RICHMOND, Va.–(BUSINESS WIRE)–Owens & Minor, Inc. (“Owens & Minor”) (NYSE: OMI), today announced that it has entered into a definitive agreement to acquire Rotech Healthcare Holdings, Inc. (“Rotech”), a privately held home based care business headquartered in Orlando, Florida, 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 LTM EBITDA, excluding synergies.
Rotech is a national leader in providing home medical equipment in the United States. The company has over 4,200 employees and provides products and services in 46 states through approximately 325 operating locations. Rotech generated approximately $750 million of revenue and an EBITDA margin of nearly 30% in 2023.
“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.
Pesicka added, “This transaction highlights our disciplined approach toward inorganic growth, with a focus on strategic fit, value creation for shareholders, prudent capital allocation and most importantly, providing improved service and experience to patients, providers, and payors. Furthermore, we are committed to deleveraging the balance sheet to below 3.0x in approximately 24 months after closing.”
“The team and I look forward to being part of Owens & Minor due to their commitment to providing best-in-class products and services to patients in their homes. Owens & Minor is a natural home for the Rotech team, and we believe the combination will benefit patients, providers, payors, and employees,” said Robin Menchen, President & Chief Executive Officer of Rotech.
Strategic Rationale
Strengthens Patient Direct product offerings through expansion across a complementary portfolio including Respiratory, Sleep Apnea, Diabetes, Wound Care, and provides access to the Durable Medical Equipment (DME) market.
Supports combined customer base allowing Owens & Minor to better serve providers and payors across an integrated national network.
Enables Owens & Minor to more comprehensively serve patients through the combined suite of complementary product offerings and improved service for patients with chronic conditions in large and fragmented markets.
Provides significant synergy opportunity of approximately $50 million by the end of year three, with further upside potential, as well as prospect for additional revenue synergies in both the near and long term.
Accelerates the growth path for the Patient Direct segment as outlined at the December 2023 Investor Day to achieve $5 billion in revenue by 2028.
Transaction Details
Under the terms of the agreement, which was unanimously approved by the Board of Directors of each company, Owens & Minor will acquire Rotech for $1.36 billion in an all-cash transaction. Given anticipated tax benefits of approximately $40 million from the transaction, the net purchase price is approximately $1.32 billion. Owens & Minor has fully committed financing in place and expects to use a combination of cash and incremental borrowings to fund the purchase price. At closing, Owens & Minor is expected to have book leverage of approximately 4.2x and expects to de-lever below 3.0x book leverage in approximately 24 months of closing.
The transaction is subject to customary closing conditions, including the Hart Scott Rodino Act, and is expected to close by the end of 2024.
About Owens & Minor
Owens & Minor, Inc. (NYSE: OMI) is a Fortune 500 global healthcare solutions company providing essential products and services that support care from the hospital to the home. For over 100 years, Owens & Minor and its affiliated brands, Apria®, Byram® and HALYARD*, have helped to make each day better for the patients, providers, and communities we serve. Powered by more than 20,000 teammates worldwide, Owens & Minor delivers comfort and confidence behind the scenes so healthcare stays at the forefront. Owens & Minor exists because every day, everywhere, Life Takes Care™. For more information about Owens & Minor and our affiliated brands, visit owens-minor.com or follow us on LinkedIn and Instagram.
*Registered Trademark or Trademark of O&M Halyard or its affiliates.
About Rotech
Rotech is one of the largest providers of home medical equipment and related products and services (collectively referred to as “HME 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. The Company provides HME products and services in 46 states through approximately 325 operating locations.
The M&A market for healthcare companies continues to build on STRATEGIC opportunities. The strategic corporate buyers and private equity investors remain committed to acquiring strong businesses that are well prepared for a transaction. Across the continuum of care, these buyers and investors are looking for well established, profitable businesses and offering prime 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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