Newswires
Pritzkers Make Surprise Quick Exit From FRN Play

09/22/2015 -ATIN - Just a few years after buying Foundations Recovery Network, one of the nation's top private chain of addiction treatment facilities with four residential locations and eight outpatient facilities, and founded in the mid 90s by addictions serial entrepreneur Michael Cartwright, the Pritizker family has sold its majority stake in FRN to giant Universal Health Services, UHS, one of the nation's largest operators of private behavioral health hospitals and facilities. The Pritzker family's entrance into the addictions space in 2012 with the FRN purchase was a significant development in that the family, whose fortune is one of the nation's largest based as it is on the Hyatt hospitality concern, is considered a leader in investment circles whose moves are closely watched and often imitated by other investors and financiers. And sure enough, their FRN purchase occurred just on the cusp of what has developed into a huge addictions space deal making boom with many dozens of deals occurring since then - all the way from Acadia Healthcare's purchase of CRC Health in the largest deal in addictions market history to many small deals like the sale of New Hope Recovery in Chicago in 2012. Along the way, private equity has descended into the space, mostly by creating acquisition vehicles whose possible exit is either an IPO or a sale to the larger asset aggregators like Acadia and UHS.

A $350M Sale

In an interview with Treatment Magazine after the Pritzker purchase, Foundations CEO Rob Waggener said that the Pritzkers were not making the investment for the short haul, seeing significant synergies between the hospitality expertise available in spades from the Hyatt connection and the high end of the addiction treatment industry. But with the very high prices that are being paid for high quality addiction treatment assets, the Pritzkers may have felt they had little choice but to sell.  Also, the Pritzkers said in the press release announcing FRN's sale that they felt comfortable that UHS "is a company that will further our commitment to the treatment of addiction, which is at epidemic levels in this country."

Ramp Growth

Although FRN CEO Waggener did not immediately respond to a request for comment, he said in a statement that with the immense resources available, given UHS' broad market presence, that the acquisition had the potential to help FRN "ramp growth" significantly. FRN's growth has been steady over the past few years, but nothing like say, for example, Elements Behavioral, owner of the renowned Promises Malibu center, which has grown by acquiring many treatment assets like The Right Step, Clarity Way and others as well by building out new centers as in the case of the innovative multi-cultural Lucida center in South Florida. In 2013, FRN bought a resort property in Georgia it converted into its fourth residential facility and FRN also opened significant outpatient care capability in recent years and, according to the press release announcing the sale of FRN to UHS, FRN currently has over 140 "expansion beds in the pipeline."

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