ACP goes from startup to $155 million sale in a decade

The first priority for Hanger Orthopedic Group after it completes its $155 million purchase of Reno's Accelerated Care Plus?

Don't mess up ACP's winning formula.

Hanger, which is headquartered in Austin, Texas, said last week it signed a definitive agreement to buy ACP in an all-cash deal that's expected to close in early December.

ACP provides electric stimulation devices that speed the healing process for patients in nursing homes, rehabilitation centers and the training rooms of sports teams.

But Hanger executives said last week they were drawn to ACP not because of its technology but because of the ongoing training and consultation it provides to the 4,000 skilled nursing facilities it serves nationwide.

Thomas Kirk, president of Hanger, said that ACP's clients repeatedly told the Hanger team that handled due diligence that the ACP service was "rather indispensable."

Hanger said it wants to keep all of ACP's employees in place after the acquisition. The company employs somewhat less than 50 in its headquarters and distribution operation in Reno along with more than 150 licensed physical and occupational therapists nationwide who work directly with clients.

John Beach, chief executive officer and a founder of ACP, will remain in the top leadership position, and the company will function as a separate business unit within Hanger.

Hanger provides orthotic and prosthetic patient care services through 675 patient care centers in 45 states and the District of Columbia.

ACP's senior managers will buy about 500,000 shares of Hanger's publicly traded stock as part of the transaction.

The sales price will be based on the average of Hanger's share price during the 20 days before the deal was announced. That's about $15 a share, which would translate into the purchase of $7.5 million in stock by the ACP team.

The $155 million payday for privately held ACP spotlights the company's dramatic success since it arrived in Reno with four employees and no revenue 10 years ago.

Hanger said ACP's revenues this year will total about $57 million with earnings of about $17 million.

It said it expects those margins to remain constant and perhaps improve a bit after the acquisition.

ACP has posted revenue growth of 20 to 30 percent annually in recent years, and the company is debt-free.

In a 2008 interview, Beach said he designed the company to be a big player even before it recorded a dime of revenue. In mid-2007, the company's growth got a major boost through the sale of $24 million in convertible preferred stock to The ComVest Group, a private equity firm in Florida.

Kirk said Hanger Orthopedic Group sees strong potential to grow ACP's business. While the 4,000 skilled nursing facilities that use ACP programs include 22 of the 25 largest national operators of nursing homes, some 11,000 facilities remain as sales targets.

Other new markets include hospice facilities, home health care services and an expanded presence in sports medicine, Hanger executives said.

The aging population of Baby Boomers as well as millions of newly insured patients under federal health reform are expected to provide a steady stream of patients who need ACP's equipment and treatment programs, Kirk said.

ACP has been adding 40 to 50 new rehabilitation centers a month, Hanger executives said, and each of them pays somewhere between $900 and $1,200 a month for the equipment and support.