John S. Castle, senior vice president of Branford Castle (left); Ann Miller, consultant with Castle Harlan; Michael Handley, CEO of Townsend Recovery. Photographer: Michael James
The addiction treatment industry is changing, and with change comes opportunity. In October, our company, Branford Castle, Inc., announced it would become a strategic investment partner with Townsend Recovery, a growing addiction treatment organization focused on delivering high-quality, cost-effective, physician-supported outpatient treatment for patients suffering from the disease of addiction.
Our partnership will help Townsend's growth strategy of building a national brand with treatment centers across the country. Already since its formation in February 2007, the company as of this fall had established treatment operations in 15 locations, with the first in Fort Walton Beach, Florida and now a presence in four other states as well (Alabama, Georgia, Louisiana, and Texas).
The addiction treatment industry has been going through changes in the way people view treatment. In particular, views are changing on the use of medication in the treatment process. There is growing evidence that combining medication with more traditional psychosocial treatment methods results in patients staying in treatment longer, thus eventually producing better outcomes than what traditionally have been expected.
Since its founding last year, Townsend has been executing its goal of providing accessible, affordable, and effective treatment to patients who need addiction-related help. To accomplish this, the company has been opening a network of physician-focused outpatient treatment centers. Townsend often utilizes medication protocols to help patients with detoxification, stabilization, and ongoing maintenance, as well as employing standard clinical practices for the industry such as individual and group therapies. Company officials describe Townsend's clinical goal as one of stabilizing the brain's reward system and minimizing the effects of withdrawal so that cognitive-behavioral therapy interventions stand a greater chance of achieving success.
Over time, the focus of the company has broadened to include delivery of services for the entire family, an approach that Townsend believes is crucial for patients to maintain healthy lifestyles post-treatment. This focus incorporates primary care services to address general health issues related to addictions.
First and foremost, Branford decided to partner with Townsend because the company's business model is well-suited to help patients in a significant number of geographic areas gain greater access to high-quality treatment. Townsend's ultimate hope involves having its model provide solutions for a large number of individuals who previously would not have sought treatment because of the impracticality and expense of traditional offerings.
In addition, we believe that Townsend's retail business model can be easily scaled, thus creating a “game-changing” concept that can be spread nationally and internationally. As it stands, the company already has announced that it is planning to open 36 more centers in the eastern United States in 2009.
Townsend's management offers another reason why we decided to partner with the company. Senior management is extraordinarily talented and unusually deep for a venture-stage company. Townsend chairman Michael Pollock, who is involved on a daily basis, has been the chief financial officer and a director of a public company. The company's CEO, Michael Handley, has had previous experience as the leader of a highly successful start-up, and chief operating officer David Cox has been the chief financial officer of a multi-billion dollar healthcare organization. We view the degree of past success of Townsend's senior managers as a very important indicator of the potential for future success.
Not only has Townsend positioned itself for market share gains within the industry, the drug and alcohol industry overall received a major boost with passage of the federal mental health and addiction parity legislation. This law should put some long-term “wind in the sails” of Townsend and other industry participants as institutions gain greater access to insurance dollars. Because of the legislation's requirements on insurance companies, we believe insurers will be highly motivated to identify effective and inexpensive treatment concepts for their patients. We believe this will prove to benefit Townsend significantly.
Over its 22-year existence, Branford has been a long-term investor in small to medium-sized private companies. Branford's principals have gained experience through more than 150 private company investments, which represent many billions of dollars in transaction value. Branford aims to provide value for Townsend by lending its experience in retail, healthcare, and growth investing.
Of note, Branford Castle's principals have been involved in early-stage financings of, and subsequent growth initiatives for, well-known public companies such as Sealed Air Corporation (the Bubble Wrap company) and The Children's Place. Furthermore, Branford Castle has had substantial healthcare experience, not the least of which has been its principals' involvement in Castle Connolly Medical Ltd. Castle Connolly is a research and information company that publishes books and provides data to other organizations identifying the best doctors in specific geographic regions and across the United States.
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