Franklin, Tenn. Eight home care companies in the Midwest and Southeast have formed Auxi Health, a $60 million company offering home nursing, infusion, respiratory services and home medical equipment in primarily rural areas.

The firm was created by Houston-based venture capital firm Monterey Capital Partners. "We saw home care as a growth opportunity in a large, fragmented industry, susceptible to consolidation," said Greg Taylor, Monterey director.

The founding companies are: Always Care Home Health Services of Missouri, St. Louis; First Home Health, Chapmanville, W.Va.; Hawkeye Health Services, Knoxville, Iowa; Home Medcare, Eastman, Ga.; Jackson Healthcare, Temple, Texas; Missouri Home Care, Rolla, Mo.; PharmaThera, Memphis, Tenn.; and Procare Home Health Service, Douglas, Ga.

Auxi aims to target non-Medicare Part A nursing business, said Paul Touchton, Auxi president. "Medicare Part A by definition is a business that is incapable of being profitable," he said.

The eight founding companies have little or no Medicare Part A business. They also have the top market share in their regions and a limited number of business lines, Touchton said. HME, respiratory and home infusion make up about 45 percent of the new company's business; the remaining 55 percent is home nursing and custodial services. The new company has about 3,000 employees and 32 locations.

In an effort to encourage the companies to work together, Auxi acquired each company for a combination of cash and stock, Touchton said. Specific terms were not disclosed.

Steve Curtiss is Auxi's chief financial officer, Brad Booth is senior vice president of development and Larry Robinson, president of PharmaThera, is chief operating officer.

Officials said they have modest growth plans for 1999, opting instead to concentrate on integrating some of the founding companies' back-office functions. Auxi aims to add just $10 million in acquired revenue in 1999, with a focus on HME acquisitions in its current regions, Touchton said. -K.S.