Agility Health attributes business growth to diversification strategy
Revenues have more than tripled in a decade.
With roots in West Michigan, a rehabilitation health care provider is seeing the fruits of its labor realized with $63M in revenue after a decade of developing partnerships and expanding throughout the nation.
Agility Health, headquartered at 607 Dewey Ave. NW, Grand Rapids, released a corporate update last week highlighting business revenue of $63 million for the fiscal year 2013 — up from $20 million in 2003 — as a result of the company’s overall business strategy over the past decade.
The corporate update attributes the success and growth of the company to an acquisition strategy of consolidating the fragmented physical therapy market, diversification of its geography and services, and investing more than $3 million in the development of a new software platform tailored to industry needs, known as AgileRPM.
Steve Davidson, chief executive officer at Agility Health, said the focus on geographic expansion and entering different service lines such as outpatient clinics and hospital outsourcing is one of the company’s strengths.
“You want a little international diversification in your portfolio to de-risk it, so I think that is something that we have really tried to do with our geography play, but also in terms of our diversification of our clinical services,” said Davidson. “If there is a reimbursement change in one area of our business, the impact is less significant.”
As of the end of the fiscal year 2013, Agility Health successfully completed nine acquisitions and continued to develop its business partnerships with outpatient clinics, health systems and its corporate clients, according to a press release. Two recent acquisitions that took place in late 2013 include Excel Sports and Physical Therapy for $3.6 million and Work-Fit for $6.3 million. Agility Health now has operations in more than 150 locations in states across the country, including Michigan, Arizona, Kansas, Massachusetts, Missouri, North Carolina, Pennsylvania and Texas.
Agility Health was originally acquired in 2003 from the Florida-based Brooks Rehabilitation Health System by Davidson and Kenneth Scholten during a management buyout, and at the time focused on only two outsourced rehabilitation services in long term care and in hospital settings.
“We really set about changing the overall strategy of the company and diversification in terms of where we provided our service geographically, because we were principally in Michigan and wanted to broaden our reach to other areas,” said Davidson. “The other thing we wanted to do was more of a partnering philosophy, so we really started partnering in different service lines.”
With its growth through acquisitions and developing collaborations with other clinicians who saw opportunities in the marketplace, Agility Health has a number of individual clinician-partnerships and relationships with existing organizations, according to Davidson.
“Each area in health care is really quite different. Even between Kalamazoo and Grand Rapids there is substantial differences in the health care market: different insurance companies, different hospitals, different physicians groups,” said Davidson. “More of our partnerships in outpatient are with existing companies, clinic groups that provided therapy services, and then we bought a super-majority of them, while they retained minority position.”
Several additional service line expansions incorporate increasing Agility’s retail and industrial audience, according to the press release. The company has roughly 10 to 20 Fortune 500 corporate clients, for which it provides onsite rehabilitation or preventive wellness services, such as Ford Motor Co., Boeing, Amway, Alcoa, American Airlines and the U.S. Women’s Tennis Association.
Another area of growth for Agility Health includes becoming a publicly held corporation through a reverse takeover transaction with Thornapple Capital Inc. in 2013 and implementing a company-matching employee stock purchase plan. Although the decision to go public was driven by economic factors such as access to capital, Davidson said the primary reason was to reward employees with the stock option.
“The non-economics really drove that process, so our employees can participate in stock purchase plans,” said Davidson. “Really it was a means to reward our core asset — which is our employees — with some form of economic benefit as the company grows and its value improves.”
One of the key initiatives moving forward to build on the company’s growth is bringing the AgileRPM platform to commercial market, which is currently implemented in 38 of Agility Health’s clinics. With an initial purpose of increasing efficiency in operational management, Davidson said the software product is an exciting area of development.
“It has been quite well received by our own internal clinicians for its compliance, compliance adherence and processes around that, and also how efficient it is. A lot of times technology can slow you down,” he said. “We are in the process of keying that product up for commercial release sometime later this year, or early next. We are looking to take advantage of our software development processes, as well.”
Agility Health also anticipates building more collaborative partnerships with hospitals in a joint-venture fashion and pursuing the acquisition of more outpatient clinics, according to Davidson.
“Growth through acquisition in outpatient clinics is significant. It is very fragmented and as the world becomes more complicated … these small private business owners are really struggling to maintain all the back-office functions,” he said. “Clinicians are not necessarily trained to deal with human resources, information technology issues or accounting issues. I think they are really looking for someone to partner and collaborate with, and I think we have seen lots of opportunities.”
With a number of leaders and management staff medically trained, Davidson said the clinical culture of the company contributed to Agility Health’s organic growth over the last decade.
“We have a very strong clinical culture and we tend to be West Michigan conservative, so I think the combination of that clinical culture really adds to a lot of things that we do, in terms of staff recruitment and acquisitions,” he said. “It resonates with other clinicians. It is a unique piece that a lot of our larger competitors can’t match.”