Sterling Venture Partners and Pacific Venture Group have co-led a $7 million Series A round of financing for Centerre Healthcare Corp., a company which hopes to operate in-patient rehabilitation facilities within hospitals.
With the fresh round of capital and a post-money valuation of $11 million, the St. Louis-based company is now trying to sign leases with top-tier hospitals.
“The company is about a year old. We’re in development stages and have made a number of contacts but haven’t executed any leases at this point,” says John Lewis, Centerre’s co-founder. “But we our pleased with the response so far.”
Lewis categorizes Centerre’s competition as hospitals which decide to operate rehabilitation facilities themselves, however Lewis, who expects to get paid by the insurance companies, says that is not the best way to go. “If a hospital does it, the people in the program are only 4% of their patients, for us it’s 100%. Frankly for them to focus an enormous amount of time on 4% is not the best use of their time,” he says.
Lewis should know. Prior to starting Centerre, he and John Keefe, the other co-founder, were senior managers at Intensiva (IHCC), long-term acute care facilities utilizing a hospital within-a-hospital model similar to Centerre.
Targeting hospitals in 24 Midwestern states, Centerre plans to use the money to show the hospitals that it has the dry powder available to pay for its leases.
“We really needed $7 million. If we had less gun powder than that, we couldn’t have gone to the hospitals we are targeting,” says Lewis.
Daniel Rosenberg, a principal at Sterling Venture Partners, which put $2.75 million into the deal, expects the company to need another round of financing before it hits its break even point at the end of 2003 or the beginning of 2004. “The biggest right now is signing up those hospitals,” Rosenberg says.
Lewis agrees and while he wouldn’t say how large a potential Series B might be, he says it will be larger than this round. “A Series B is slated for 19 months out. We anticipate having several leases executed and being profitable in at least one hospital before we go for a Series B round,” says Lewis.
River Cities Capital Funds of Cincinnati, which just closed its third fund with $158 million in September, also participated in this round.
Rosenberg and Eve Kurtin of Pacific Venture Group will join Centerre’s board of directors.
Contact Danielle Fugazy