Flacks Group takes a longer-term view on Corizon and reduces its debt
Area mergers and acquisitions have largely been put on pause due to Covid-19, but one deal that did get done had simple reasoning behind it.
“Our debt was coming for maturity at the end of the second quarter,” Corizon Health CEO James Hyman said. “As we started to talk to people in the industry … we realized that we were going to face other types of investors that might be better than our previous investors. Our previous investors were basically banks and the private equity firms. They have a pretty clear mandate of rapid growth, rapid exit. … What we got [instead] was someone who could take a longer-term view … and they were willing to substantially reduce our debt burden.”
Brentwood-based Corizon, which provides health care services to the prison industry, announced last week it had been bought by investment firm Flacks Group.
Terms of the deal were not disclosed, and Hyman would not disclose Corizon’s pre-deal debt level except to say, “It was a lot of debt, and we substantially reduced it.”
Corizon provides primary medical services, behavioral health, dental care and pharmacy services to 149 facilities in 16 states, employing more than 5,000 people, according to the release. The company generates approximately $800 million in annual revenue.
The sale comes less than a year after Hyman was named CEO of Corizon, replacing Steve Rector.
Miami-based Flacks Group specializes in the “operational turn-around of under-utilized companies,” according to a news release announcing the sale. The firm employs more than 7,500 people and has more than $2.5 billion of assets under management.
Despite not having experience in the corrections or health care industries, Hyman said Flacks was a good fit for Corizon because they can provide the necessary tools to improve and grow the business. While much of that plan is on hold due to the pandemic, Hyman said Corizon hopes to continue to win new contracts in the coming months.
“What they have invested in in the past is management teams that have a clear view of what they want to do to drive a successful business, and Flacks can provide the resources and support to enable that plan,” Hyman said. “ For us … Flacks gives us a partner that isn’t driven by immediate short-term needs. … They bring a partnership owner that’s willing to take management’s plan and invest in that and be a part of it.”
Hyman said the company s not anticipating a vaccine to be widely available until the middle of 2021, which means not only could the company’s growth be slowed but that Corizon must continue to care for corrections inmates in a pandemic environment.
Hyman said that virtually every state prison system has moved to 100% testing but that not all local jails are testing each detainee as they come in. Inmates that are sick are isolated in an infirmary or sent to a hospital, if necessary.
“From a customer’s perspective, they are seeing their municipal and state budgets under extraordinary pressure, and the health care for detainees and inmates is one of the only things in health care that is constitutionally mandated,” Hyman said. “So helping our customers through that process, helping our patients through that process is going to be all consuming for the next 12 months.”
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