American Renal Associates, which owns clinics in partnership with physicians, raised about $165 million this week through an initial public offering that sets the stage for the company to expand into new markets.
American Renal priced the 7.5 million common shares at $22 per share Wednesday. The stock began trading Thursday.
The Beverly, Mass.-based company co-owns nearly 200 dialysis centers in two dozen states and said it plans to open 32 more clinics this year and next.
Founded 16 years ago, the company has been opening a dozen or more clinics a year since 2012 using a model that includes substantial ownership by nephrologists in the markets where American Renal operates, the company said.
The 347 nephrologists affiliated with American Renal represent less than 4% of the total in the United States, the company said in its filing. The company sees that as an opportunity to grow its joint venture model.
On average, American Renal owns 54% of its 192 clinics with physicians owning the other 46%.
Though growing, American Renal is dwarfed by the largest player in the sector, the DaVita Kidney Care unit of publicly traded DaVita Healthcare Partners.
DaVita Kidney Care operates or provides administrative services at 2,251 outpatient dialysis centers in the U.S. and 118 more abroad.
American Renal said it will look for select acquisitions. Some 49 of its existing clinics were purchased and converted to minority physician ownership as well, the company said.
American Renal serves about 13,000 patients today while DaVita's is in the range of 180,000.
The company said it will use proceeds from the IPO to pay off one of two credit facilities, double the amount of borrowing capacity in its remaining facility to $100 million and pay a special dividend to pre-IPO shareholders of $28.9 million plus some adjustments.
American Renal's net revenue grew at a compound annual rate of 16% from $356 million in 2011 to $653 million in 2015. Adjusted EBITDA over that time grew from $104 million to $188 million.