Addiction treatment provider Delphi Behavioral Health Group appears to be ceasing operations and outsourcing some of its facilities to other operators.
Michael Borkowski, CEO of Delphi Behavioral Health Group, declined to answer Behavioral Health Business’ questions. Public documents show that Delphi plans to lay off at least 130 employees. In addition, Delphi customer service representatives indicate that the company is closing large parts of its operations.
“Certain centers are being taken over by alternative companies. However, Delphi is closing,” a company employee said of his caption.
It’s unclear what will happen to Delphi Behavioral Health patients in the closing facilities or which entity will take over the facilities that remain open.
BHB has reached out to several senior leaders at the Delphi Behavioral Health Group, who have not yet responded to requests for comment. This story may be updated.
Delphi Behavioral Health was founded in 2015. Its website says it operates 13 facilities in California, Florida, Maryland, Massachusetts and New Jersey.
Letters signed by Borkowski show all four Florida facilities will be closed and 133 employees will be laid off. The letters are communications that are publicly available through a Florida state agency’s website. The Federal Worker Adjustment and Retraining Notification (WARN) Act requires some companies to announce certain mass layoffs or site closures.
The Florida WARN notices show that most of the affected employees are behavioral health professionals, nurses and administrative staff.
The other states where Delphi Behavioral Health Group operates have not yet listed any layoff notices from the company.
“Although the final day of Breakthrough’s existence has not yet been determined, this closure is expected to be permanent and affect all employees,” Borkowski said in the letters. “All affected employees have been informed of their separation and that their separation from employment will be permanent.”
BHB called all of the facility phone numbers listed on the company’s website and Google Search company profiles. All calls resulted in busy signals or intercept messages indicating the numbers were not working.
Delphi Behavioral Health Group promoted Borkowski from CFO, the role he assumed when he started in 2016, to CEO in August 2022.
Delphi Behavioral Health Group has had several private equity investors over the years. Dallas-based investment firm Capital Southwest Corp. (Nasdaq: CSWC), a business development company, states in its latest quarterly financial report that it has 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 granted Delphi Behavioral Health Group a protection advance — debt intended to protect a lender’s assets — in April 2021, the filing states. In its quarterly financial report, Capital Southwest said it owns 5% to 25% of the stocks of companies it does business with, as it did Delphi.
In August 2020, Capital Southwest Corp. CEO Bowen Diehl said during a conference call that the company had reorganized its financial obligations to the board of directors of Delphi Behavioral Health Group out of court.
“We remain pleased with the quality of care Delphi provides to its patients and the company’s improving financial performance,” Diehl said, according to a transcript of the call. “We are optimistic about the future of the company and the eventual return of our capital.”
Capital Southwest Corp.’s recent disclosure on Delphi Behavioral Health Group states that it loaned Delphi $76,000 in the second quarter of calendar 2022.
Other early investors in Delphi Behavioral Health include BlueOx Healthcare Partners, which exited the business in October 2017, and Halifax Group, which exited in April 2020.