Preferred Homecare

Summary

Financial Advisor

Phoenix, AZ

Preferred Homecare is a healthcare provider specializing in home-based medical care and durable medical equipment (DME) services. They serve patients who require medical support in the comfort of their homes, often after hospital discharge or for managing chronic conditions.

Carl Marks Advisors (CMA) was engaged to assist the Sponsor and Board of Directors in addressing critical challenges, including a maturing credit facility, limited liquidity, a failed sale

CMA conducted a business assessment to stabilize liquidity, improve performance, and develop a strategic plan, analyzing multiple options to maximize stakeholder value and secure lender support. The company faced severe liquidity constraints, including past-due payables and canceled revenue bonds requiring additional collateral.

CMA then led the wind-down of California operations, managing 16 locations, over 600 employees, and tens of thousands of oxygen, ventilator, and DME patients.

CMA’s efforts increased EBITDA, generated positive free cash flow, and facilitated the sale of home infusion and RT/DME business lines in two transactions, delivering returns to equity holders previously considered out of the money.

Key Challenges

Customer Pricing Pressure

Competitive Market

High Capex Requirements

Engagement Highlights

Phase 1 – January 2017 – March 2017: CMA performed a comprehensive business assessment focused on stabilizing liquidity, improving financial performance, developing a strategic plan, and gaining both Board of Director and Lender support.
- Liquidity: PHC was challenged by past due AP, nervous suppliers, no available liquidity and the cancellation of revenue bonds requiring incremental collateral to be reinstated.
- Strategic Plan: CMA analyzed seven different potential paths forward for PHC, evaluating the options we believe both maximized the value to all stakeholders and afforded the best opportunity for lender support.
Phase II: July 2017 – January 2018: CMA was asked to lead the wind down of the California operations.
- CMA’s responsibilities included full operational authority to oversee and direct the wind down of 16 locations, 600+ employees servicing ≈25,000+ oxygen patients, ≈5,000+ ventilator patients and ≈35,000+ DME equipment rental patients.
Resolution: Over the tenure of CMA’s engagement, the Company significantly increased EBITDA, generated meaningful positive free cash low and sold home infusion and RT/DME business lines to separate buyers in two different transactions returning proceeds to the equity (previously believed to be out of the money).

Preferred Homecare

Summary

Financial Advisor

Key Challenges

Engagement Highlights

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