EDITOR’S NOTE: This story has been changed from the print version to clarify that UnitedHealthcare currently has no plans to expand its revenue bond investment program outside the state.
UnitedHealthcare recently invested about $23 million in three Los Angeles County health centers to help expand and enhance patient care and services. But the Minnesota insurer took a more innovative approach than simply making grants.
The unit of UnitedHealth Group of Minneapolis instead employed a special investment fund to purchase tax-exempt revenue bonds from the Help Group in Sherman Oaks, Gateways Hospital in Echo Park, and St. John’s Well Child & Family Center in South Los Angeles.
The money will be used to build new facilities, renovate clinics and help the non-profits refinance existing debt at more affordable rates.
Steven Henry, UnitedHealth’s director of treasury investment management, said his company launched the program in 2007 after becoming aware of the difficulties many health care non-profits had in accessing capital markets.
“They often fall into what we call a gray area – not large enough to go out and easily access the bond markets to raise capital for projects, but not so small that all they need are grant funds,” said Henry, who gets tips about potential recipients from bond underwriters, financial consultants and the non-profits themselves.
The Help Group, which serves children with autism, learning disabilities and other special needs, sold UnitedHealth about $11.5 million in bonds. Gateways, which provides acute inpatient, residential and outpatient services to mentally ill adolescents and adults, sold $5 million in bonds. St. John’s, which provides health care, health education and social services to low-income families, sold $5.37 million in bonds. In addition, Gateways and St. John’s received grants of $537,000 and $621,000, respectively, to help pay closing costs of the transactions.
“The innovative combination of bond proceeds and grant funding from UnitedHealthcare provides a tremendous service for the population that so desperately needs our services in Los Angeles,” said Gateways Chief Executive Mara Pelsman.
The bonds range from 10 to 30 years and annual interest payments by the non-profits return to the fund to finance new investments. The program hopes to eventually expand, and even is working to create a secondary market for the debt. Last year, the fund sold bonds it bought in 2009 from a Bay Area hospital, and used proceeds to buy $8.6 million in new bonds from the Antelope Valley Health District.
Fandango for Fundraisers
What Fandango provides to moviegoers and TripAdvisor for travelers, imAthlete site hopes to do for runners, bicyclists and other participants in the $90 billion amateur athletic industry.
The three-year-old Santa Monica company provides event organizers, non-profits and sport-governing bodies an integrated website through which athletes can register for roughly 3,000 events, make travel arrangements, and order workout and competition gear.
Founder Jeff Matlow, who self-funded imAthlete with proceeds from earlier marketing and music industry ventures, said there was an obvious opportunity for his company.
“Sports is a fragmented industry in the way travel used to be. The type of integrated service provided by a Travelocity, or Fandango in the case of movies, really hadn’t been done for athletics,” said Matlow, 44, himself a triathlete, marathoner and swimmer. Most of imAthlete’s 16 full- and part-time employees are amateur athletes.
The company makes its money from fees it gets from event organizers, and a cut from e-commerce and online advertising sales. Clients include the USA Triathlon, which runs the Ironman World Championships in Kona, Hawaii.
Matlow recently added to his advisory board former Fandango and Shopzilla Chief Executive Chuck Davis, who said he was impressed by Matlow’s vision and success in launching and operating the site at a relatively low cost.
“I’m really excited about the enormous market potential because imAthlete has a diversified revenue model,” Davis said. “The platform they built has the potential to disrupt the athletic marketplace, much the way Fandango did to the movie ticketing industry.”
ImAthlete also has arrangements with professional triathletes Jarrod Shoemaker and Sara McLarty, who sell customized training plans to weekend warriors who want to follow in the footsteps of elite competitors.
Branching Out
Cynvenio Biosystems, a Westlake Village developer of molecular diagnostics systems for cancer, has spun out a new subsidiary, BioMolded Products.
BioMolded is opening a product design and manufacturing facility, also in Westlake Village, that will manufacture medical-grade, blow-molded plastic parts for the biopharmaceutical and life science industries.
The subsidiary initially will supply products to Cynvenio, but said it will be marketing its customized products to other companies.
“The market for the design and manufacture of novel medical-grade consumables for the life sciences is underserved in our geography, and we intend to address that need,” said Steve Roy, BioMolded’s general manager.
Staff reporter Deborah Crowe can be reached at [email protected] or (323) 549-5225, ext. 232.
