Case Study

Building a national operator of outpatient kidney dialysis clinics

The company’s founders were among the first to recognize the advantages of a physician joint venture model for the ownership and operation of dialysis clinics and to build a national, scalable business based on this approach

Founded in 1999, American Renal Associates (ARA) is a leading national provider of outpatient kidney dialysis services operating over 84 clinics and serving more than 5,700 patients throughout the U.S. The company is focused exclusively on developing, acquiring and operating dialysis clinics in partnership with leading nephrologists. The company’s founders were among the first to recognize the advantages of a physician joint venture model for the ownership and operation of dialysis clinics and to build a national, scalable business based on this approach.

Pamlico initially called ARA in 2002 and over the next few years became increasingly impressed with its extraordinary growth prospects given its proven track record of establishing successful partnerships with leading nephrologists. Pamlico was selected to partner with management and consummated its initial investment to provide liquidity to the company’s original venture capital investor in 2004. In 2005 Pamlico Capital became the majority shareholder after investing additional capital to recapitalize the company.

During the partnership, the Pamlico team assisted management in all facets of the business including strategic planning, Board governance, compliance, financial reporting, management recruiting and debt financing. Pamlico helped the company to arrange its first syndicated credit facility in 2005.  We also identified the need for and helped put in place an intercompany funding structure in 2008, which facilitated a highly successful $250 million bond offering consummated upon the company’s sale in 2010.

During Pamlico’s investment period, the company grew its EBITDA 40% annually. ARA was sold to Centerbridge Partners in May 2010 for a purchase price of approximately $415 million, representing a highly-successful investment for Pamlico.