Source: ResCare failed to sell, now may be broken up, with Chrysalis Ventures interested
In August of this year, IL reported the massive Louisville-based health care firm ResCare was on the block. ResCare’s owner, Canadian private equity firm Onex Corp., had wanted something like $1 billion for it, which would have given it a nice return on the $545 million it paid for ResCare in 2010.
But that was August, and since then it looks like there have been no buyers for ResCare, which is, incidentally, the nation’s largest privately owned home care company.
So now, one health industry insider tells us Onex might be looking to break ResCare into smaller, more easily digested components. And there may be some interest from Louisville-area investors in at least one part of ResCare.
ResCare has 49,000 employees, with 1,000 locally, so a sale of the firm could have a big local impact.
“ResCare is off the market, they couldn’t sell themselves,” says the source, who has knowledge of the health care private equity world. This is a black eye to Onex and flies in the face of what a PE firm is supposed to do best, which is liquidate assets when it needs to. But not this time.
“They may look for other exit alternatives, like splitting ResCare up,” says the insider, adding it could become anywhere from four-to-six smaller pieces.
And Louisville venture capital firm Chrysalis Ventures just might be interested in a piece of ResCare, the source says. Specifically, the part of ResCare that relates to brain injuries.
IL put in a call to Elizabeth Rounsavall, director of research and analytics at Chrysalis, and asked whether the firm is interested in buying part of ResCare; she declined comment.
Our source also pointed out that Onex’s inability to sell ResCare comes at a time when there’s been some real buying and selling of firms. Most notably, and locally, was Kindred’s acquisition of Gentiva. Kindred was so hot to buy Gentiva that it kept on trying even as Gentiva’s managers and board kept on trying to get away, eventually settling on a price, $1.8 billion, that was a good deal north of their initial $533 million offer.
This is especially striking because Gentiva ran hundreds of millions in the red, even as Kindred did everything it could to buy it.
Yet as bad as Gentiva was, Kindred still wanted it. Yet no one wanted ResCare at all. So what does that tell you?
IL has contacted Onex to ask about ResCare being sold, but so far has not heard back.
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