Sleep Nation, Sanomedics fuel market activity

Tuesday, September 24, 2013

MIAMI – Although the sleep space remains attractive, there hasn’t been much buying and selling activity in recent months, say analysts, with a few exceptions.

Leading the pack: Sleep Nation, which completed its 43rd acquisition in August. The provider, which formed in May 2012, accepted contracts nationwide in Round 2 of competitive bidding.

“There’s a growing number of focused sleep companies that don’t really care at all about any of the other HME,” said Jonathan Sadock, managing partner with Paragon Ventures. “All they want to do is grow the CPAP business and, most important, the re-supply business because, if you think of that in terms of it being mail order, it has better margins.”

In early September, Sanomedics International completed its $3 million acquisition of Largo, Fla.-based Prime Time Medical, thanks to $5 million in financing it recently received.

Sanomedics, a medical technology holding company, will also use the funding to close on its $7 million acquisition of Baytown, Texas-based Duke Medical.

“They have a strategic interest in sleep markets and they have been putting together companies to enable them to execute their vision in the sleep market,” said Sadock. 

Still, analysts say oxygen remains a more desirable market than sleep.

“With oxygen, you still get three months guaranteed rental, but on CPAP you have the run out on possibly a short term rental,” said Don Davis, president of Duckridge Advisors. “You also have more compliance issues; and the patient is more or less a free agent as a decision maker in terms of revenue from you.”