Sterling-Partners-backed Adeptus hires FTI for revamp advice

  • Adeptus’s stock price has collapsed over past year
  • Firm hired Houlihan Lokey to explore strategic options
  • Sterling Partners will not raise new fund

Adeptus Health, a portfolio company of Sterling Partners, hired FTI as a restructuring adviser amid a collapse in its stock price.

The company said on March 1 it also hired Houlihan Lokey Capital Inc as financial adviser for the board and management as they explore strategic options, an SEC filing shows.

Adeptus hired FTI’s Andrew Hinkelman as restructuring officer in connection with a debt extension the company agreed to with lenders, an SEC filing dated March 7 shows. The company also secured a $7.5 million temporary bridge loan through March 31 to pay certain expenses agreed to by its creditors, the filing said.

In return, Adeptus’s lenders waived certain default triggers on the company’s debt covenants, according to an analyst report from Jefferies.

Adeptus’s stock price has plunged from $72.35 on May 27, 2016 to $1.78 in midday trading March 28.

Sterling first invested in Adeptus in 2011, when it acquired a 75 percent stake in First Choice ER, a company founded in 2002 by Jacob Novak.

In 2013, Sterling created Adeptus Health as a holding company to own and operate First Choice emergency rooms, regulatory filings said. Adeptus was incorporated in Delaware in 2014 to become First Choice ER’s parent, the filings said.

Adeptus held a public offering on June 30, 2014, selling more than 5.3 million shares at $22 each. The company raised about $96.2 million after underwriting discounts and expenses. A Sterling Partners affiliate sold an additional 313,586 shares in the offering, the filing said.

The company held a secondary offering in 2015. How much of a stake Sterling retains is unclear.

Spokesmen for Sterling Partners, Adeptus, Houlihan Lokey and FTI declined comment.

Sterling, with offices in Chicago, Baltimore and Miami, earlier this year decided to forgo raising a Fund V and move forward on a deal-by-deal basis.

Sterling Partners closed Fund IV on $917 million in 2013, which it said it will finish investing. The firm then will be “most effective in an independent, single-deal model, with reduced restrictions,” Chairman Steven Taslitz wrote in a Jan. 31 letter to limited partners.

Two healthcare executives from the firm, Managing Directors Danny Rosenberg and Garrick Rick, are spinning out and starting their own shop, Buyouts exclusively reported in February.

Action Item: Check out Adeptus’s secondary offering document here:

An entrance sign to Texas Health Presbyterian Hospital in Dallas on Oct. 4, 2014. Photo courtesy Reuters/Jim Young