APM beats out Brightwater in auction of failed disability services provider Therapy Focus

Major WA disability services provider Therapy Focus will be bought by homegrown rival APM in what administrators have described as an “outstanding” result for creditors and staff. Just eight weeks after being put into the not-for-profit group, McGrathNicol restructuring experts on Thursday revealed they would recommend a meeting of creditors next week accept a buyout proposal from APM over a rival bid by Brightwater Care Group. The APM deed of company arrangement will see the State Government, which is owed $2.3 million, and other creditors repaid in full and all of Therapy Focus’ more than 250 staff retained. It represents a rare local acquisition for the former ASX-listed group, which while founded in WA, has been buying up on the east coast, New Zealand, Europe and North America in recent years as part of an aggressive expansion that has lifted annual revenue to $2.6 billion. Under administrators’ plans, Therapy Focus would transition within days of the December 11 creditors’ meeting to the private-equity owned APM and a new board that would include two current Therapy Focus directors. Lead administrator Rob Kirman described the rescue plan “as an outstanding outcome for staff, creditors and Therapy Focus customers, particularly in the context of the current challenges facing providers in the NDIS (National Disability Insurance Scheme) sector”. Supported by a dozen clinics, Therapy Focus provides occupational, speech and other therapy services to 4000 clients at homes, workplaces and schools in Perth and the lower South West. Directors called in McGrathNicol on October 9, citing “sustained financial pressure” that had been exacerbated by recent pricing cuts imposed by the NDIS. The group was founded as a not-for-profit community service in 1998, but changes to NDIS funding in recent years — including the scrapping of Federal Government grants in favour of a fee-for-service model — forced it on to a commercial footing. However, directors said it had been hamstrung by its inability to recover rising costs from fixed NDIS pricing for therapy, despite increased industry lobbying of government about the growing financial stresses on disability service providers. The Government is the biggest creditor, with the $2 million exposure in unspent funding provided through the Department of Communities. Having put the business on the market, McGrathNicol attracted seven binding offers before shortlisting APM and Brightwater. The APM proposal also provides for Therapy Focus to retain its not-for-profit status, a concession that is believed to have been one of several factors that helped decide McGrathNicol in favour of the group. APM chief development officer Peter Magill said his group had wanted to make the integration of Therapy Focus “as seamless as possible”. “When you step back and look at what we do, our mission and our purpose, there’s a lot of alignment. “Both for-profits and not-for-profits have the same challenges and opportunities,” Mr Magill said. “These aren’t easy businesses, let’s face it, and I think for the smaller businesses it’s becoming harder and harder. “We don’t really see it as one being for-profit and the other not-for-profit, it’s about bringing together similar businesses with similar missions and trying to get the same outcome for clients and their families.” Therapy Focus chair Fiona Payne said APM’s financial muscle and scale would benefit the smaller provider. “We welcome the financial resources, the growth opportunities and the government influence APM can bring to the table,” she said. “And we are really delighted they committed to preserving our name, our brand, the not-for-profit status, all our staff and the continuity of the business.”