A young Hudson software company has received a $21 million investment from Summit Partners of Boston.
The company, COMS Interactive, will use some of the money to add staff and tailor its software — which is popular among nursing homes — for other long-term care providers.
COMS also will pay off some of its existing investors, many of whom are local, said CEO Edward Tromczynski.
Summit Partners now owns a minority stake in COMS, which makes software designed to help long-term care providers manage patients with multiple medical conditions.
The private equity firm brings more than cash to the table: Summit Partners has a lot of expertise related to both the software industry and the long-term care market because it regularly invests in those sectors, Mr. Tromczynski said. They're “practically a strategic investor,” he said.
“If we didn't have them invest in the company, these are guys you'd want on your board anyway,” he added.
COMS is just five years old, but it has grown quickly. The company has about 850 customers under contract today, up from about 300 in November 2011.
The company employs about 40 people, and that number should rise to about 60 by the end of the year, Mr. Tromczynski said. About 25 of COMS' employees work in Northeast Ohio, he said.
In conjunction with the new investment, five of the company's 40 investors cashed in their shares for what Mr. Tromczynski described as “fabulous” returns. Several others sold some of their shares, he said.
Among the local investors who will retain some stake in the company are Zapis Capital of Westlake, Portal Capital of Beachwood, Carleton McKenna & Co. of Cleveland and Next Sparc, an investment vehicle owned by Len Pagon, who founded Brulant Inc., an interactive marketing firm that in 2008 was sold to Rosetta of Princeton, N.J.
Carleton McKenna, an investment banking firm, was the first company to invest in COMS and “could not be more pleased with the achievements of the COMS team,” according to a written statement from managing partner Paul Carleton.
“COMS represents a stellar opportunity for everyone associated with this growing organization,” Mr. Carleton stated.
The company's Daylight IQ software lets nursing home staff build detailed medical profiles of each resident, documenting their diseases, vital signs and treatments the staff has provided. It also sends staff members alerts when it sees a pattern that might be indicative of a problem.
The web-based software has prevented patients from dying early, Mr. Tromczynski said. The premature mortality rate among COMS customers is less than half the national average, he said, citing benchmarks set by the Centers for Medicare and Medicaid Services.
Plus, Daylight IQ users have an average 30-day hospital readmission rate of 12.7%, he said. The national average was 18.4% in 2012, according to CMS.
“It's stopping readmission, stopping premature mortality, and you get paid more,” he said.
Mark deLaar, a managing director with Summit, will join the COMS board of directors. In a press release, he stated that the company is “impressed by the strong ROI (return on investment) guarantee that COMS is able to demonstrate to its clients.”