In 1997, the Stephens family invested in Randal Caldwell’s vision for United Medical’s growth. Three years later, Randal agreed to sell the company to Lincare Holdings at four times its earlier value.

Foundation for Success

United Medical Inc. was founded by Randal Caldwell, a trained pharmacist, and two local physicians in Wynne, Arkansas in 1983. By the mid-1990’s, the company was providing respiratory therapy services and durable medical equipment from 14 locations in Arkansas, and experiencing excellent growth.

Randal wanted to expand into new markets, but his partners were reluctant to invest additional capital. In order to accommodate his partners’ desire for liquidity, Randal agreed to sell the business to a regional competitor. However, when the potential acquirer experienced operational problems, the deal broke down.

Structuring a Partnership

In early 1997, Randal met with Jon Jacoby and Jim Jacoby. Together, they discussed Randal’s interest in growing the business and how that conflicted with his partners. In June of 1997, the Stephens family agreed to invest $10.5 million in United Medical for a controlling stake in the company. The proceeds from the transaction were used to buy out all of the partnership interests of United Medical’s physician partners and provide a significant dividend to Randal.

United Medical now had the ownership structure and financial strength to grow as Randal envisioned.

Creating Long-Term Value

Soon after the investment into United Medical, the company commenced a three-year growth initiative, expanding to more than 50 locations through a series of acquisitions as well as select green starts. During this period, revenue grew fourfold and EBITDA multiplied 10 times due to efficiencies of scale and improved focus on higher margin services.

In June of 2000, Randal Caldwell decided that he’d like to spend more time with his family and agreed to sell the business to Lincare Holdings. By partnering with the Stephens family, Randal realized over four times more in value than he would have had he closed the transaction his original partners wanted him to pursue. The Stephens family realized an IRR in excess of 50% while building an enduring partnership and friendship with an experienced health care services executive.