Scale matters: Kingswood writes Quipt’s growth story

LOS ANGELES – With its recent acquisitions of Quipt Home Medical and Drive Medical, Kingswood Capital Management sees plenty of opportunity in the home medical equipment industry to take high-quality platforms and grow them both organically and through M&A, says Kingswood Partner Michael Niegsch.

“We focus on situations with strong downside protection and multiple levers for value creation,” he said. “The HME market fits that well, given its non-discretionary demand. You’ve got aging demographic trends, and you’ve got the continued shift toward home-based care, which is significantly more cost effective than institutional settings.”

Niegsch spoke with HME News recently about how Kingswood plans to take its HME investments to the next level.

HME News: With your investments in both Quipt Home Medical and Drive Medical, what is it about the HME industry that makes it attractive to Kingswood?

Michael Niegsch: We believe the HME sector has been relatively underappreciated by investors in recent years, particularly due to perceived GLP 1 risk, reimbursement overhang, and higher cost of capital in today's environment. Despite that, the underlying fundamentals in the HME space are really strong. So, for us, that kind of dislocation creates an attractive opportunity to invest in high quality platforms like Quipt at compelling entry points.

HME: Where does Kingswood see the value in having a stake on both the manufacturer and the provider side? How do you see the roles of manufacturers and providers evolving in the market?

Niegsch: I think for both deals, what is important to us is we were able to invest in scalable platforms. We really view these two investments as kind of independent investments. Again, we like underlying macro trends in the space, and we think they're supportive of both investments. But the merits of each deal needed to stand on its own.

HME: How does Kingswood plan to support Quipt through this next phase of growth?

Niegsch: We’re really focused on operational execution, as well as M&A growth. We think the platforms are well positioned to benefit from our operating network and our resources. We’ve appointed industry veteran Steve Griggs as executive chairman at Quipt and expect him to play a key role in helping us drive organic growth. We also see a big opportunity to increase patient setups and adherence by making delivering a user-friendly experience and leveraging a strong, digital ecosystem that Quipt has already built and reigniting the M&A strategy.

HME: What do you see as key growth drivers in the HME industry, overall?

Niegsch: I think the growth story for us is both the macro (trends), as well as operational opportunities. So, the aging population, increasing prevalence of chronic conditions like sleep apnea and COPD, the continued shift to home health care based on cost-efficiency and a preference to age in place, and digital tools and technology like AI improving patient intake, adherence and overall compliance.

HME: And the key challenges?

Niegsch: The key challenges are reimbursement pressure, labor constraints and regulatory complexity. That said, scale matters, so businesses like Quipt benefit from the purchasing power, more stable reimbursement exposure and the ability to invest in compliance and infrastructure. We think Quipt is well positioned to become a leading national HME player over time.