The Situation

A high-growth healthcare business (the “Company”) sought lease financing to: (i) refinance high-cost existing equipment leases and (ii) fund future equipment purchases to achieve its growth plans. The Company operates radiology machines that provide a unique treatment solution to dermatologists, enabling them to more efficiently run their practices. The Company offers an attractive proposition to all parts of the value chain: enabling a less-invasive treatment model for patients, while providing economic benefits to payors and dermatologists relative to alternative treatment methods.

Due to the asset-intensive nature of the business, the Company used lease financing for several years to support its growth. As the Company matured, however, it was able to raise equity capital from a private equity firm and identified an opportunity to refinance older leases with lower-cost lease providers. The Company was working with an independent leasing company with whom Atalaya had a pre-existing relationship to arrange the equipment financing. Upon being introduced to the deal, Atalaya was able to quickly get up to speed on the transaction, and was encouraged by the Company’s financial performance, equity support and projected growth.

The Solution

In July 2019, Atalaya provided $3 million to refinance existing equipment leases. The refinance reduced the Company’s lease rate by several hundred basis points and extended the lease terms to better match the Company’s contract length with physician partners. Atalaya was excited about financing in-place, revenue-generating equipment and the recent sponsor investment. In addition to the initial transaction, Atalaya was encouraged by the Company’s growth trends and will pursue additional financings of new equipment to support that growth.

The Result

By refinancing a portion of the Company’s previous leases, the Company lowered its monthly payments significantly – enabling it to reinvest in growth and build out the platform.

“While the relationship is in its early days, the prospect of additional funding opportunities for new equipment, solidifying the continued growth of [the Company] is what we would want for our counterparts, and what we’d imagine our counterparts want for us,” said Mia Genereux of Atalaya.