Passport's Jim Lackey
Passport Health Communications founder, Chairman and CEO Jim Lackey said he faced "the most blank stares I've ever seen in my life" when he first tried to explained to physicians how his technology could automate their practice's productivity and reimbursement income. They didn't know the meaning of "point and click," he said.
Last week, Lackey told his audience at Nashville Technology Council's annual meeting that using the Internet for business processes was so new 12 years ago when he started Passport, that to get his first customer he had to go to a longtime friend who was a chief information officer and plead, "I'll owe you for the rest of my life, but you've got to buy this from me."
It took Passport five years from that point to make money. At that point, Lackey said that when he reported to his wife, "We made money this month!" she responded, "I thought you always made money." He joked that he then dropped the subject, forthwith.
Things have changed. Franklin-based Passport Health Communications now counts more than 4,300 healthcare providers among its customers and could see $80 million in revenue this year, up from about $13 million five years ago.
Growth toward that target got another boost last week, when Passport announced its acquisition of former competitor Nebo Systems of Oakbrook, Ill.
Lackey told the NTC crowd Passport is signing 40-plus new hospital customers each quarter and the company's transaction-driven revenue-cycle business is 96 percent recurring revenue. Lackey said Passport enjoys 96 percent customer retention, as well. Passport's technology and services help reduce eligibility and reimbursement errors for hospitals, physician groups and other customers. The company executed 105 million transactions in 2007.
With one or more further acquisitions now in the works, Passport employment seems likely to surpass 300 souls by year's end, straining its recently expanded office space at 720 Cool Springs Boulevard.
Passport's M&A strategy is supported by Brentwood Capital Advisors, which scouted Nebo and other firms, closed the Nebo acquisition and raised the money to make the deal happen. The Specialty Lending Group of Goldman Sachs brought the bucks and related commitments. The Nebo transaction retired debt incurred earlier, and provids funds for operations and acquisitions.
Passport Executive Vice President Scotte Hudsmith (at right) told VNC Friday that working with an institution like Goldman Sachs was inevitable: "There's local money here for [companies in] the startup phase, but there's not a fund here that's big enough to fund the growth we need going forward."
About a year ago, Passport did a $70 million equity and debt recapitalization deal with Primus Capital Funds, with Allied Capital and Fifth Third Bank providing debt financing. Hudsmith noted that in prior outings, Nashville-based Clayton Associates and Franklin-based Coleman Swenson Booth have been investors, as has SSM Partners in Memphis.
Beyond M&A, Passport also employs innovation as a strategy: Passport is exploring introducing a data-exchange portal through which qualified patients can, when they are checking-in with their provider, obtain adequate credit lines to pay for deductibles or other expenses. The service is being tested at a hospital beta site. Passport earnings would come from financial institutions providing credit for borrowers.