Addiction treatment provider Delphi Behavioral Health Group appears set to shut down its operation and offload some of its facilities to other operators.
Delphi Behavioral Health Group CEO Michael Borkowski declined to answer Behavioral Health Business’ questions about the matter. Public documents show Delphi plans to lay off at least 130 members of its staff. Additionally, Delphi customer service employees state that the company is closing down major portions of its operations.
“Certain centers will be taken over by alternative companies. However, Delphi is closing,” said a company employee through its text line.
It’s unclear what will happen to Delphi Behavioral Health patients at the closing facilities or which entity will take over the facilities that will remain open.
BHB has reached out to several top Delphi Behavioral Health Group executives who have yet to return requests for comment. This story may be updated.
Delphi Behavioral Health was founded in 2015. Its website states that it operates 13 facilities in California, Florida, Maryland, Massachusetts and New Jersey.
Letters signed by Borkowski show that it is closing all four of its Florida facilities and laying off 133 people. The letters are notices publicly available through a Florida state agency’s website. The federal Worker Adjustment and Retraining Notification (WARN) Act requires some businesses to give notice for certain mass layoffs or site closures.
The Florida WARN notices show that most of the employees impacted are behavioral health technicians, nurses and administrative staff.
The other states where Delphi Behavioral Health Group operates have not yet listed layoff notices from the company.
“Although the last day of Breakthrough’s existence has not yet been determined, this closure is expected to be permanent and will affect all employees,” Borkowski said in the letters. “All affected employees have been notified of their separation and that their separation from employment will be permanent.”
BHB called all facility phone numbers listed on the company’s website and listed on Google Search business profiles. All the calls resulted in busy tones or intercept messages indicating the numbers were not working.
Delphi Behavioral Health Group promoted Borkowski from CFO, the role he took in 2016 when he joined up, to CEO in August 2022.
The Delphi Behavioral Health Group has had several private equity investors over the years. The Dallas-based investment firm Capital Southwest Corp. (Nasdaq: CSWC), a business development company, states in its latest quarterly financial report that it invested just over $8 million in debt and equity in the company with a fair market value of $5.3 million.
Capital Southwest has yet to return a request for comment.
Capital Southwest Corp. acquired equity and loaned the company money in April 2020. It then extended a protective advance — debt meant to protect a lender’s asset — in April 2021 to Delphi Behavioral Health Group, the filing states. In its quarterly financial report, Capital Southwest said it holds 5% to 25% of the securities of companies with which it makes deals as it did with Delphi.
In August 2020, Capital Southwest Corp. CEO Bowen Diehl said during an earnings call that the company had restructured its financial obligations with the Delphi Behavioral Health Group board of directors out of court.
“We continue to be pleased with the high-quality care that Delphi provides its patients and the company’s improving financial performance,” Diehl said, according to a transcript of the call. “We are optimistic about the company’s future and the ultimate recovery of our capital.”
Capital Southwest Corp.’s latest disclosure about Delphi Behavioral Health Group is that it loaned Delphi $76,000 during the second quarter of the calendar year 2022.
Other early investors in Delphi Behavioral Health include BlueOx Healthcare Partners, which exited the business in October 2017, and the Halifax Group, which exited in April 2020.
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