Eating Recovery Center, LLC (“ERC”) is the country’s leading provider of eating disorder treatment services and provides a full continuum of care for eating disorders at all levels of severity and stages of illness, ranging from medical inpatient care in a hospital setting to outpatient services.
Background and Source
Subsequent to reviewing several physician specialties in the late 2000s, Lee Equity identified eating disorders as a unique niche based on significant supply/demand imbalance, regulatory tailwinds, attractive patient unit economics, and lack of government reimbursement risk. We believe management chose Lee Equity as its preferred partner during its sale process due to its growth investing heritage and strategy consulting background to accelerate the growth of ERC.
Investment Thesis Highlights
- Rapid growth of eating disorder incidence levels and 2.5x demand/supply imbalance
- #1 player with industry leading clinical team with 135 years of combined experience in treating eating disorders
- Regulatory tailwinds of federal/state mental health parity laws
- Highly fragmented with significant consolidation potential
- Diverse commercial in-network payors with no Medicare or Medicaid exposure
Post-Investment Value Creation
- Lee Equity quantitatively and qualitatively ranked all major metro markets in a strategic market prioritization framework for growth, based on local supply and demand, payor concentration, payor rates, and other demographics. This growth framework had three strategic benefits – prioritization for marketing, prioritization for new facilities, and prioritization for acquisitions.
- ERC was led by an industry-leading clinical team and CEO. The remainder of the executive team was upgraded with a new CFO, COO, Chief Marketing Officer, and Chief Medical Officer.
- ERC grew from a regional provider into a national leader, expanding from 3 markets into 10 markets and 10 facilities into 25 facilities. The company more than quadrupled capacity and patient census during Lee Equity’s ownership.
- Under Lee Equity’s ownership, ERC acquired and integrated three acquisitions.
- ERC added a higher acuity hospital program, a mood and anxiety program, and a nationally recognized clinical team focused on binge eating disorders.
On September 21, 2017, Lee Equity Partners Realization Fund, L.P. sold ERC to a private equity firm, CCMP Capital Advisors.
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Investment TypeGrowth Buyout
Initial InvestmentDecember 2012
Key Transaction DatesSeptember 2017 Sale to Sponsor
Key Investment Metrics
Capital Invested$66.8 million
Realized Proceeds$283.6 million
As of September 21, 2017 sale.