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Ares New Healthcare ABL Unit
PLUS: Holmdel Man Among Eight Charged in Multi-Million Dollar Small Business Lending Scam

This team will launch a specialized healthcare ABL platform within Ares Commercial Finance (ACF), enhancing ACF’s offerings for middle-market healthcare companies. Ryan Cascade, Head of Ares Commercial Finance, emphasized that this addition will broaden Ares' lending capabilities in the healthcare finance market.
Todd Gordon, now Managing Director and Head of Healthcare ABL at Ares, noted that their expertise combined with ACF’s platform will offer valuable financing options. This expansion addresses the growing demand for asset-based financing, complementing Ares’ existing credit offerings for mid-market companies.
Ares Management’s expansion into healthcare asset-based lending (ABL) aligns with a confluence of market dynamics that have created a high-demand environment for alternative lenders.
Analysis of the Key Drivers and Opportunity Scale
1. Medicare/Medicaid Reimbursement Delays
Payment Delays: Medicare and Medicaid reimbursements often take 30–120 days to process due to complex billing requirements, leaving providers with cash flow gaps. For example, hospitals reported a 28% decline in cash reserves (from 173 to 124 days’ cash on hand) between 2022–2023, driven partly by delayed claims.
Underpayment Pressures: Medicare reimbursements have declined 29% since 2001 (adjusted for inflation), while Medicaid reimbursements fail to cover 89% of hospitals’ costs on average. These shortfalls force providers to seek bridge financing to maintain operations.
2. Surging Operating Costs
Cost vs. Reimbursement Gap: Medical costs are projected to rise 8% in 2025—the highest rate in 13 years—driven by labor, drugs, and inflation. Meanwhile, Medicare’s 2025 reimbursement rate increases for hospitals (2.9%) and cuts for physicians (-2.83%) lag far behind cost growth.
Margin Compression: Hospital operating expenses rose 24–89% for labor, drugs, and utilities from 2022–2023, while revenue growth stagnated. This has pushed 15% of claims into denial disputes, costing providers $19.7B annually in adjudication expenses.
Source: collaboratemd.com
3. Traditional Bank Retreat from Healthcare Lending
Regulatory Constraints: Post-2008 regulations (e.g., Basel III) forced banks to reduce exposure to sectors like healthcare, which face higher regulatory scrutiny and reimbursement volatility.
Private Credit Advantage: Alternative lenders like Ares offer bespoke structures and faster execution, bypassing banks’ risk committees. Banks now account for <30% of middle-market loans, down from 80% in 2000.
4. Middle-Market Healthcare Lending Opportunity
Market Size: The U.S. middle market (companies with $10M–$1B revenue) represents ~1/3 of U.S. GDP (~$8T) and includes 200,000 private companies. Ares targets healthcare firms within this segment, offering ABL facilities up to $500M.
Returns Potential: Healthcare direct lending delivers a median net IRR of 15% (vs. 11% for generalist lending), driven by higher margins and banks’ reluctance to serve the sector.
Why This Environment Favors Ares
Ares’ new healthcare ABL team—staffed by Huntington Bank veterans—leverages its $349B credit platform to address these pain points. By providing rapid, flexible financing to middle-market providers, Ares capitalizes on:
Cash flow gaps from delayed reimbursements.
Refinancing needs as traditional lenders exit.
Sector specialization, which reduces risk and commands premium pricing.
With healthcare ABL demand rising amid structural shifts, Ares is positioned to capture a significant share of this multi-trillion-dollar market.
Competitive Landscape of Healthcare ABL
Incumbent Players and Market Positioning
Prior to Ares’ entry, the healthcare ABL space was dominated by specialized lenders including SLR Healthcare ABL (originating $1.5B+ since 2007), White Oak Healthcare Finance ($395M facility to Genesis Healthcare), and Comvest Credit Partners ($109M facility to Oceans Healthcare). These lenders typically target facilities with $3M–$395M credit facilities, focusing on stressed healthcare providers facing regulatory or reimbursement challenges.
SLR’s model exemplifies sector specialization:
Collateral Focus: 80–85% advance rates on Medicare/Medicaid receivables versus 70–75% for commercial payers
Pricing: Floating rates of SOFR + 600–800 bps for senior tranches, with monitoring fees of 0.25–0.5% of committed lines
Source: slrcapitalpartners.com
Ares’ Differentiated Approach
Ares’ $349B credit platform enables structural advantages:
Larger Ticket Sizes: $500M facility capacity versus SLR’s $15M median deal size
Cross-Selling: Integration with Ares’ $8B healthcare private equity portfolio for growth financing
Pricing Leverage: Ability to undercut competitors by 50–75 bps through balance sheet lending
This positions Ares to capture upper-middle-market deals previously serviced by syndicated bank loans, particularly for private equity-backed roll-ups requiring $200M+ facilities.
Market Impact: Pricing, Terms, and Deal Flow
Pricing Compression Risks
Ares’ entry introduces downward pressure on spreads:
The disparity stems from Ares’ ability to blend ABL facilities with term loans at 12–14% all-in yields, creating 300–400 bps arbitrage versus standalone ABL providers511.
Covenant and Structural Innovations
Ares is pioneering hybrid structures combining features from leveraged finance:
Last-Out Tranches: Junior debt at 18–22% yields with warrants in facility expansions
Cross-Collateralization: Linking ABL facilities to intellectual property in medtech deals
This contrasts with traditional healthcare ABL’s reliance on strict borrowing base certificates and lockbox controls
Source: occ.treas.gov, haynesboone.com
Deal Flow Acceleration
The middle-market healthcare ABL pipeline is projected to grow 23% annually through 2027, driven by:
Regulatory Catalysts: 89% of hospitals now below 150 days cash on hand due to Medicaid redeterminations
Refinancing Wave: $47B in healthcare loans maturing through 2026 requiring ABL takeouts
Ares’ brand recognition has already shifted borrower preferences, with 62% of private equity sponsors in Proskauer surveys citing platform lenders as preferred partners for add-on acquisitions.
Imminent Consolidation Wave
The Ares move mirrors SLR’s 2013 acquisition of Gemino Healthcare Finance, triggering three likely outcomes:
Vertical Integration: Expect Blackstone/Credit Suisse to acquire niche players like SLR Healthcare ABL
Talent Wars: 40% compensation premiums for underwriters with CMS reimbursement expertise
Regulatory Arbitrage: Non-bank lenders exploiting Basel III’s 20% risk weight for ABL versus 150% for cash flow loans
Our Opinion
Ares' entry into healthcare lending brings capital and brand recognition, but success isn't guaranteed due to the complexities of CMS regulations, reimbursement cycles, and healthcare receivables risks.
The healthcare ABL market offers opportunities for alternative lenders as hospitals face cash flow issues, banks retreat, and costs rise. Success requires financial strength and specialized expertise, with a focus on underwriters who understand both credit and medicine.
Ares' presence validates the market's potential for attractive returns, but sustainable success demands deep sector knowledge. The opportunity is real, but so are the risks, with details being crucial.
Podcast Interview: SureLine Capital's Success in Transportation Factoring
Ex-banker Clint Weston reveals why he left a 20-year banking career to build SureLine Capital, focusing specifically on the trucking industry most lenders avoid like the plague.
Discover the TRUTH about factoring rates, why banks are leaving small carriers high and dry, and how alternative financing is keeping America's supply chain moving despite tightening credit markets.
Clint shares controversial perspectives on banking regulations, why factoring gets unfairly labeled "the F-word of lending," and the real reason most transportation businesses fail in their first three years.
Warning: contains honest opinions about the future of transportation finance.
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Headlines You Don’t Want to Miss
Eight individuals—including a Holmdel man—have been charged in a multi-million dollar fraudulent lending scheme that targeted small business owners across the United States. The defendants allegedly operated a criminal advance-fee scam masquerading as legitimate alternative lending, using a network of fake companies to solicit upfront payments from business owners in exchange for loans or lines of credit that were never delivered.
A New York appellate court ruled that U.S. Bank can pursue claims against MAve Hotel’s owners for violating cash management and rent deposit provisions, even while a foreclosure action is pending, clarifying that such contractual claims are not necessarily barred by foreclosure law. The decision sets a precedent allowing commercial lenders to enforce lockbox and cash control agreements independently from foreclosure proceedings, strengthening lender rights in distressed asset situations.
New York Attorney General Letitia James has sued earned wage access companies MoneyLion and DailyPay, alleging they disguised high-cost payday loans as wage advances, charging fees and tips that resulted in effective annual interest rates up to 750%—far above state usury caps. The lawsuits claim these practices violate New York’s lending and wage assignment laws, trap workers in cycles of debt, and seek to halt the companies’ operations in the state, obtain restitution for affected employees, and impose civil penalties.
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