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DCA Capital in the News

December 30, 2005
Sacramento Business Journal

Fast–growing Nurse Staffing Firm Gets Bigger

Sacramento’s largest nurse staffing firm just expanded its reach beyond California.

Valley Healthcare Systems Inc. bought Licensed Medical Staffing on December 5. The Sebastopol company sends nurses and other healthcare staff to hospitals and other medical facilities in California, Arizona and New Mexico. Financial details of the deal were not disclosed.

The acquisition is Valley’s first since it received $1 million in October from a Roseville private equity fund to boost expansion in the tight nurse–staffing market nationwide.

The deal adds only 25 employees to Valley Healthcare’s staffing rolls but expands the company’s reach into two new states and folds an additional 2,500 healthcare professionals into its database.

In September, the Business Journal recognized Valley Healthcare as the fastest–growing company in the Sacramento region.

Annual revenue skyrocketed to $7.1 million in 2004, up 1,629 percent from $409,291 in 2002, the year the company was founded. Revenue is expected to reach $12 million this year and more than $20 million in 2006.

Valley Healthcare represents a significant, long–term investment opportunity due to the imbalance in nurse supply and demand, particularly in California, said Jeremy Wolfe, a general partner at DCA Capital Partners, the private equity fund behind the cash infusion this fall, and a member of the Valley Healthcare board.

“Not only are they in an interesting area, but one that will be consolidating over the next few years,” Wolfe said midweek. “They have the team to be the consolidator and use the capital we gave them to grow the business.”

Licensed Medical Staffing is expected to be the first of several acquisitions for the local company, he said.

Picking up other states

Valley Heathcare sends nurses and allied healthcare professionals, such as medical assistants and techs, to medical facilities in California. The primary focus is on nurses.

Valley pays for travel and housing during what is typically a 13–week stint at hospitals and care centers desperate for help.

Acquiring Licensed Medical Staffing strengthens Valley Healthcare’s business in California and adds two other states.

Licensed Medical quickly developed its business in markets Valley hadn’t served—and that should help Valley grow faster and further leverage its expanding staff of nurses, said co–chief executive officer Tim Coxen.

The idea is to take Valley’s success in technology, recruitment and staffing and apply it to other states, added Valley co–CEO Steve Swan.

A deal with Valley was attractive because the company reinvests in infrastructure and personnel to maintain a high level of service, said former Licensed Medical co–owner Paul De Luca.

Valley Healthcare has 21 employees at its Gold River office now, but the company expects to add three more before March.

Swift sector

Medical staffing is fast paced and there’s plenty of competition. The second–fastest–growing company in Greater Sacramento — Response 1 Medical Staffing Inc. — is in the same field.

Annual revenue at Response 1 hit $3.7 million in 2004, up 552 percent from $567,746 in 2002.

When it comes to staffing, the company that comes up with the right person for the job first wins. Valley has more than 190 nurses and other providers on the job and a database of more than 40,000.

Locally, the company provides nurses to California state prisons, the Indian Health System, Sutter Health and Catholic Healthcare West. It also serves as a vendor to other hospitals through their own service provider and works with several hundred non–affiliated healthcare facilities.

Most of these clients also put requests to other staffing companies, too, so whichever company delivers fastest wins.

Demand is particularly acute in California due to strict laws on nurse–to–patient ratios, but local health systems like CHW pick and choose their temporary hires from as many as 20 different companies.

“We are growing,” Response 1 president Cherie Love told the Business Journal this month. “This year was way better than last year.”

Article courtesy of Sacramento Business Journal. Article/Exclusive Report by Staff Writer, Kathy Robertson. Article copyright ©, American City Business Journals, Inc.Visit the Sacramento Business Journal online

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