Emerald Textiles is the largest in linen and laundry commercial processing within acute care, servicing Hospitals, Medical Centers, and specialty clinics across four states in the Western US. CEO Andy Kratky discusses the company’s latest developments and its continual growth in the market.
INTRODUCTION
Since the beginning of the COVID-19 pandemic, we have been reminded that healthcare is one of the most critical sectors to the health and wellbeing of people around the globe, and the continued function of everyday life, from individuals to businesses and even governments.
Within the sector, there are key players who keep the wheels of the industry turning in one way or another, such as the suppliers of healthcare resources.
One such company is Emerald Textiles (Emerald), the largest healthcare linen service provider that specializes in servicing the healthcare industry, with 12 state-of-the-art commercial linen processing facilities, three service centers, and industry leading operations across the Western US.
“We are the largest provider of healthcare linens in the region, and we have 12 different sites across four states,” introduces Andy Kratky, CEO of Emerald. “These are our processing facilities, and on top of this we have three service centers strategically located to serve a wide base of healthcare customers.
“We measure ourselves on the pounds of linen produced each year. This number sits at around 330 million clean pounds provided to our customers annually, which is sizable compared to others in the field.”
QUALITY AT THE FORE
Emerald’s 2,200 employees serve around 2,500 customer sites in the country, delivering the highest quality products to the sector across the western region.
“Emerald is 99 percent in the healthcare space, with one facility in Reno (Nevada) that additionally produces linen for the hospitality sector,” Kratky says. “Our standard items focus on any linen that you would find in a hospital room, such as bed sheets, bath blankets, pillowcases, and many other items. Another key part of our business is non-standard items such as reusable isolation (ISO) gowns, scrubs, and microfibers, for example.
“Since the COVID-19 pandemic, reusable ISO gowns have been a very important part of supporting the healthcare workers in hospitals. At the beginning of the pandemic, many experienced supply chain disruptions and we did a great job ramping up our inventories such as reusable ISO gowns. Being proactive in our inventory ramp up ensured our healthcare partners had enough supply and got what they needed. This was especially important when disposables became difficult to find, to ensure that the workers were as safe as they could be during work hours, all while providing sustainable, reusable, hygienically clean products.”
What truly sets Emerald apart from the competition in the industry is not just its scale of service across the Western US, but also the quality of specifications the company follows when it comes to its products.
“We provide a higher quality, higher spec product to service our customers and make sure that they have the best quality products within their hospitals,” Kratky continues. “The lack of issues when it comes to our quality, mixed with our dedication to making sure that our customers have the best products and enough supply on time, is critical to Emerald, and is what really differentiates us.”
“Through the investment in acquisitions such as Angelica, we have been placed in a really good position in the US”
Andy Kratky, CEO, Emerald Textiles
GROWTH IN THE INDUSTRY
While quality remains key to serving customers, growth and a focus on consolidation are also instrumental in establishing a lasting foothold in the industry. Across the US healthcare space, players are competing to incorporate additional institutions and grow to best service regions and states in their specialized areas.
“Traditionally speaking, there are larger healthcare systems that branch out across the US, and then there are systems that have been more regionally focused, or super-regionally focused with market density based in large cities,” Kratky elaborates. “Then there are a lot of smaller independent healthcare facilities that support different local areas but do not really branch out throughout their state, region, or the country.
“What we have seen over the past several years is a consolidation of the market. You have larger healthcare systems that are going out and acquiring smaller independent systems that are a good fit with their footprint, and they are also building new hospitals and medical office buildings to continue their outreach.”
Emerald has been able to achieve this trend in acquisition and growth, being able to implement additional facilities, whether they are greenfield developments or otherwise in order to successfully grow and expand with their customers.
ACQUISITION AND EXPANSION
In recent years, Emerald has been driven by this growth focus across the Western US.
According to Kratky, the initial vision of the company was to create a linen and laundry healthcare provider that could service larger healthcare systems, with the business starting up in Northern California catering to a small number of different facilities.
Emerald has grown significantly through organic growth, but also continues to grow through acquisition and expansion.
“The most recent acquisition was with Angelica Corporation (Angelica), another provider of hospital linen and laundry, in which we acquired nine different facilities from them in the west of the US,” Kratky says. “The idea was to continue to scale up, and there were certain facilities that were very good, and we didn’t have to alter. Some other facilities we have had to deploy capital and invest in upgrading them.
“We have a strong market position because of our success in growing organically and through the investment in acquisitions such as Angelica. Because of our footprint and the deployment of our strategy, we are able to support larger healthcare system customers without compromising quality or customer experience. Recently, this has accelerated and put us in a good position from a customer standpoint as well as in terms of capacity.
Angelica was a large integration due to the number of sites that we incorporated, but this was completed in around five months. I would call this a success from start to finish, because usually it takes far longer to fully integrate a company of that size. Our team was also able to support our customers and partners during this time and did a really great job.”
On top of the Angelica acquisition, Emerald has undergone several plant expansions, including at its Phoenix (Arizona) plant, to improve capacity, efficiency, and customer service.
“The Phoenix expansion has been a really nice success story for us since we acquired the business,” Kratky tells us. “We knew that it was one of the better running facilities that we acquired, and it has a great team of people working there. Earlier this year, we were able to secure a large new health system partner in Phoenix, and we had to expand our capacity to take on such a customer.
“We are currently deploying another of what we call a continuous batch washer (CBW) tunnel system, to make a total of three CBWs, along with five new industrial sized dryers to expand such capacity. This will also allow us to continue our growth efforts in that market.
In addition to Phoenix, we have deployed $50M of capital over the past four years to upgrade several facilities and expand capacity to take on new customers, which results in better customer support and improved efficiencies in the facilities.”
“We are firm believers in making sure that we have the best equipment, highest quality products and service, and the best people for our customers”
Andy Kratky, CEO, Emerald Textiles
PEOPLE FIRST
Since Emerald’s acquisition of Angelica and its additional facility investments, the company has undergone substantial growth in the market.
“Last year we grew 18 percent organically, and this year to date we have grown 12 percent; because of this, we have expanded capacity in certain facilities and continue to do so,” Kratky tells us. “We have also increased investment in our linen products, continue to invest in high-tech automation through quality equipment, and internal investment of our people.”
For Kratky, Emerald’s workforce is the center of the company’s success, and reinvesting in employees has been, and continues to be, a primary focus on in-house development across Emerald’s many sites.
“We are firm believers in making sure that we have the best equipment used for production, and we continue to deploy capital across our sites for our manufacturing capabilities as well as our staff,” he elaborates. “This is one of the reasons for our year-on-year organic revenue growth, but the second is the focus on our people.
“We have a lot of employees within our facilities, and we make sure that our employees have a good work environment and the support they need to thrive in the workplace. We need to make sure that we take care of our employees.”
Within this sphere, Emerald ensures to recognize and reward its employees’ efforts and performance, and celebrate such achievements.
“We have had employee recognition in the company for a number of years now, and we host events and other things to keep our teams motivated,” Kratky tells us. “We also have quarterly business meetings with all employees across our 15 locations with the intent on providing all of our teams with a perspective of what is going on with the company and how we are moving forward.
“I am a believer in open communication to our team to ensure they have an understanding of what is going on in the entire business, not just their portion of it. This gives them the perspective of how they impact the company as well as how their co-workers impact the company. Maximized communication to our team is critical, and providing the team with the status of the company and performance goals, both internal and external, is extremely important, as is recognizing and celebrating individual performance.”
Environmental, social and governance (ESG) is at the core of the company’s mindset and defines the way in which Emerald operates across the western US.
“From an environmental standpoint, our ESG strategy helps Emerald reduce our use of natural gas, electricity, water and other resources used at our facilities to be good stewards of the environment,” Kratky explains. “Doing our part will help the planet that much more, and our ESG plan is very important to our overall strategy as a company as well as our healthcare partners.”
EXTENDING REACH
Emerald’s primary focus for the rest of 2022 and beyond is building on the organic growth experienced from the company’s multiple investments and facility developments. Despite holding a predominant share of the market, Emerald seeks to drive value for its customers and their businesses, while keeping its eyes peeled for opportunities for acquisition.
“We see an opportunity in independent outpatient facilities that we think are a very good fit for Emerald, and that we can align with from a product and service perspective,” Kratky says. “So, we are working on, and in the process of, deploying a strategy to really hone in and focus on generating more outpatient and independent care facility business.
“Outside of this, despite our super-regional reach, we have had customers reach out to us and ask directly if we have the ability to serve them in other states across the country.
Because of this, I believe that greenfield expansion is definitely going to be a part of our future, where we build a processing facility based off an anchored customer in a certain area. We did this with our Livingston CA facility, so we are well versed in creating a world class greenfield facility.”
Stemming from this customer demand, Emerald is prospecting expansion into adjacent markets as well.
“This is a pillar of our growth strategy,” Kratky reveals. “There are plenty of opportunities out there in the market, and we will always look towards expanding our product and service base to reach customers further afield.”
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