The below excerpt was provided by RJ Lumba, Managing Partner of GrowthCap and host of the Growth Investor podcast. He interviewed Chris Miller, CEO of Everside Health, one of the largest direct primary care providers in the U.S., operating over 375 health centers in 34 states.. The company is backed by New Enterprise Associates (NEA), Oak HC/FT, Alta Partners, Greenspring Associates and other strategic investors..
RJ: So something I noticed in your background, you’re not only a CEO, I think you’re multifaceted in that you know how to structure companies, you know how to raise capital. It’s kind of like a Swiss army knife tool set, the way you’re able to build companies and do so in a fundamentally sound way. We’ll dig into Everside, but before that, can you tell us a little bit about Trumpet, which it seems like you built from the ground up?
Chris: Yeah, we did. So we acquired two very small practices in the autism development disability space. But from there, we really worked to grow the business both organically and a bit of inorganic growth as well. It was based on not only building but acquiring mission driven businesses, right? And so there’s a lot that we can talk about on the financial side driven by profitability, but most importantly, we were able to launch de novo clinics that were led by individuals, fundamentally that were trained under Trumpet and were able to unleash them on new areas and continue to build those businesses.
But we did some acquisitions as well that were led by mission values driven individuals and acquiring that kind of talent was fundamental to our growth too. So we were very systematic about how we built it, taking one step back and launched that business. One of our theories was that reform was going to happen across the United States really driven by states mandate that you reimburse for the services that we provide, which is applied here analysis. And we started the company, just a few states had enacted that reform. And today, all 50 states have that. So our investment thesis unfolded as we thought it would, and we were systematic in terms of how we built that business.
RJ: Were you in the healthcare space previously? You mentioned being mission driven. Were you really compelled based on what the company was providing to the world?
Chris: It was an interesting story. But I’m now almost 20 years and having run multi-site, multi-state healthcare services businesses. The first one was focused on the senior space, keeping seniors living in home versus going into long-term care facilities. I ran that company for about four years and we sold it. My wife is a behavior analyst in the field of autism. And so that led me to the thesis that I described before, as she had a small practice seeing patients with a partner and was turning away clients left and right, because she just had the capacity to build it. And so that led to our buying two small practices in California and Hawaii and expanding the business from there.
RJ: Excellent. Let’s move into Everside and value-based care. The genesis of that was through a spin-out from DaVita. How was that conceived?
Jim: So the business was called Paladina Health at the time, and it was founded by the chairman and CEO, DaVita, Kent Thiry. And so it was his idea that they wanted to diversify outside of kidney care. And they started this small division within DaVita called Paladina that had several different leaders. And frankly, RJ didn’t get a whole lot of attention.
So they brought me on board, taking one step back to you. I had a gentleman named Joe Mello, who is the chief operating officer of DaVita. He was on my board at Trumpet. And it was he who called me and said, hey, check out this business. Can you come in and give us an idea if you think there’s anything there?
I did. I became immediately compelled by the mission and the ability to transform healthcare and the way the US healthcare system was evolving driven by primary care. And so it fundamentally led to my leaving my baby Trumpet behind and joining what was then just a small division of DaVita and contemplating how I can grow it from there.
RJ: You led sizable fundraising rounds. Was the size of those rounds driven by really your vision of what the company could become?
Chris: So look, we spun the business out of DaVita. I ran it under DaVita for about two, two and a half years and recognized that we probably weren’t going to be able to get the types of resources we needed to really grow the business and impact lives. And so I spun the business out of DaVita June of 2018, sold 100% of the asset to New Enterprise Associates, NEA. And then we brought on Oak and Alta and some additional growth partners along the way.
But it was really driven by two things. And again, similar to how I built Trumpet, but we wanted to grow the business organically and one of the resources to do that and continue to differentiate ourselves. We also wanted the resources to think about how we can grow through M&A. And so over the course of the past three years, I’ve acquired three different companies that had geographic fits for us, but all were very much mission values driven businesses that fit very well into the Everside model.
And so over the course of that process, we switched our name and moved our name from Paladina Health to Everside Health, left all the legacy business names behind. And here we are as one Everside.
RJ: Speaking high level, this seems fairly simplistic. You grow organically, you grow through acquisition and you’re off to the races, but that’s really tough to do. How do you do that successfully? Integration is always a tough area.
Jim: It is. So look, this comes down to what may be an obvious answer, but you have to have the right teams to do it. And so we’re fortunate in that the businesses that we’ve acquired, we really wanted to not only acquire their clients and their geographic presence, but their talent too. We need more people to help us grow and build this business. Again, one step back, but there’s 110 million Americans that get their insurance through self-insured employers.
And right now, even after the acquisitions, we’re serving 1.6 million eligible lives. So lots of white space for us to continue to grow and build this business. But we want to acquire that talent. And I have a very good team that’s now accustomed to integrating that talent, not only from a cultural perspective, but from a technology perspective too.
So we’ve gotten quite good at it. We weren’t very good at it the first time. We’ve gotten better at it the second and third time. And we’re very transparent with the company we’re acquiring in terms of how it’s going to work and who they’re going to report to and what clarity roles look like. And I think that’s a really important process.
RJ: And over the past decades, you must have developed some key tenets on how you operate and what you think makes for a successful leader and leadership team. Could you maybe share one or two key insights with us?
Jim: I always focus on three fundamental aspects of an individual and a team. And it’s humble, hungry, and smart, RJ. So I feel very strongly that if I can find those three qualities in a leader, in their respective teams, and making sure they’re instilling those three characteristics in their team, that it’s going to work.
So I worry less about pedigree. I worry less about even industry expertise. If I can find a partner and leaders that are humble, hungry, and smart, it works quite well with us. And so humility is important in terms of us from a mission values perspective. Hungry, I want people who are going to be ambitious and really want to impact the world and change lives. And smart never hurts. Those are the three characteristics that are important to me.
RJ: You’re no stranger to capital and investors. And you just described what you look for in a leader. What do you look for in a capital provider?
Jim: That’s a good question too. So really, I want a firm that’s going to provide more expertise than the financials that they provide. So I really want someone who’s going to help us from a strategic standpoint. But I also really want someone who’s in this for the long haul. And so we were really intentional when we spun this business out of DaVita.
NEA wasn’t the highest bidder at the time, but they were the right partner for us because they had expertise in both healthcare and technology. And they had a long-term vision. Their average hold time, I think, for their affiliate companies is eight or nine years. And so we really need the time to build this business and impact lives.
And I don’t want to think about bringing on a new capital provider or a new ownership structure four or five years into the journey. We want somebody who’s thinking from a long-term vision. So that was really important and intentional in terms of why we chose NEA, Oak and Alta and the other partners that we had.
RJ: With your experiences building companies, what’s been the most challenging part? Are there some memorable moments where your success for the company was teetering or you really felt like you were at an inflection point? Like if you couldn’t do XYZ, you might not survive…
Jim: I think every entrepreneur has those moments, right? And some are more dramatic than others. But to me, the most disappointing aspect of being an entrepreneur is when you work really hard to make a great hire, what you think is a great hire and that great hire doesn’t work out. It’s a wildly disappointing moment for any entrepreneur.
You’ve done your work. You think you’ve done a good job in terms of bringing on the right kind of talent to help you build the business and it just doesn’t work. And sometimes it doesn’t work for a variety of reasons, but it often leads you to these moments of despair where you think, oh no, now I’m going to have to assume this role or what’s going to happen to the company.
And look, the beauty of this is there’s a lot of great talent out there. And not to say that it’s easy to find, but great talent makes a huge difference both from an investor standpoint and an operating partner standpoint too. So that’s something I think that we work real hard at to make sure we’re very careful in terms of who we bring on and we hope we make the right fit.