Investors jump into support surfaces market

Friday, March 31, 2006

LOS ANGELES - A duo of private investment companies with deep pockets acquired two manufacturers of pressure support surfaces in February and have drawn up a plan to become the dominate player in this fragmented market.
The Compass Group International and Hollywood Capital have formed Anodyne Medical Device to acquire leading manufacturers of medical support surfaces. The new company, headquartered in Los Angeles, acquired in February AMF Support Surfaces and SenTech Medical Systems.
"We saw a real opportunity to create an entity in the industry that could better serve the customer base," said Mark Bidner, chairman of Hollywood Capital and Anodyne. "You need some consolidation so that the manufacturer has the critical mass to produce products that are priced competitively and invest in R&D to bring products to market at a cost that makes sense."
At Medtrade last year, 27 companies exhibited under the product category Supports & Accessories.
Anodyne's consolidation strategy is nothing new. Investors regularly look for fragmented industries where they can become a large player, reap economies of scale and, hopefully, profits. On the provider side, Lincare and Apria have done that for years. With the HME industry's reimbursement pricing pressures, economies of scale are more important than ever, Bidner said.
With AMF and SenTech in tow, Anodyne has created a platform company with a robust line of foam and air products for the acute, long-term care and homecare market. Bidner and his fellow investors discovered the pressure support market through other investments.
The company expects to close on a third acquisition this spring, Bidner said.