Matria spins off diabetes subsidiary

Thursday, August 31, 2006

MARIETTA, Ga. - Matria sold diabetes product subsidiary Facet for $122 million cash, the company announced July 26.
The buyer: Chicago-based private equity firm, Water Street Capital Partners.
"If you look at what Matria is trying to do, their focus is really going to be a disease management company," said Kevin Palamara, a director with Boston-based investment firm Provident Healthcare Partners. "They are out of the diabetes supply space and they are looking to compete with companies like Healthways."
The deal is in line with previous Matria M&A activity. In 2004, the company sold its direct-to-consumer diabetes and respiratory supply business to CCS Medical for $130 million. Last February, Matria acquired disease management company CorSolutions for $445 million cash.
While at first glance the supply and disease management services might seem complementary, they are actually quite different, said industry watchers.
"Their kind of core business is nurses helping chronically ill people manage their health," said one insider. "Facet is really more of a manufacturing enterprise."
Facet has been on the block since January, and one industry watcher speculated that Matria sold the company for less than it hoped for to keep from dragging it out.
Also in January, Matria announced it planned to sell its German subsidiary, Dia Real, which offers diabetes managements services and supplies in that country. The insider said he expected to see Dia Real sell for much less than Facet.
Selling both companies is part of a plan to reduce Matria's debt by approximately $175 million by year-end, Matria Chairman and CEO Parker Petit said in a statement.