Organic Growth Masterclass: AJM Healthcare, backed by WestBridge

AJM is an outsourced wheelchair services provider to people in the community on behalf of the NHS. It provides clinical assessment services, procurement and approved wheelchair repair and maintenance services.

AJM does this for a variety of clinical commissioning groups (CCG), who award these contracts by tender, and the contracts are typically for between three to seven years.

WestBridge invested in the business in September 2018, at which point it was only operating three of these full services, and a number of smaller repair and maintenance contracts. However, given the continued outsourcing trend driven by the NHS, the investor knew this was a high growth niche market, Whittard says.

MANAGEMENT GROWTH

“The company was owned by two entrepreneurial businessmen, who had originally bought the company from its founder. They’d recruited the then managing director, who hired the operations director and remaining senior team members,” says Whittard.

“The first step we took, in line with the WestBridge Value Creation Model, was to recruit a chairman for the business. The management team was very operationally-focused so we needed to find someone who could help the team strategically and prepare the business for significant growth, as well as mentoring the management team.

There was a succession planning requirement during our investment, as the managing director was looking to retire prior to our eventual exit. The operations director became the managing director and we made a number of functional senior hires to build out the senior team.

Additionally, we increased headcount by hiring across HR, procurement, IT and operations.”

OPERATIONS IMPROVEMENT

There was clear opportunity for WestBridge to improve the underlying margins and efficiencies in the business to deliver value, Whittard points out:

“The first area was sales and marketing, and we employed an operational consultant to look at those initiatives and its tender processes. The business won six new WCS contracts within 24 months, doubling its revenue. Noticeably, where the business had predominantly served the south of England, these new contracts were much more geographically widespread.

We put a new IT workflow and stock management system in place so that we could better manage the chairs we had in stock and monitor where they were in their refurbishment process. This also allowed us to improve communication with the NHS CCGs.

The variety of needs that these chairs serve is huge and so is the number of configurations. As a result of these improvements, we were better able to utilise our stock, which in turn meant quicker turnaround times on requests. We drove materials costs as a percentage of sales down by approximately 25 per cent during our investment, which significantly benefited the business’ profitability and cash flows.”

ENHANCED GOVERNANCE

“When someone passes away with a wheelchair in our contract, it is important to collect that chair so it can then be used for someone else in need,” Whittard says. “We focused heavily on minimising stock loss and improving the rates at which we were collecting those chairs. We also focused on working with the clinicians in the way they prescribe, to increase the opportunities where we could reuse a chair in stock, rather than buying new. That goes hand-inhand with the work we did to improve the refurbishment of chairs. The environmental benefit of recycling those wheelchairs was significant.

If, for whatever reason, a chair had been damaged during its user’s life, we would break it up and keep each part as spares for future refurbishment. We made sure that the business sent as little to waste as possible.

Additionally, governance plays a key role in this business. We put in place new governance and reporting procedures, to allow for much more in depth data recording, so that we can monitor trends and make better informed decisions on the financials and operations.”

WestBridge exited the business in June 2021 in a secondary buyout supported by Livingbridge.

This Organic Growth Masterclass was originally published in GBI sister publication Real Deals