Originally Published by HME News on January 6, 2017
YARMOUTH, Maine – The pace of acquisitions slowed down a bit in 2016, but overall it was a decent year for buyers, say analysts.
“The big deals have stalled out a bit, but you have a lot of people that are shopping and acquiring the small patient add-on deals,” said Brad Smith, managing partner at Vertess, a Tucson, Ariz.-based M&A advisory firm. “If you have $10 million to spend, you could get one really nice company or you could buy a whole ton of patient lists, which have more bang for the buck.”
One area of the market that buyers honed in on in 2016 was supplies, with manufacturers, in particular, busy pulling out their checkbooks. Two recent deals include Coloplast, a manufacturer of ostomy, urology, continence and wound care supplies,acquiring Comfort Medical, a provider of those supplies, for $160 million; and Domtar, a manufacturer of absorbent hygiene products and other fiber-based products, acquiring mail-order supplier Home Delivery Incontinence Service for about $45 million.
“I think we are going to see the lines continue to blur here, with manufacturers going direct to consumers” said Patrick Clifford, managing director, home medical equipment, for The Braff Group. “The reimbursement rates kind of dictate that—there’s only so much margin to go around.”
Another trend that continued in 2016: Gone are the days when providers sought to be all things to all people, say analysts.