Lincare acquires 14-location Merriam-Graves

Monday, January 31, 2005

Mike Moran, managing editor

CHARLESTOWN, N.H. - Lincare renewed its on-again-off-again courtship last month with one of the largest independent HMEs in northern New England when it acquired Merriam-Graves.

“Merriam-Graves is no longer in the home medical equipment business,” said a source close to the deal.

Merriam-Graves is a subsidiary of an industrial gas company by the same name. The HME derives 60% to 70% of its revenue from home respiratory services and operates 14 locations throughout the Northeast. Lincare has reportedly closed eight of the 14 locations and laid off 30+ employees.

“Of all the acquiring companies, Lincare is most feared by employees because when they put their platform in place they tend to do more layoffs more quickly,” said one industry insider. “They are looking for economies of scale.”

Lincare and Merriam-Graves began acquisition talks last spring.

In June, issues with Merriam Graves’ A/R discovered during due diligence reportedly led Lincare to back off its initial offer. Merriam-Graves considered the lower offer unacceptable and scuttled the deal, according to industry sources.

Even after the initial Lincare deal fell through, Merriam-Graves actively shopped around for a potential buyer but couldn’t find anyone interested in the asking price, which a source familiar with the deal pegged at north of $20 million.

“Lincare’s first price was higher than most, so the end price is still going to be high,” said the source.

After Lincare and Merriam-Graves parted ways in June, Apria acquired LifePlus, a premier regional HME based in Raymond, N.H. Some industry watchers suspect Lincare may have renewed its dealings with Merriam-Graves to keep pace.

After talks broke off in June, in addition to shopping for another buyer, Merriam-Graves took time to “clean up” its A/R, said a source familiar with the deal. That also may have played into Lincare’s desire to renew acquisition talks.

Concerns regarding Medicare DME cuts and billing problems apparently played a role in the Merriam-Graves’ decision to sell, said one source.