BHG’s valuation hits $1B as growth continues

SYRACUSE — Started with $25,000 and three partners in 2001, Bankers Healthcare Group (BHG) has reached a valuation of $1 billion, according to its top executive.

Along the way, the three partners have sold 49 percent of the business, but held onto the remaining 51 percent, explains Chairman and CEO Albert (Al) Crawford.

The company’s growth was underlined in 2015 when Pinnacle Financial Partners, a Nashville, Tennessee–based bank with more than $20 billion in assets, bought 30 percent of BHG for $75 million, effectively valuing the company at $250 million.

Just one year later, Pinnacle bought another 19 percent for $114 million, more than doubling the company’s value to $600 million.

Sitting in his office on Solar Street in Syracuse, Crawford explains that in the three years since, BHG has continued to grow, hitting a valuation of $1 billion on annual revenue between $160 million and $170 million in 2017.

And he sees much more growth on the horizon.

BHG has gotten where it is by supplying loans to health-care professionals — doctors, dentists, and veterinarians from the start, adding nurse practitioners, pharmacists, physical therapists, and physician’s assistants more recently.

The loans, which average about $100,000, but can be as much as $500,000, are then sold to banks. 

The company’s loans have been attractive to those in the health-care field because BHG makes it easy. Borrowers don’t have to take time to go to the bank, they don’t have to dig up old financial records, and they don’t have to answer a lot of questions, Crawford contends.

Instead, they can go online and apply without leaving the office, give BHG permission to access the necessary financial records, and hear back about the loan in 24 to 48 hours. If they choose to go forward, they get the money within a week — and can get it in as little as 72 hours, Crawford says.

Demand for BHG’s loans is driven in part by the fact that health-care professionals often start out burdened with tens of thousands of dollars in student loans, sometimes hundreds of thousands in student loans, Crawford notes. 

“Society puts them in a very tough space,” he says.

Those debts leave some health-care providers with low credit ratings, credit scores far below what one might assume, Crawford says. BHG has been actively developing financial technology to be able to ascertain the real risk presented by these types of borrowers, he says. It has hired credit analysts from some of the largest banks to help it better understand which borrowers are better risks.

The company’s 15 credit analysts look to see what differentiates someone who has struggled with debt but ultimately works through it, from someone who files for bankruptcy. And they look to see who may have filed for bankruptcy but is rebuilding their credit and has earned an opportunity.

Then, Crawford says, the interest rate is set to reflect the risk and leave room for BHG to profit. 

To reach health-care professionals, BHG markets heavily across all sorts of platforms. A doctor may hear from BHG two dozen times before clicking on the company’s website, Crawford notes. 

Clients who go forward with loans, and those who don’t, may be offered BHG’s credit card, offered through Pinnacle Financial Partners, a product BHG has had since 2014. The card has more than 17,000 users, Crawford says.

From the start, funding the loans made by BHG has meant building relationships with banks. Crawford traveled the country meeting with bankers whose balance sheets needed to be diversified. Early on, he found strong demand among banks that had too large a percentage of total lending tied up in agricultural loans. Taking on loans to medical practitioners gave these banks a more diversified mix of assets.

Over the years, BHG built up a network of banks to which it could sell the loans. Today, Crawford says BHG has more than 850 banks it turns to, auctioning off somewhere between $2 million and $3 million in loans each day. “We don’t need Wall Street,” Crawford says. “We developed our own Wall Street.”

Further, Crawford says BHG has never stuck the banks with a bad loan. If worse comes to worse, BHG can collect on the loan with its in-house operation.

BHG’s network of banks plays a role in Crawford’s plans for future growth. He says the banks could be turned to as buyers for all sorts of loans. “It’s a marketplace,” he notes.

And, it’s a marketplace BHG expects to engage as it expands its product offerings. BHG is moving toward providing loans for medical procedures. These are loans not to health-care providers, but to their patients. It is a $400 billion-a-year market, says Crawford, and he wants BHG to be the No. 1 player in the space within five years.

Handling growth has been a continuing challenge for BHG. Crawford says the company has hired 100 people in the past six months, 60 just since Jan. 1. Today, the company has 367 employees. Of those, 167 are in Syracuse, 34 in New York City, and the remaining 166 at the company’s corporate headquarters in Davie, Florida.

While Crawford works from the Syracuse office at 201 Solar St., his fellow original founders, Robert T. Castro and his brother Eric R. Castro, work from the Florida headquarters, handling loan origination, and funding, human resources and IT. The Syracuse office is the company’s financial headquarters, handling credit underwriting, accounting, collections, bank sales, and marketing.

Locally, BHG has been forced to spread out to find space for its growing number of workers. They can be found at the Solar Street headquarters, at a former fire station across the street, and at a converted mill within walking distance.

The work spaces are modern and the local headquarters is airy with windows throughout to make the most of natural lighting. Crawford notes that Central New York’s often short days and cloudy skies make windows a practical choice.

He adds that the darkness and cold weather are, in some ways, a plus: “You might as well be working.” In turn, when the weather is lovely on a Friday in the summer, the company urges managers to let people leave early, he says.

Added perks for workers include a snack and coffee bar in the main office and a 2,500-square-foot gym with a high-tech golf simulator. The dress code is casual most days and on an early spring day, Crawford worked in shorts and a T-shirt, coming directly from the gym.

Intertwining his discussion of the company with business philosophy, Crawford says he and others in the company read a great deal. Recently, they’ve been reading Daniel Coyle’s “The Culture Code.” It’s about what it takes to keep companies performing at the top level.

For Crawford, part of the culture that has driven BHG’s growth and that he expects with continue to drive its success is an overriding sense that there is more that needs to be done, challenges that need to be faced now. “Urgency,” he says, “from Day One we’ve worked with a sense of urgency.”      

SYRACUSE — Started with $25,000 and three partners in 2001, Bankers Healthcare Group (BHG) has reached a valuation of $1 billion, according to its top executive.

Along the way, the three partners have sold 49 percent of the business, but held onto the remaining 51 percent, explains Chairman and CEO Albert (Al) Crawford.

The company’s growth was underlined in 2015 when Pinnacle Financial Partners, a Nashville, Tennessee–based bank with more than $20 billion in assets, bought 30 percent of BHG for $75 million, effectively valuing the company at $250 million.

Just one year later, Pinnacle bought another 19 percent for $114 million, more than doubling the company’s value to $600 million.

Sitting in his office on Solar Street in Syracuse, Crawford explains that in the three years since, BHG has continued to grow, hitting a valuation of $1 billion on annual revenue between $160 million and $170 million in 2017.

And he sees much more growth on the horizon.

BHG has gotten where it is by supplying loans to health-care professionals — doctors, dentists, and veterinarians from the start, adding nurse practitioners, pharmacists, physical therapists, and physician’s assistants more recently.

The loans, which average about $100,000, but can be as much as $500,000, are then sold to banks. 

The company’s loans have been attractive to those in the health-care field because BHG makes it easy. Borrowers don’t have to take time to go to the bank, they don’t have to dig up old financial records, and they don’t have to answer a lot of questions, Crawford contends.

Instead, they can go online and apply without leaving the office, give BHG permission to access the necessary financial records, and hear back about the loan in 24 to 48 hours. If they choose to go forward, they get the money within a week — and can get it in as little as 72 hours, Crawford says.

Demand for BHG’s loans is driven in part by the fact that health-care professionals often start out burdened with tens of thousands of dollars in student loans, sometimes hundreds of thousands in student loans, Crawford notes. 

“Society puts them in a very tough space,” he says.

Those debts leave some health-care providers with low credit ratings, credit scores far below what one might assume, Crawford says. BHG has been actively developing financial technology to be able to ascertain the real risk presented by these types of borrowers, he says. It has hired credit analysts from some of the largest banks to help it better understand which borrowers are better risks.

The company’s 15 credit analysts look to see what differentiates someone who has struggled with debt but ultimately works through it, from someone who files for bankruptcy. And they look to see who may have filed for bankruptcy but is rebuilding their credit and has earned an opportunity.

Then, Crawford says, the interest rate is set to reflect the risk and leave room for BHG to profit. 

To reach health-care professionals, BHG markets heavily across all sorts of platforms. A doctor may hear from BHG two dozen times before clicking on the company’s website, Crawford notes. 

Clients who go forward with loans, and those who don’t, may be offered BHG’s credit card, offered through Pinnacle Financial Partners, a product BHG has had since 2014. The card has more than 17,000 users, Crawford says.

From the start, funding the loans made by BHG has meant building relationships with banks. Crawford traveled the country meeting with bankers whose balance sheets needed to be diversified. Early on, he found strong demand among banks that had too large a percentage of total lending tied up in agricultural loans. Taking on loans to medical practitioners gave these banks a more diversified mix of assets.

Over the years, BHG built up a network of banks to which it could sell the loans. Today, Crawford says BHG has more than 850 banks it turns to, auctioning off somewhere between $2 million and $3 million in loans each day. “We don’t need Wall Street,” Crawford says. “We developed our own Wall Street.”

Further, Crawford says BHG has never stuck the banks with a bad loan. If worse comes to worse, BHG can collect on the loan with its in-house operation.

BHG’s network of banks plays a role in Crawford’s plans for future growth. He says the banks could be turned to as buyers for all sorts of loans. “It’s a marketplace,” he notes.

And, it’s a marketplace BHG expects to engage as it expands its product offerings. BHG is moving toward providing loans for medical procedures. These are loans not to health-care providers, but to their patients. It is a $400 billion-a-year market, says Crawford, and he wants BHG to be the No. 1 player in the space within five years.

Handling growth has been a continuing challenge for BHG. Crawford says the company has hired 100 people in the past six months, 60 just since Jan. 1. Today, the company has 367 employees. Of those, 167 are in Syracuse, 34 in New York City, and the remaining 166 at the company’s corporate headquarters in Davie, Florida.

While Crawford works from the Syracuse office at 201 Solar St., his fellow original founders, Robert T. Castro and his brother Eric R. Castro, work from the Florida headquarters, handling loan origination, and funding, human resources and IT. The Syracuse office is the company’s financial headquarters, handling credit underwriting, accounting, collections, bank sales, and marketing.

Locally, BHG has been forced to spread out to find space for its growing number of workers. They can be found at the Solar Street headquarters, at a former fire station across the street, and at a converted mill within walking distance.

The work spaces are modern and the local headquarters is airy with windows throughout to make the most of natural lighting. Crawford notes that Central New York’s often short days and cloudy skies make windows a practical choice.

He adds that the darkness and cold weather are, in some ways, a plus: “You might as well be working.” In turn, when the weather is lovely on a Friday in the summer, the company urges managers to let people leave early, he says.

Added perks for workers include a snack and coffee bar in the main office and a 2,500-square-foot gym with a high-tech golf simulator. The dress code is casual most days and on an early spring day, Crawford worked in shorts and a T-shirt, coming directly from the gym.

Intertwining his discussion of the company with business philosophy, Crawford says he and others in the company read a great deal. Recently, they’ve been reading Daniel Coyle’s “The Culture Code.” It’s about what it takes to keep companies performing at the top level.

For Crawford, part of the culture that has driven BHG’s growth and that he expects with continue to drive its success is an overriding sense that there is more that needs to be done, challenges that need to be faced now. “Urgency,” he says, “from Day One we’ve worked with a sense of urgency.”