LMI picks up the pieces

Monday, May 18, 2009

MOUNT VERNON, N.Y. – With Air Products no longer seeking to sell its healthcare portfolio in one chunk, Landauer Metropolitan Inc. (LMI) picked up three more of its home medical equipment business units last week.

LMI has bought Genox Homecare in Connecticut, Mid-Atlantic Healthcare in Maryland and Young’s Medical Equipment in Pennsylvania. Last year, it bought A&J Care in New York and COPD Services in New Jersey.

“We still think HME is a business that makes a lot of sense, as long as you can get a valuation that reflects that reimbursement rates are declining,” said Joe Luceri, LMI’s CFO.

Since 2002, when LMI first started looking to make acquisitions, it has grown about five-fold. LMI now has 17 locations and 500 employees, and earns about $125 million in revenues annually.

LMI, buoyed by recent acquisitions, plans to make up for losses in reimbursement with gains in scale (i.e. purchasing power) and synergy (i.e. consolidated back-office operations).

“We’re getting to a point where we’re adding additional revenues with proportionately fewer resources,” Luceri said.

Of the HME business units in Air Products’ healthcare portfolio, LMI was attracted to Genox, Mid-Atlantic and Young’s because of their geography.

“Our strategy has always been and continues to be having a contiguous service area,” Luceri said. “We’re better able to integrate businesses when they’re in areas that we’re already in or next to.”

Genox, Mid-Atlantic and Young’s will keep their names and management teams.

“They’re solid providers that are well known in their geographies,” said Lou Rocco, LMI’s CEO. “We will provide them with guidance and resources, but for the most part, we will let them take the ball and run with it.”

LMI inquired about Genox, Mid-Atlantic and Young’s earlier this year, after learning Air Products had received an attractive offer for its home infusion business from a subsidiary of Walgreens—a signal that it had given up holding out for one buyer.

In a release announcing the deal with LMI, Air Products stated that it expects to sell the remainder of its healthcare business by the end of its fiscal year in September.

Terms of the deal were not disclosed.