Liberty exits res-med business

Sunday, April 23, 2006

WAKEFIELD, Mass. - Liberty Medical sold its respiratory business for an undisclosed sum in April, surprising few in an industry rocked by changes in reimbursement.

The buyer: Soporex Respiratory, headed by former Rotech CEO Steve Linehan.

Liberty was acquired by parent company PolyMedica in August 2005, and it discontinued its respiratory business that same year. The company has been looking for a buyer for some time, according to one industry insider, who said several previous agreements to sell--including one with Lincare--fell through.

In mid-April, Liberty notified its respiratory med customers that Soporex, operating under the name Independence Home Pharmacy, would take over their orders. Independence is based in Murray, Ky.

Liberty assured customers that diabetes testing supplies, prescription medications and ostomy supplies would remain with Liberty.

Getting back to its core business makes sense for Liberty, said Bob Leonard, an associate with the Braff Group.

"I think they got into respiratory, because it was pack and ship like their basic diabetic supply business," said Leonard. "But it's gotten to the point where the only thing that makes that business attractive is the pull-through of oxygen patients."

That doesn't work for a company like Liberty, which does not have a network to support oxygen patients, said Leonard.

According to Liberty's latest quarterly filing, respiratory meds generated about $8.5 million a quarter, or $30 million to $40 million in annual revenues, said Kevin Palamara, a director at Provident HealthCare Partners in Boston.

"The value of those patients is obvious," said Palamara. "For somebody looking to grow their respiratory business, they can really use those patients and market other ancillary services to them at a higher margin."

Which is what industry insiders speculated the little-known Soporex plans to do.