New England Orthotic & Prosthetic Systems

New England Orthotic & Prosthetic Systems

Roles
Financial Advisor
  • Regained lenders' support 
  • Reorganization company without disruption to continuing operations

The client was a private equity-sponsored provider of durable medical equipment and related services. Faced with revenue declines and liquidity impairment, the company engaged CR3 Partners to perform an assessment of operations. The CR3 team successfully identified ways to improve profitability and was ultimately brought on as financial advisor, completing a Chapter 11 reorganization, and building support with stakeholders which resulted in new capital.

The Situation

  • Private equity-sponsored provider of durable medical equipment and related services to walk-in patients and referrals from hospitals and specialists
  • Company experienced revenue declines and did not sufficiently reduce its fixed-cost base to offset the impact
  • Liquidity was impaired by cutoff of significant claims reimbursement by a third-party insurance provider, and the increase in claims outpaced the company’s ability to review supporting documents; the impaired liquidity triggered financial-covenant defaults and a loan-workout protocol by the company’s lenders

The Work

  • Assessment of operations, identifying ways to improve profitability
  • Conducted on-site assessment of the corporate operations and the branch locations, identifying issues with development of recurring referrals and the need to consolidate branches to increase efficiency and reduce cost
  • Analyzed revenue cycle and cash-flow management and reporting, improving revenue-cycle management at the branch level and the need to focus more on four-wall location profitability
  • Engaged as financial advisor to work closely with management team to conserve cash through a turnaround; negotiated with company lenders to stabilize liquidity
  • Completed Chapter 11 reorganization of capital structure with new equity providing new capital

The Results

  • Company’s operating cash flow was stabilized with support from its lenders
  • Reorganization outcome allowed the company to avoid a complete liquidation and disruption of services to the communities as provided by its branch operations
  • CR3’s effective communication with financial stakeholders built support for the business, enabling the option of restructuring

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