Air Products continues acquisition binge

Saturday, November 30, 2002

LEHIGH VALLEY, Pa. - Industrial gas giant Air Products didn't waste any time adding to its home medical equipment business.

Less than a month after acquiring American Homecare Supply for $165 million, Air Products announced Oct. 29 that it had picked up West Virginia's largest HME, Home Health Care Services (HHCS). Terms of the deal were not disclosed, but the 10-location provider has annual revenues of about $9 million.

While HHCS owner Sam Helmick and his staff were concerned about national competitive bidding, it wasn't a make or break issue when deciding to sell.

"It's time to for me to see the benefits of what I've done for 15 years, provide some security for my family and still do what I love," said Helmick.

HHCS had offers from "just about all the big boys," but Helmick preferred the AHS model, which leaves existing management in place and provides them additional resources.

"They don't walk in with a big manual and say, 'This is the AHS way, take it or leave it,"' Helmick said. "I spent 15 years building this company; I didn't want to see it dismantled."

Don't look for Air Products to back off its acquisition binge anytime soon, said Bob Cucuel, CEO of AHS.

"There are many acquisitions in process," Cucuel said. "We are not moving as quickly now as we will be in six months."

Prior to being acquired by Air Products, American Homecare Supply had HHCS in its sites, Cucuel said, for a number of reasons: its respiratory mix (55%); revenue; broad geographic coverage; good year-over-year sales growth; seasoned management team.

In short, he said, HHCS has "all the things you look for."

Geographically, HHCS extends American Homecare Supply's reach west and south. AHS now has branches stretching from New Hampshire south through West Virginia. AHS leadership hasn't decided if it will move further north than its Nashua, N.H., branch.

"The sweet spot for us will be going south, through Virginia, the Carolinas and into Georgia," Cucuel said.

Those areas are some of the fastest growing areas in the country and should allow AHS to achieve double-digit growth and help it eventually to enter the Florida market, Cucuel said.

In building its contiguous East Coast network, AHS has holes to fill in the capitol region of New York, the state of Delaware and around Washington, Cucuel said.

In addition to acquiring companies, AHS looks to open three to four free-standing locations each year as a way to quickly enter a market and build its managed care business.

"It makes sense," Cucuel said. "All you really have to do is set up a 2,000 to 3,000-square-foot warehouse, stock it, drop it a respiratory therapist and driver and get your provider number." HME