M&A still hot, hot, hot -- bid deals kick off 3rd quarter

Sunday, August 7, 2005

YARMOUTH, Maine -- M&A activity in the HME market continued its torrid pace in the first quarter of 2005, and preliminary second quarter numbers also look robust.

Buyers snapped up 26 companies in the first quarter, a 44% increase over Q4 2004 (18) and a 24% increase over Q1 2004 (21), according to The Braff Group's quarterly M&A report, Perspectives, released last month.

While the Braff Group is still tallying Q2 deals, preliminary numbers indicate that the first half of 2005 will look much like the first half of 2004, when buyers consummated 52 deals, said company President Dexter Braff.

From an M&A perspective, the third quarter is also getting off to a fast start

Last last month, New York City metro giant Landauer-Metropolitan solidified its position as the area's largest HME provider when it acquired the region's number-two player, Low Surgical & Medical Supply.

In another significant deal, Pacific Pulmonary Services and O2 Science, both large regional HMEs in the western United States, merged in late July. Pacific Pulmonary operates in 13 states and O2 Science runs locations in seven states. Terms of the deal were not disclosed. Although termed a merger, Pacific Pulmonary is by far the bigger company, and its president, Peter Kelly, will serve as CEO and president of the merged company. O2 Science's president, Mark Hanley, will pursue other healthcare interests, according to a release.

In 2003, the HME industry recorded 86 acquisitions. That number jumped to 90 last year and should hit 90 to 100 this year, Braff said.

"The market is a continued crest, and the crest started at least in 2003," Braff said. "We've seen activity like this for two years running and it will probably be a third year," he said.