When the Home Health and Hospice (HH&H) sector is talked about, the focus is typically centered on patient-centric areas, leaving one vital component under-discussed: the durable medical equipment and respiratory home care (DME) field.
The DME subsector is a broad industry that encompasses daily medical equipment designed for use in the home. This includes in-home services for mobility aids, shower and transfer benches, in-home hospital beds, oxygen and breathing concentrators, internal and external feeding tubes, surgical dressings, wound care equipment, ostomy bags, tracheostomy tubes and blood testing diabetic strips.
According to the LevinPro HC database, as of October 4, 2024, there have been 16 DME transactions reported. This accounts for approximately 34% of the 68 HH&H transactions announced since the start of the year.
Compared to 2023, when 21 transactions were announced, 2024 is expected to be on par with prior years’ activity. In 2022, 19 deals were reported; in 2021, 17; in 2020, 10 transactions were reported; and in 2019, 15 acquisitions were reported.
There was one transaction with a disclosed purchase price, which is not out of the norm as, in most years, there have only been several acquisitions with an announced price. The infrequency of disclosed prices can be attributed to the fact that a large portion of the DME (and HH&H deals on the whole) are completed by private companies. On July 23, 2024, Owens & Minor, Inc., a healthcare supply chain management company, announced that it acquired Rotech Healthcare for $1.36 billion.
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.
Based in Mechanicsville, Virginia, Owens & Minor 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.
The Rotech acquisition is the third-largest DME transaction in the LevinPro HC database. The two transactions with a larger purchase price are the 2020 acquisition of AeroCare Holdings, Inc. by AdaptHealth Corp. for $2.4 billion and Owens & Minor’s acquisition of Apria, Inc. for $1.4 billion in 2022.
Private equity and their portfolio companies account for the largest buyer type for DME throughout 2024, with seven acquisitions. Some of the active private equity acquisitions include NMS Capital’s Strive Medical, LLC, which purchased ProMed DME, and MasVida Healthcare Solutions, a portfolio company of Brixey & Meyer Capital, which acquired DME assets from Joerns Healthcare.
Private equity interest in the DME field increased notably in 2024 from 2023, when private equity buyers (and their portfolio companies) only accounted for five of the 21 transactions. In 2023, Seven Hills Capital’s portfolio company, Reliable Medical Supply, completed two acquisitions in the DME space: Capstone Medical Partners and Tusk Mobility. Neither price was disclosed.
Independent HH&H buyers also represent a large portion of the buyers in 2024 with five transactions. These acquirers include Home Oxygen Company, which bought DME assets from Community Hospice & Health Services and HME Home Health which purchased Coast Ability. According to LevinPro HC, these transactions represent both Home Oxygen Company and HME Home Health’s only acquisitions, to date.
There have been no companies with multiple transactions since the start of 2024, so far.
Active buyers of the past several years include AdaptHealth Corp. (eight deals since 2020), Quipt Home Medical Corp. (five DME deals since 2021) and Reliable Medical Supply (four deals since 2022). None of these companies have made any transactions in 2024.
While the majority of the transactions have been completed by private organizations, four were completed by publicly traded companies. Air Liquide acquired two respiratory home care companies; Owens & Minor, Inc. acquired Rotech Healthcare; Platinum Equity purchased Sunrise Medical, Inc.; and Viemed Healthcare, Inc. acquired East Alabama HomeMed for $3 million.
The 2024 M&A numbers don’t necessarily reflect how industry experts feel about the market. There is a consensus in the industry that growth in the DME space has been driven and will continue to be driven by the increasing prevalence of chronic diseases, the increasing geriatric population, and technological advancements.
“The pervasiveness of chronic diseases, such as urological disorders, cancer, cardiovascular disease, neurovascular diseases and various other chronic conditions, is significantly increasing, leading to a considerable rise in hospital admission rates, thus driving the growth of the durable medical equipment market globally,” Grand View Research stated in an article.
While the number of DME transactions in 2024 may not yet reflect a dramatic surge, the industry remains robust and poised for continued growth. The increasing demand for home-based healthcare solutions ensures that the DME market will remain an essential component of the broader HH&H landscape.
