Owens & Minor, Inc. (“Owens & Minor”) (NYSE: OMI) and Apria, Inc. (“Apria”) (Nasdaq: APR) announced that the companies have entered into a definitive agreement pursuant to which Owens & Minor will acquire Apria for $37.50 in cash per share of common stock, representing an equity value of approximately $1.45 billion.
“I’m very excited about the acquisition of Apria, which will strengthen our total company value proposition. The combination of two complementary businesses in Byram Healthcare and Apria will enable us to better serve the entire patient journey – through the hospital and into the home – ultimately furthering our mission of Empowering Our Customers to Advance Healthcare,” said Edward A. Pesicka, President & Chief Executive Officer of Owens & Minor. “In addition, this transaction diversifies our total company revenue stream by expanding our presence in the higher-growth home healthcare market.”
Pesicka added, “We are impressed by what Apria has built for its customers, and I look forward to welcoming Dan Starck and the Apria team to Owens & Minor upon close.”
“I am energized and enthusiastic to join Owens & Minor,” said Dan Starck, Chief Executive Officer of Apria. “Both companies share cultures fueled by a commitment to customers, patients, teammates and the communities we serve. We look forward to joining together and delivering the highest quality healthcare solutions to our customers.”
Strategic Rationale
- Strengthens total company value proposition, enables us to better serve the entire patient journey and positions Owens & Minor as a leader in the home healthcare market. The transaction builds upon Owens & Minor’s strong capabilities in product manufacturing and healthcare services.
- Accelerates growth and diversifies revenue base by expanding our presence in the higher-growth home healthcare market.
- Accretive to revenue, adjusted EBITDA, adjusted earnings per share, and enhances our free cash flow generation, enabling Owens & Minor to rapidly deleverage while continuing to invest across the business.
- Expands our Patient Direct platform with access to over 90 percent of insured healthcare customers in the U.S.
- Broadens our Patient Direct product portfolio by combining our strength in diabetes, ostomy, incontinence, and wound care, with Apria’s product portfolio strength in home respiratory, obstructive sleep apnea, and negative pressure wound therapy. These product portfolios are complementary and do not overlap as many of these products are needed to treat the same and multiple chronic and acute conditions.
- Increases the attractiveness to Payors, Providers, and Patients due to the broader product portfolio, combined with our scale, geographic footprint, and delivery model.
- Creates a platform for future growth within this highly fragmented and growing space, with an approximate $50 billion total addressable market.
- Enables the acceleration of support for our hospital customers seeking to expand into home healthcare delivery.
Transaction Details
Under the terms of the agreement, which was unanimously approved by the Board of Directors of each company, Owens & Minor will acquire Apria for $37.50 in cash per share of common stock, representing an equity value of approximately $1.45 billion, as well as the assumption of debt and cash for a total transaction value of approximately $1.6 billion.
This price per share represents a 26% and 24% premium over Apria’s closing share price on January 7, 2022 and 30-day volume weighted average price, respectively.
The transaction is subject to customary closing conditions, including the Hart Scott Rodino Act and other regulatory approvals and the approval of Apria’s stockholders, and is expected to close during the first half of 2022.
Paragon Ventures Commentary on This Transaction
How surprising is the recent announcement of the acquisition of Apria by Owens & Minor?
It is interesting and not entirely surprising considering the current M&A market and Apria’s ownership journey. Apria was a publicly held company that the Blackstone Group took private in 2008 for a total purchase price of approximately $1.7 billion. At the time, it included the Coram infusion services business which Apria had acquired in 2007 and ultimately sold to CVS in 2014 for $2.1 billion. Blackstone took Apria public again in March 2021 while retaining a majority position in the company. This supports the view that Blackstone continued to believe in and support Apria while taking some chips off the table. What was a bit surprising was the relatively short timing from going public again in 2021 to the Owens & Minor (O&M) acquisition less than a year later.
What does it mean for the industry and the M&A climate going forward?
Consolidation throughout healthcare is continuing in 2022 at a rapid pace across both vertical and horizonal channels. O&M’s strategic move into the home respiratory/sleep market makes great strategic sense. As I mentioned, the strategic focus of some buyers/investors includes consolidating sales efforts across the continuum of care. This is a prime example. The call points of Apria, O&M and their Byram Healthcare converge in many referral relationships. In addition, Apria and O&M have always included acquisitions in their strategic plans and we expect that to continue in the years ahead. In the current M&A climate, this transaction is good news for business owners considering a sale, merger or recapitalization.
About Owens & Minor
Owens & Minor, Inc. (NYSE: OMI) is a global healthcare solutions company that incorporates product manufacturing, distribution support and innovative technology services to deliver significant and sustained value across the breadth of the industry – from acute care to patients in their home. Aligned to its Mission of Empowering Our Customers to Advance HealthcareTM, more than 15,000 global teammates serve over 4,000 healthcare industry customers. A vertically-integrated, predominantly Americas-based footprint enables Owens & Minor to reliably supply its self-manufactured surgical and PPE products. This seamless value chain integrates with a portfolio of products representing 1,200 branded suppliers. Operating continuously since 1882 from its headquarters in Richmond, Virginia, Owens & Minor has grown into a FORTUNE 500 company with operations located across North America, Asia, Europe and Latin America. For more information about Owens & Minor, visit owens-minor.com follow @Owens_Minor on Twitter and connect on LinkedIn at www.linkedin.com/company/owens-&-minor.
About Apria
Apria, Inc. (Nasdaq: APR) is a leading provider of integrated home healthcare equipment and related services in the United States. Apria offers a comprehensive range of products and services for in-home care and delivery across three core service lines: (1) home respiratory therapy (including home oxygen and non-invasive ventilation (“NIV”) services); (2) obstructive sleep apnea (“OSA”) treatment (including continuous positive airway pressure (“CPAP”) and bi-level positive airway pressure devices, and patient support services); and (3) negative pressure wound therapy (“NPWT”). Additionally, Apria supplies a wide range of home medical equipment and other products and services to help improve the quality of life for patients with home care needs. Apria’s revenues are generated through fee-for-service and capitation arrangements with third-party healthcare payors, including government and commercial payors (“Payors”) for equipment, supplies, services and other items we rent or sell to patients. Through its offerings, Apria also provides patients with a variety of clinical and administrative support services and related products and supplies, most of which are prescribed by a physician as part of a care plan. Apria is focused on being the industry’s highest-quality provider of home healthcare equipment and related services, while maintaining its commitment to being a low-cost operator. Apria serves over 2 million patients annually and offers a compelling value proposition to patients, providers and Payors by allowing patients to receive necessary care and services in the comfort of their own home, while, at the same time, reducing the costs of treatment. Learn more at www.apria.com.
The M&A market for healthcare companies continues to strengthen in 2022 for well established, profitable healthcare companies. There is unprecedented capital in market, the lowest interest rates in US history and strong acquirer motivations for high quality healthcare companies. Across the continuum of care, buyers and investors are looking for well established, profitable businesses and offering strong valuations and options for management.
Do you know the current market value of your business? We do! We are here to help you plan, prepare, explore and succeed in executing your strategic options.
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