A group of veteran Nashville entrepreneurs have inked a deal to expand their latest venture’s Southeastern footprint.
HomeFirst Home Healthcare has secured an $11 million round of funding, said CEO Jim Happ, led by Atlanta-based Fulcrum Equity Partners, with participation from existing investors, including Harpeth Ventures.
The funds will be used to purchase Mountain Home Health, which has locations in North Carolina and Georgia, and BridgeWay Home Health, which has two locations in Atlanta. Terms of those deals were not disclosed.
Home health companies have boomed amid the pandemic, as the need to keep patients out of hospitals filled with Covid-19 patients has increased. Amedisys purchased Nashville-based home health firm Contessa Health for $250 million last year, while hospital giant HCA Healthcare Inc. bought a majority stake in Brookdale Senior Living Inc.’s home health, hospice and outpatient therapy business for $400 million.
The $11 million investment reunites Fulcrum and Fulcrum partner Tom Greer with Happ and HomeFirst board member Wally Dant. Fulcrum invested in Nashville-based home health firm Suncrest Health in 2008, Greer said, where Dant was CEO and Happ was chief operating officer.
Suncrest was purchased by Almost Family Inc. in 2013 for $75.5 million.
Greer said his experience with Happ and Dant was a driving factor in Fulcrum’s investment in HomeFirst.
“We know that the market is there. So, there’s not a lot of market risk. There’s no technology risk here, because we’re not inventing anything new,” Greer said. “So, it’s all about execution. Backing good people that do it the right way. … I like people that don’t cut corners, do it the right way and have the right mindset, in terms of taking care of people, and that have done it before. When you look at Jim and the team that’s around him, we’ve known these people for years, we’ve seen how they operate. That takes a lot of the risk away. … It makes sleeping at night a lot easier, because you know you’re backing people that do it the right way.”
Founded in 2020, HomeFirst launched by purchasing two facilities, one in Nashville and one in McMinnville. Happ said the company’s strategy is to purchase companies in or around Tennessee, in states that have a certificate of need law, which requires state approval for the construction of new health care facilities.
“[Certificate of need (CON) states] are still highly competitive but it gives you an opportunity to compete in a way that is different than the non-CON states,” Happ said. “I personally believe it allows for the industry to have a better reputation, because it’s a barrier for entry to home health. It pays to have experience and it’s a people business but it’s not capital intensive. You get into some of these non-CON sates and you get entrepreneurs who decide that home health care seems like it would be a great industry [to enter] because the population is aging, there’s higher demand. … That’s not always a good thing for the state, for the local community or for the payers.”
Greer said Homefirst will spend 2022 making sure the resources and infrastructure are in place for continued growth. But he didn’t rule out more deals in the meantime.
“The infrastructure is really important to us because we want to take it from this entrepreneurial company to a professional company. Not that Jim is not professional but he hasn’t had the resources,” Greer said. “If acquisitions come along that make sense, we will absolutely pursue them. But it’s not like we go, ‘We have to have three deals done in the next year.’ It’s going to be opportunistic and make sure it’s the right acquisition. … From my standpoint, I want to make sure that [Happ] has what he needs … to make this a true platform that can really grow and become a big regional and potential national provider.”
A previous version of this story included an incorrect photo that was provided to the Business Journal.
