Sanford Health eyes growth in senior care

Sanford Health officials are talking about the potential for growth after closing Jan. 1 on a deal to merge with Evangelical Lutheran Good Samaritan Society, another nonprofit group based in South Dakota that is also a large operator of senior care facilities.

Sioux Falls-based Sanford Health currently generates about $4.5 billion to $5 billion per year in revenue, while Good Samaritan sees annual revenue of $1 billion to $1.5 billion, said Kelby Krabbenhoft, the chief executive at Sanford, in an interview.

The merged organization will have enough scale to quickly resolve the problems that drove about $37.5 million in losses at Good Samaritan in 2017, and a smaller annual loss last year, Krabbenhoft said.

"On a $6.5 billion company, the financial challenge for both of us was about $30 million," Krabbenhoft said. "That's less than half of 1 percent."

The long-term care business is tough, with financial challenges that sometimes prompt facilities to shut down.

But Randy Bury, a Sanford Health executive who is transitioning to a job as president at Good Samaritan, stressed the potential for growth.

"We'll be a growth company, and that's where the focus will be," Bury said.

Good Samaritan runs about 20 senior care and home health facilities in Minnesota. Sanford Health runs about a dozen hospitals in Minnesota, where the nonprofit group employs about 5,000 people, Krabbenhoft said.

When news of the merger first broke last summer, Sanford Health officials also said they were in talks to enter the Chicago market. But Krabbenhoft said the Chicago deal is not moving forward.

Christopher Snowbeck

Ryan Walther, a Twin Cities entrepreneur who was a founder of the satirical newspaper the Onion recently fooled the investment minds on ABC's "Shark Tank." At least for a few minutes.

Walther and business partner Arik Nordby pranked the judges when they solicited funds for a fictitious company called Rynarki.

The weird products inspired no offers. They were just empty boxes with images of the crazy gadgets printed on the outside, including the "pet sweep."

Bob Hennessey, a retired Twin Cities business lawyer and acquaintance of Walther's, called in the information about the "Shark Tank" episode in December. Walther was away on vacation last week.

The Rynarki boxes featured fictitious products such as a $7 "plant urinal." The box said it will help the owner "turn your liquid gold into leafy greens!" And an "earwax candle kit." The extraction device was supposed to be in the box. All the business "Sharks" were laughing.

After pranking the prospective investors, Walther and Nordby introduced the real company: Prank-O. They drew disbelief from the investors when they sought $640,000 in exchange for an 8 percent stake in the business.

The business had sales, but also problems, according to CNBC. Sales were about $2.8 million last year and have reached $10 million since 2013.

The somewhat humbled co-founders told the Sharks they had $1 million in debt and were working off a line of credit.

"I'll make you an offer, but you're going to have to listen," an interested Mark Cuban said. "You've got a great product. You've got great comedy minds. But your track record speaks for itself. I don't mean … any disrespect. All entrepreneurs go through this."

He offered them $640,000 but for 25 percent, three times the equity the owners wanted to concede. Shark Kevin O'Leary also made a $640,000 offer for a royalty of 38 cents per unit indefinitely.

The entrepreneurs tried to negotiate with Cuban for less equity. No cigar. They took his offer.

Walther an original partner in the Onion in 1994, was instrumental in growing it from a local newspaper in Madison, Wis., to a well-known satirical news outlet that covers current events.

Prank-O was started in 2009 after Walther met Nordby, who was selling prank gift boxes on the Onion's online store.