On July 23, Owens & Minor, Inc. announced that it entered into an agreement to acquire Rotech Healthcare Holdings, Inc. for $1.36 billion in cash.
Given anticipated tax benefits of approximately $40 million from the transaction, the net purchase price is approximately $1.32 billion, which represents approximately a 6.3x multiple of last 12 months EBITDA, excluding synergies.
Rotech is one of the largest providers of home medical equipment and related products and services in the United States, with a comprehensive offering of oxygen, other respiratory therapy equipment, wound care equipment and supplies and diabetes devices and supplies. Rotech generated approximately $750 million of revenue and an EBITDA margin of nearly 30% in 2023, according to the press release.
Owens & Minor, Inc. is a healthcare supply chain management company that distributes national brand name medical and surgical supplies in the United States. For the full year 2023, the company generated $10.3 billion in revenue, according to the company’s financial report release on February 20, 2024.
The transaction is subject to customary closing conditions, including the Hart Scott Rodino Act, and is expected to close by the end of 2024. The transaction will strengthen Owens & Minor’s direct patient offerings and accelerate growth.
“Rotech squarely fits into our existing Patient Direct segment and directly aligns with the strategy we outlined last December during our Investor Day, supporting our expansion in the very large and fast-growing home-based care space. We are excited to acquire a high-quality company like Rotech, an opportunity that doesn’t come along very often, and I look forward to welcoming the Rotech teammates into the Owens & Minor family,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor.
Citi acted as exclusive financial advisor to Owens & Minor and Kirkland & Ellis LLP is acting as its legal advisor. Jefferies LLC acted as exclusive financial advisor to Rotech and its legal advisor is Paul, Weiss, Rifkind, Wharton & Garrison LLP.
According to data captured in the LevinPro HC database, this acquisition marks the 54th Home Health & Hospice transaction of the year, and the 13th in the durable medical equipment/respiratory home care specialty.
