Back in 2001, Irvine-based Cymetrix Inc. was a company with only $2 million in sales.
Cymetrix, which runs administration and financial services for hospitals, grew fast, posting some $30 million in revenue four years later.
Further growth became an issue. The company had to look at its options.
Enter Los Angeles-based private equity firm Riordan, Lewis & Haden, which invested in the company in 2005. As part of the deal, the firm took a minority stake in Cymetrix, which changed its name from Healthcare Management Solutions, and brought on Riordan, Lewis & Haden’s Irvine partner Murray Rudin to its board.
Now Cymetrix is expecting $35 million in revenue this year and eyeing sales of $45 million to $50 million next year.
The company had been searching for an investor, according to cofounder and Chief Executive Michael Halberda.
“In 2005, the company had reached a size whereby in order to continue to fund the company’s expansion of its processing centers, creation of technology, hiring of more people, so forth and so on, we needed an infusion of private equity,” he said.
The company, which serves more than 300 hospitals and healthcare networks in 35 states, handles everything from patient billing and scheduling to insurance issues. It seeks to free hospitals to focus on patients.
The company works with hospitals of all types, including medical-surgical hospitals, specialty care facilities and teaching and academic medical centers, Halberda said.
Cymetrix grabbed the attention of Riordan, Lewis & Haden after Rudin saw an article on the company.
“I thought, ‘hmm, interesting kind of company,’ and I called the CEO and explained who we were, what we did and we just started to spend some time getting to know each other,” Rudin said.
Rudin said he spent roughly six to eight months courting the company to see if the chemistry was right between the two.
“They were helping their customers improve their cash flows,” Rudin said about why his firm chose to invest in Cymetrix.
Rudin also said that Cymetrix had a particular ability to understand a hospital’s revenue cycle, which he called “a complicated organism.”
“Given that hospitals face unrelenting reimbursement pressures, the ability for hospitals to be more efficient in their financial side allows them to have more resources to focus on the clinical side,” Rudin said.
He declined to say how much the firm invested in Cymetrix. He did say a typical investment in a company the size of Cymetrix is about $10 million. The investment came from Riordan, Lewis & Haden’s prior $120 million fund.
Halberda called Riordan, Lewis and Haden “very non-invasive” in its approach.
Riordan, Lewis and Haden will be with Cymetrix for a while, Rudin said.
“As long as you’re delivering good value for your clients, you’re doing fine from our standpoint and good opportunities to create value for our investors will ultimately come, whether it’s through the sale of the company to a strategic buyer or some other method,” Rudin said.
That other method won’t be an initial public offering, according to Halberda.
“Our focus is growing the business and improving the quality of service we provide. Going public is not something that’s been discussed,” he said.
Cymetrix works in a field with plenty of larger players. Competitors include Perot Systems Corp., IBM Corp., Accenture Ltd. and Navigant Consulting Inc.
To compete, Cymetrix touts its focus as a specialty company that only works in healthcare. Its services and products can be tailored to clients, instead of only offering set services and products, according to Halberda.
Cymetrix counts some 650 workers. Besides the corporate office, the company has offices in Carlsbad, Long Beach, Nashville, Lewisville, Texas, and Lowell, Ark.
Halberda, Jeff McDonald, Cymetrix’s senior vice president and chief financial officer, and Steve Campbell, who is no longer with Cymetrix, cofounded the business in 2001.
