Success stories

Lithuanian Private Equity and Venture Capital Association

“InMedica”, “BaltCap”, and “INVL”: Do what is good for your client, and money will follow

“InMedica” team: CEO Kęstutis Broniukaitis, COO Laura Penikienė, manager of medical activities Arūnas Ivanauskas, manager of odontological activities Robertas Ivanauskas, personnel manager Ilona Kneitaitė.
Year of contract: “BaltCap” – 2012  (exit 2019), “INVL BSGF” – 2019
With the help of private funds, the value of the company has become 20 times bigger. The investment of “BaltCap” allowed to obtain 10 clinics and to open 2 new clinics. With the contribution of “INVL Asset Management Baltic Sea Growth Fund” 6 more clinics were obtained and 1 new opened.

“InMedica” raises the bar in the whole sector of medical services and changes the approach to these services: the vision to create a network of medical facilities, each of which would provide services of equally high quality, is becoming a reality. With the help of private funds, the network is being brought to uniformity and expanded – quite recently it has been complemented with walk-in type of clinics, where visitors may in a short time and without booking an appointment in advance undergo rapid testing, get vaccinated or receive a consultation regarding some non-complicated health issues. Since the first investment of private capital, which contributed to the success exceeding all expectations, the value of the company has become 20 times bigger, however, there were many challenges too.

Why did you decide to cooperate?

Kęstutis, InMedica: In our case it was a clear willingness to grow. To grow on our own we lacked some internal resolution and courage. We wanted to share the risks with someone. Another issue was related to assets: any growth must be somehow financed. This is done either with partners, by increasing equity, or with the help of banks and financial credits. At some point, those financial credits are quite complicated to obtain, and the attitude of such financing institutions is different, and it is way easier to do all that with strategic partners. I am grateful to “BaltCap” for trusting us back then, and to “INVL BSGF” for trusting us now.

The reason why it is beneficial for a company owner to be partnered with an investment fund is the ability to have an objective feedback in relation to the decisions which are being made. Quite often the founders of business may begin to find themselves very nice and smart, then they are unable to consider themselves objectively. I was not an exception, because it was not clear who I should compare myself with. A fund, however, by investing into multitudes of companies in various sectors, may share a much more objective evaluation on how successful are certain choices of the company. Sometimes, as a result of such feedback, one may see that they are not that great and only moderately smart, and such realisation is very important, because only then it is possible to see the objective reality, and to take the opportunity to learn, change and grow.

Kornelijus, BaltCap: It is very inspiring to remember the story of “InMedica”. Maybe it will also inspire other owners and companies to do something similar. Many times we discussed with Kęstutis the possibility to create something bigger in the sector of healthcare services. Back then, there was no significantly large network or player in this market. There were some large clinics, established before, but we saw foreign examples: in more advanced countries there were broad networks, offering their clients the possibility to receive services of family medicine and healthcare specialists in the vicinity of their residential places. We agreed on the vision and market opportunity, came to a decision how to achieve this, how to finance it together, we shared responsibilities and developed a long-term plan. In my opinion, that plan was more or less implemented, as we intended. We have obtained more than 10 clinics, the size of business has multiplied, and we have become one of the leading centres of medical services, which provides not only family medicine services, but also specialised services. Inspiring is also the decision of Kęstutis to come to work full time in his own “InMedica”, the turnover of which was only one million back then, and for this he had to give up on his safe career in a large corporation. Kęstutis decided to risk both his time and money, and this risk has paid off.

Nerijus, INVL: I will add to what Kornelijus has said. When we started with the Baltic Sea Growth Fund the year before last, we were looking for interesting topics. One of such interesting topics, which we pinpointed from the beginning, was medicine in general. In Lithuania the sector of healthcare services for patients is underdeveloped, as well as the sector of other services for medical companies, for example, clinical research, even though there are many specialists in Lithuania who are able to provide such services. Then we received a notification that Kornelijus and “BaltCap” were considering to sell “InMedica”. So it was a coincidence: this kind of business was interesting for us, and “BaltCap” was selling it. So we had never been targeting “InMedica” specifically.

Initially, we thought that “InMedica” was not of interest for us, because this company had been already grown by “BaltCap”, we thought that they would demand a high price, and after they sell it to us we would not know what to do with it. When the negotiations started, and we began to consider an option of acquiring this network with the small shareholder Kęstutis remaining in business, our negotiations sped up. Before that we were evaluating our capacity to understand what to do with this business, but after finding out that the founder of the business was about to stay, we accelerated the process and completed the deal.

Then we only had to draft a strategy and specify our vision, what we want to achieve in 5 years. Together with Kęstutis and his team we completed those tasks. Now we are moving on, and even if not precisely in line with our initial strategy, but the direction was set, and we still adjust it upon necessity. It is of great importance to discuss the rules in the very beginning. And I intentionally use the notion of “discussing”, rather than “agreeing upon”: if an agreement is made and engraved in stone, then it would be binding for the next five years, und such inflexibility might cause problems. Instead, we set some red lines: we identified the boundaries which were not meant to be crossed, and within them we allowed some liberty, as the need may be.

What biggest challenges have you overcome in cooperation? 

Kęstutis, InMedica: I have come up with a big list of things achieved with the help of the fund, especially in relation to the development of strategies – both with “BaltCap” and “INVL BSGF”. Refinement of the strategy and building the courage – by making me realise that I was not alone, that I was supported in my activities by professionals and partners, - eased the decision making significantly, especially when the growth was needed and those decisions were not only urgent, but also quite responsible, considering the size of the company. 

What challenges? For me personally the greatest challenge, I think, was to make a clear distinction between situations where I communicate and consult with the fund as a partner and shareholder – a horizontal relation among equals, so to say, – and the situations where I am related to the fund as management is related to shareholders. The latter relation is vertical. We had some cases in our experience, do you recall them, Kornelijus? When we rushed a bit with the growth and had some issues with the management of finances, and thus the results of the company were worse than expected. We then had to decide whether it was worth to separate, both psychologically and physically, the owners from the management. In other words, whether a different CEO was needed. What I liked and what I learned was that clearly defined principles help to keep life easy. In our case, we agreed on the desired results, the schedule, and in case of failure to achieve those results, we knew that the management would have had to be changed. Then I would have had to step aside, and a more appropriate manager would have been hired. All that did not happen, because we got the expected results, but psychologically I was very calm, because I knew that as a shareholder I was also interested in the increase of the value of the company. If that value could grow with a different manager, other than me, I should be satisfied too. These things had to be clearly defined and expressed.

Kornelijus, BaltCap: Main challenges were related to growth, because they are inevitable when the company’s size multiplies within a relatively short time. When we only began to work with Kęstutis, it was a company consisting only of four or five clinics and which had only a couple of employees in the administrative team. At the end of our cooperation, the administrative team expanded to more than ten people, and every function was assigned a manager. The challenge was to build the whole team and structure of the company, and to make sure that the new team is able to manage the business which was several times bigger. Also, at some point, for about two years we had been actively expanding, both by acquiring other clinics and opening new ones. Around that time, when we had way more clinics, Kęstutis said that it was time to slow down a bit. Then we said to ourselves: “Let us try to integrate everything. To develop common systems, to see, how we could reduce costs and raise revenues.” That year was interesting because of the challenge how to turn an extensive network into a coherently working system. And we succeeded.

In what stage of cooperation are you now and what are your current goals?

Nerijus, INVL: Main goal is to increase the value, and then to set strategic goals to ensure further growth. During the period of “BaltCap” investment, the growth of “InMedica” took place and the company learned how to grow by means of acquisitions. At first, upon acquisition of clinics which already had their patients, we saw that these patients were used to the standards of that specific clinic, and they were fine with keeping those standards. We them continued the acquisitions and expanded our network, and increased the quality of our services to such level that new patients began to apply, thus we created the “InMedica” trademark, increased its renown, and patients began to select not a specific clinic, but the network instead. Thus, naturally, we faced another challenge, also mentioned by Kornelijus – the development of common standard. Therefore one of our goals is to make sure that every patient receives services of equal quality in each clinic, and to keep them at high enough level be recommended by our clients to other people. Only a single format and unified standard may ensure a consistent growth of the number of patients. So one of our strategic goals is not to simply sell services of our network, but to make them desirable to be obtained. In all our businesses we apply the rule: do what is good for your client, and money will follow. One might find such declaration quite high-sounding, but putting money first definitely leads to problems. Together with the team of Kęstutis we sat and pondered what to do to ensure the comfort of our clients, what is still needed to be able to offer a full spectrum of “InMedica” services. Then we ticked the items which are most required, identified the lowest hanging fruit and placed them to the top of the list. Other services, which for some reasons at that time were deemed to be not necessary, we planned to offer at the facilities of our partners, or to begin the provision of such services later, or not to provide them at all. In general, this step was done to review the needs of our clients: if the client is satisfied, money will follow too.

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