a deal valued at approximately $300 million, according to people familiar with the matter.

The transaction provides an exit for Formation Capital and Safanad Ltd, whose Monday announcement confirmed Buyouts’ initial April report of the anticipated deal. Financial terms weren’t disclosed in the Aug. 5 release. The sale concludes a Moelis-conducted sales process for RHA that kicked off in the fall of 2018.

Cain Brothers, a division of KeyBanc Capital Markets, provided additional sell-side advice, the news release said. MidCap Financial led debt financing on the transaction, one of the people said.

In connection with the transaction, New York’s Blue Wolf will own a majority stake in the company, while RHA’s management team remains in place.

Led by CEO Jeanne Duncan, RHA serves individuals with intellectual and developmental disabilities, offering supported living, waver programs and employment services, among other services. The company also provides behavioral health and substance treatment services. RHA serves more than 25,000 people annually across its more than 440 locations in North Carolina, Georgia, Tennessee and Florida.

Asheville, North Carolina-based RHA produced approximately $34 million of Ebitda for its 2019 fiscal year ended June 30, two of the people said. The company anticipates full-year 2019 Ebitda in the upper $30 million- to $40 million-range, one of the people added.

The transaction follows activity involving RHA’s larger peers, Civitas Solutions and BrightSpring Health Services, formerly ResCare.

Onex Partners in December agreed to sell BrightSpring to KKR-backed pharmacy-services provider PharMerica in a deal valued at a 9x to 9.5x multiple of Ebitda, or at a valuation in the $1.3 billion to $1.43 billion range, a source told Buyouts at the time.

Around the same time, Centerbridge Partners agreed to buy Civitas in a $1.4 billion take-private, providing an exit for Vestar Capital Partners. The deal equated to a multiple of about 7.6x pro-forma adjusted Ebitda, according to another source. Blue Wolf, for its part, formed ClearSky Health earlier this year to focus on inpatient rehabilitation facilities and related post-acute-services company.

The firm launched the company alongside Greenwich, Connecticut, growth-equity firm Peloton Equity.

Blue Wolf in February acquired clinician-owned Fox Rehabilitation, a provider of in-home geriatric therapy services under Medicare Part B.

Blue Wolf and Formation Capital declined to comment, while those with Safanad and RHA couldn’t immediately be reached.

Action Item: Check out Blue Wolf’s latest Form ADV: