Who Is Mac Crawford? What Is He Known For?

Referred to as one of the profitable turnaround CEOs and M&A (mergers and acquisitions) consultants within the healthcare {industry}, Edwin “Mac” Crawford spent the primary 15 years of his profession (1971 to 1986) within the monetary and industrial sectors in a sequence of licensed public accountant (CPA) and chief monetary officer (CFO) roles. Crawford’s first President function was at Mulberry Road Investments in Georgia, the place he spent 4 years (1986 to 1990) managing cross-industry investments.

Crawford’s legendary profession in healthcare started in 1990, when he was recruited to show round Constitution Medical, a struggling proprietor and operator of psychiatric hospitals. Inside seven years, he had taken the corporate by chapter, offered off in-patient services, paid off debt, realigned the enterprise to worthwhile operations in managed behavioral healthcare, and rebranded the corporate with the title of an acquired rival: Magellan Well being Providers. Over the course of his tenure, he remodeled Constitution from a bankrupt enterprise into the most important behavioral well being providers firm within the U.S. He was promoted twice: to President and Chief Working Officer (COO) in 1992 and Chair and Chief Government Officer (CEO) in 1993.

Crawford is also referred to as the Chair and CEO who remodeled MedPartners from a critically mismanaged firm with big working losses (when he took over in 1998) into Caremark Rx, one of many largest prescription advantages administration (PBM) and mail-order pharmaceutical firms within the U.S. (by 2007)—after which orchestrated the $26.5-billion merger with drugstore chain CVS in a deal that created CVS Caremark, a $75-billion Fortune 20 firm.

Since he stepped down as Chair of CVS Caremark in 2007, Crawford has served as Principal of CrawfordSpalding, an funding banking advisory agency centered on turning round distressed companies. He has additionally partnered with JANA Companions, an activist hedge fund, on investments in underperforming healthcare firms.

In 2013, Crawford was appointed to the Worldwide Advisory Board (IAB) of FleishmanHillard, a worldwide communications agency, specializing in public relations, public affairs, advertising, paid media, transmedia, and social content material.

Training and Early Profession

Edwin “Mac” Crawford (born 1949) earned a B.S. in Accounting from Auburn College in Alabama (1971), certified as an authorized public accountant (CPA), and joined Arthur Younger (a predecessor firm to Large 4 accounting agency, Ernst & Younger), the place he spent 10 years (1971 to 1981) honing his enterprise and monetary administration expertise.

After leaving Arthur Younger, Crawford spent 5 years in Chief Monetary Officer (CFO) roles, at an accounting agency (GTI, 1981 to 1985) and an Alabama-based machine producer (Oxylance Company, 1985 to 1986).

In 1986, Crawford was recruited as President of Mulberry Road Funding Firm in Georgia, the place he spent 4 years managing the agency’s actual property, O&G (oil and fuel), and enterprise capital investments.

Constitution Medical | Magellan Well being (1990 to 1997)

Crawford’s legendary profession within the healthcare sector started in 1990, when he was recruited as Government Vice President of Hospital Operations at Constitution Medical Company, a Georgia-based firm that owned over 100 psychiatric and acute-care hospitals all through the U.S. and Europe. Over the course of his 7-year tenure, he remodeled Constitution from a struggling proprietor and operator of psychiatric hospitals to the most important behavioral well being providers firm within the U.S.

When Crawford joined in 1990, Constitution was going through chapter resulting from critical monetary, authorized, and management points, starting from allegations of Medicare and Medicaid fraud to a lawsuit claiming that the worker inventory possession plan (ESOP) had overpaid for 11.8 million Constitution shares bought from Chair and CEO William Fickling and his kin. On prime of this, regardless of the onslaught of unprecedented price controls the hospital {industry} was going through from managed care within the early Nineties, CEO Fickling had continued to pour cash into unprofitable inpatient services—accruing even greater losses.

Though he was a healthcare novice in 1990, Crawford was praised by each {industry} insiders and analysts for a way quickly he developed and executed a cross-enterprise technique at Constitution to rein in operational prices and realign the enterprise. With an pressing mandate to restructure the corporate, Crawford rapidly realized that—because the {industry} shifted to managed care and psychiatric and acute-care sufferers had been pushed out of inpatient services into cheaper applications—Constitution wanted a completely new mannequin to ship cost-effective behavioral healthcare within the rising outpatient and home-based healthcare market. After main Constitution by Chapter 11 chapter and a serious restructuring, Crawford was promoted to President and Chief Working Officer (COO) in 1992. In March of 1993, he changed William Fickling as Chair and Chief Government Officer (CEO).

As quickly as Crawford took over as CEO, he started promoting off acute-care services and psychiatric hospitals, ramping up Constitution’s outpatient and home-care providers, and lining up partnerships with massive healthcare programs to handle their behavioral well being providers. In 1995, Crawford led the acquisition of one in all Constitution’s rivals in behavioral well being providers, Florida-based Magellan Well being Providers. After divesting Magellan’s psychiatric in-patient enterprise to legendary dealmaker Richard Rainwater’s Crescent Actual Property Equities, he used the proceeds to erase Constitution’s remaining money owed. With Constitution’s monetary slate cleaned, the mixed firm was renamed Magellan Well being Providers in October of 1995, with Crawford as Chair, CEO, and President.

Over the subsequent two years, the sale of the previous Magellan psychiatric hospitals funded the acquisitions of different small rivals, together with Inexperienced Spring Well being Providers (1995) and Aetna’s Behavioral Well being Unit (1997), making Magellan the most important managed care firm in U.S. behavioral well being by 1997.

MedPartners | Caremark Rx (1998 to 2007)

Based mostly on his profitable turnaround of Constitution-Magellan, Crawford was recruited in March 1998 as Chair and CEO of MedPartners, a doctor follow administration (PPM) enterprise that had imploded three months earlier, when huge working losses of $840 million from its Western U.S. operations and debt obligations in extra of $1.8 billion had been reported.

A former Wall Road favourite, MedPartners’ fortunes had plunged in early 1998, when the due diligence group of PhyCor, a possible merger accomplice within the PPM house, had uncovered that the “merger and restructuring reserves had been drained to hit earnings numbers.” The PhyCor group additionally described “horrifying” mismanagement in MedPartners’ California companies, together with programs “in chaos,” “insufficient” reserves to cowl incoming payments, and “hundreds of unpaid claims.” What was maybe most alarming to PhyCor (and Wall Road) was that “MedPartners’ senior administration did not understand how damaged the corporate was.”

In January of 1998, three months earlier than Crawford was introduced in, PhyCor terminated the merger, and MedPartners introduced each a restructuring cost of $115 million in California and future earnings far wanting expectations. Virtually instantly, the inventory plunged 45%, and the CEO, Larry Ray Home, was fired. When Crawford got here in, the complete extent of the large working losses started to floor. The California enterprise was “dropping $200 million a yr” and “lawsuits from shareholders and physicians started to pile up.”

Confronted with turning round a internet lack of $821 million at year-end 1997, Crawford introduced his intention to unload MedPartners’ total PPM operation inside three years and refocus the corporate on one worthwhile division with massive money flows: a $2.4-billion prescription profit administration (PBM) division that had been acquired as a part of MedPartners’ 1996 acquisition of Caremark.

Not like the troubled PPM {industry}, prescription profit administration (PBM) companies like Caremark operate as intermediaries that negotiate reductions with pharmaceutical firms on behalf of employers and insurers—and Crawford instantly noticed the potential of PBMs within the unstable, cost-cutting healthcare market of the late Nineties. To mirror this enterprise-wide shift to PBMs, MedPartners was renamed Caremark Rx, and Crawford spent the subsequent yr promoting off nearly all of the U.S. doctor practices, which concerned shedding a number of thousand staff.

Over the subsequent six years, Crawford remodeled a mismanaged firm that was hemorrhaging money into one of many largest PBM and mail-order pharmaceutical firms within the U.S. Underneath his management, Caremark Rx revenues grew from $2.4 billion in 1998 to $9 billion in 2003. With nearly all debt paid off by 2004, the corporate was ready to accumulate a PBM rival, AdvancePCS—a merger that made Caremark Rx the most important PBM firm within the U.S., with annual revenues of over $23 billion.

CVS Caremark (2007)

In 2007, Crawford orchestrated the $26.5-billion sale of Caremark Rx to drugstore chain CVS in an all-stock deal that created a Fortune 20 firm with annual income estimated at $75 billion. Referred to as a “merger of equals,” the deal mixed Caremark’s pharmacy advantages administration providers with the most important U.S. pharmacy chain into a brand new firm, CVS Caremark. Following the merger, Crawford was named Chair of CVS Caremark however retired from the Board later that yr.

CrawfordSpalding Group (since 2008)

In 2008, Crawford launched CrawfordSpalding Group, an funding banking advisory agency centered on turning round distressed companies. Along with providing strategic, administration, and monetary providers primarily based, CrawfordSpalding invests in sure struggling consumer firms. His co-founders within the new advisory agency had been two ex-CVS Caremark executives, Invoice Spalding, the previous Government Vice President of Technique, and his son Drew Crawford, the previous Senior Vice President of Underwriting and Analytics.

JANA Companions and WL Ross & Co. LLC

Since his retirement from CVS Caremark, Crawford has labored on a number of healthcare investments with JANA Companions, an activist hedge fund based by Barry Rosenstein in 2001. As an {industry} veteran and turnaround specialist, Crawford has vital credibility as a shareholder activist, i.e., an investor who buys a major stake in a public firm and will get a seat on the board of administrators to affect how the corporate is run—actually because they consider that the corporate is mismanaged from a monetary or management perspective. If the board resists the proposed modifications, the activist can use numerous offensive ways to pressure change, e.g., media campaigns, lawsuits, or proxy fights: persuading different shareholders to permit them to make use of their proxy votes towards the board.

Working with JANA, Crawford’s participation has ranged from taking seats on the Boards of Labcorp (a medical laboratory community) and Staff Well being Holdings (a doctor providers group) to serving on the search committee for the CEO of Staff Well being. As JANA’s accomplice, Crawford has additionally exerted extra assertive strain on boards. For instance, in 2021, when Alabama-based Embody Well being, a $6.4-billion community of inpatient and outpatient hospitals, was planning to spin off the house well being and hospice unit, Crawford partnered with JANA to push the corporate to pursue a merger as an alternative. Each Crawford and JANA Companions have invested in Embody (JANA owns greater than 2%), and Reuters reported in December 2021 that Crawford “signaled privately that he can be prepared to affix the Embody Board, if obligatory, as a part of a dissident slate (of administrators).”

Put up CVS Caremark, Crawford has additionally partnered with Wilbur Ross, a billionaire investor who spent 25 years as a chapter restructuring advisor for Rothschild Investments. In 2010, Crawford and Ross introduced the launch of Crawford-Ross, a three way partnership to co-invest in and restructure healthcare firms. Along with stating that his firm was “ready to speculate greater than $1 billion to assist Mac and his group as we collectively construct a serious place in healthcare,” Ross stated that “given his observe report in efficiently restructuring and working healthcare companies, (Crawford) is the chief greatest positioned to search out and capitalize on alternatives created by the turmoil brought on by the latest healthcare laws.”

The Backside Line

• Though he’s greatest referred to as one of the profitable turnaround CEOs within the healthcare {industry}, Crawford spent the primary 19 years of his profession (1971 to 1990) honing his enterprise and monetary administration expertise in a sequence of CPA, CFO, and President roles in accounting, funding, and industrial companies.
• When Crawford was recruited to restructure Constitution Medical, he was a whole healthcare novice—and each {industry} insiders and analysts had been impressed with how quickly he acknowledged a shift in {industry} demand that will make PBMs high-growth companies within the cost-cutting healthcare market of the late Nineties and the way expertly he reined in operational prices, paid off debt, and recognized M&A companions.
• When the CVS-Caremark merger that Crawford orchestrated was introduced in 2006, The Wall Road Journal predicted that the brand new “behemoth” would management “the meting out of 1 billion prescriptions a yr—greater than 1 / 4 of the U.S. whole.” By 2012, the CVS Caremark share of retail prescriptions stuffed within the U.S. was 17.25%; by 2021, that share was 38.55%.
• Discussing his technique for CrawfordSpalding with The New York Occasions within the troubled leveraged buyout market in 2008, Crawford anticipated with the ability to benefit from the turmoil. “I’m at my greatest in a messy state of affairs.”