AccentCare Inc., an Irvine-based elder-care services company, has received $25 million in a third round of private financing.
The company provides care and management services for senior citizens who want to remain at home, rather than go into nursing homes. Two-year-old AccentCare has raised $45 million to date, said President Joe Davis.
Three Arch Partners of Menlo Park and Highland Capital Partners of Boston led the investment round with $20 million. The remaining money came from several returning investors: Cardinal Health Partners of Princeton, N.J.; Mission Ventures of San Diego; Piper Jaffray Ventures, the Minneapolis-based venture arm of U.S. Bancorp; and Salix Ventures, with offices in Nashville, Tenn. and San Francisco.
Richard Lin, a Three Arch partner, and Wyc Grousbeck, a general partner of Highland Capital, joined AccentCare’s board of directors in the deal.
“The proceeds from the financing go into three buckets,acquisitions, new startup offices and working capital,” Davis said.
AccentCare got the word out for its fundraising bid during a series of road shows coinciding with several healthcare investment conferences, Davis said. The company was able to meet with “a lot of private equity investors” during those times, he said.
The company’s funding comes amid a tightening of investor purse strings in the wake of the technology stock meltdown.
“The financing climate right now in general is very tough,” Davis said.
A lot of venture capital firms have less time to look at new opportunities because they’re tending to firms they’ve already invested in, he said.
“The upside is that more traditional businesses (are getting funding),” Davis said.
Three Arch’s Lin downplayed the tech meltdown issue, noting that healthcare-focused firms such as his operate in a different segment and can “cherry-pick premier companies.”
Three Arch has followed AccentCare for about two years, Lin said. His firm decided to fund AccentCare for three reasons, he said: management, “a proven business model” and a large market to address.
AccentCare operates in California and Arizona and is looking to expand to either Florida or greater New York in the fourth quarter, Davis said. Later potential markets include the Midwest (Ohio, Michigan, Illinois and Indiana) and Texas.
AccentCare’s target population is the frail elderly,most typically a woman who is 80 or older,and baby boomers who have care-giving responsibilities.
Most of the company’s services are non-medical, such as meal preparation, bathing, dressing and toileting. But Davis said that AccentCare does employ registered nurses who act as care managers and coordinate a client’s medical needs.
AccentCare’s services aren’t subject to the vagaries of health insurance.
“This is not covered by Medicare. The bulk of our payers are consumers, with some long-term care insurance,” Davis said.
AccentCare expects to have $35 million in revenue and to be profitable this fiscal year, which began last month, according to Davis. But AccentCare doesn’t have immediate plans to go public.
“We think we have to have substantially more revenue than $35 million and good profit before you can take a company public in this type of market,” Davis said. “We’re building a company that’s focused on quality and being built to last.”
AccentCare employs approximately 1,500 people, including 100 in Orange County at its corporate office and a field office, also in Irvine. It was co-founded in 1999 by Davis and Robert Prosek, the company’s chairman and chief executive. n
