After Raising More than $32M, OnShift Hunting for More Market Share and Acquisitions

On a mission to help the senior care industry address the staffing crisis, OnShift closed on a new round of funding at the end of 2018 from major investors like Clearlake Capital and Ziegler Link Age, and is hunting to grow its market share.

Based in Cleveland, Ohio, the cloud-based human capital software-as-a-service company is looking to make acquisitions and possibly enter new markets to stimulate that growth.

“This is not the time to retrench, this is the time to go after more market share,” said Mark Woodka, CEO of OnShift, during an interview at the National Investment Centers for Seniors Housing & Care (NIC) conference in San Diego.

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Senior Housing News sat down with Woodka to learn more about OnShift’s plans after raising more than $32 million since its founding in 2008.

You just announced an additional raise — undisclosed amount — beyond the initial $32M, but based on what I hear you have a lot of capital at your disposal to put to work. What’s your plan for 2019?

Our plan for 2019, and the reason we raised more money, is two-fold. Number one, we look at our market and we have a lot of growth potential just selling what we already have to our customers. We’ve penetrated maybe 9% or 10% of the [skilled nursing and senior living] market.

We’ve got a lot room to grow in those markets, but also our customers have so many more problems [we can help solve], because there’s so much white space around the industry.

The reason we went out and raised money and found a financial partner is we want to be able to grow inorganically as well, so we can be able to do acquisitions and fill out our road map [faster] or get into some market segments more quickly.

You said your market share sits around 10%. What percentage of the market do you think is not using a staffing solution like you offer?

I still think it’s pretty high, but it’s really hard to tell. What attracted me to this business originally was it was almost 100% greenfield. When I did the research on investing, I got involved as an angel investor.

I didn’t know that.

Yeah. When I did the research, we didn’t find a single person that was using an enterprise software solution [for staffing]. I don’t know off the top of my head, but a big percentage of our sales pipeline [is] still using a piece of paper [to manage staffing everyday].

That’s crazy.

It is. I don’t get it, but therein lies our opportunity.

I’ve noticed that you’re starting to get name-checked during earnings calls based on your work with operators like Sunrise. Do you think that proves that you’re having an impact on a bigger scale?

Absolutely, because it provides great validation [for our product].

We’ve seen occupancy drop in the last couple years, and while I think it’s gone up a bit, we’ve got kind of a new reality here, and operators need to get their cost structure in line.

After your most recent raise, where do you think you will be in terms of market share in 2020?

Probably another 4% or 5% up, maybe 6%. We’re accelerating our growth, building on our sales and marketing organizations real quickly. We’re trying to really stimulate the growth.

Is your growth going to come mostly from skilled nursing or senior living?

It comes from both actually. I think our business mix in the last three or four years, we used to be probably 70%-72% skilled, but now I’m seeing it’s much closer to 50/50. That was a conscious decision on our part to expand our efforts in senior living.

And I know you guys have finally kind of entered the behavioral health market. Why did you make that decision?

There’s need there and our product set fits there. Some of the growth comes from inbound requests in different industries. And if we get five or six or 10 or 20 of these, we’re like, “Hmmm, maybe we should take a look at that.” And so that’s kind of what happened on the behavioral health side. We started seeing a lot of implied interest. So yeah, we did enter that.

Are you looking at any acquisitions right now?

We have some things in the pipeline that are tuck-ins. There are also other market segments falling into long-term post-acute care. We haven’t decided what we’re doing there.

We’ve got a number of customers that are in the home care business, or in therapy, or hospice. We need to do something there.

We see our customers diversifying, so we want to prepared to address their needs.

You guys have released add-on products that allow staff to get paid faster, plus other staffing solutions. Do you get those ideas from outside of the industry?

It’s a combination of the things. Text-to-hire is a great example. We just launched that product. That came out of a research project with customers last year. They came to us and said, “We can’t find enough candidates.”

We said, okay, let’s do a pilot and see if we can generate a stronger candidate. And we did. We got about twice as many candidates, but the hiring rates were lower.

When we went in to peel back the onion, we found out the reason more people didn’t get hired: the process being followed in the building wasn’t right.

For example, if I’m the resident care director, I process applications on Tuesdays and Saturdays. And while 75% of my applicants are millennials, I’m calling them. I may have an application that has been on my desk for three days and I’m calling that person, and if that person’s good, they have a job already. They’re off the market. Even if they’re not, then they’re not answering their phone.

We built the chat application to get to people immediately, get the application scheduled, remind them to come in, and we’re seeing candidate flow about 2X and hiring about 2X. It’s stuff like that, where we’ll dig into a problem with customers and help to find solutions.

Assuming you pull off your growth targets, what’s your exit plan?

Here’s how I run my business. Build a good business, and exit plans will present themselves. Could we do an IPO? It could be a strategic [acquirer], it could be a private equity player. We don’t have a fixed plan or time horizon. My focus is build a really solid, fundamentally strong business, and that will take care of itself.

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