Great Elm Capital Group, Inc. announced today that on June 12, 2019, Focus Respiratory, LLC, a wholly owned subsidiary of Great Elm DME, Inc., acquired the respiratory assets of Omaha, Nebraska-based Midwest Respiratory Care, Inc. in an all-cash transaction valued at approximately $6.25 million or 4.6x MRC’s EBITDA less capital expenditures for the twelve months ended April 30, 2019. The acquisition expands the Company’s geographic reach in the Midwestern U.S. beyond its existing Omaha presence by adding respiratory operations in Lincoln, NE, Fort Madison, IA and Lenexa, KS, significantly increasing the pool of potential patients who may be serviced by the Company. The acquisition also presents potential cost synergies, including combining corporate offices in Omaha, implementing best practices with respect to billing and collection and purchasing rental equipment. The acquired assets represent approximately $3.5 million of trailing twelve-month revenue, including approximately $2.8 million of recurring rental revenue, and are estimated to increase the Company’s unleveraged free cash flow by approximately $1.7 million per annum. The acquisition was funded through $3.4 million of additional debt under the Company’s existing term loan facility, $2.7 million of equity from Great Elm Capital Group, Inc. and the remainder from pro rata equity contributions by the Company’s other shareholders.
Upon the closing of the acquisition, MRC’s non-hospice patients became customers of Focus, while MRC focuses its operations on its durable medical equipment business servicing hospice customers.
“This transaction aligns with our acquisition strategy for the Company by both broadening our footprint and our patient-focused product and service offerings,” remarked Peter A. Reed, Chief Executive Officer of GEC, parent of the Company. “We believe there is a significant opportunity to make additional acquisitions in existing and adjacent geographies. With the acquisition of Midwest Respiratory, we have now scaled our platform in the Midwest to complement our existing platforms in Arizona and the Pacific Northwest. The acquisition also meaningfully diversifies our service offering and payor base in this region as well as supplements our Company-wide organic growth.”
The Company’s CEO Ron Evans added, “Over more than a decade, Midwest Respiratory Care has been a leader in providing high quality respiratory equipment and services in the Midwestern U.S. We anticipate a seamless transition for both Midwest Respiratory’s customers and employees.”
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
“Midwest Respiratory Care is pleased to partner with Focus, which has a demonstrated track record of providing high quality, patient-centric care in the Omaha region, and we are confident that our customers will continue to receive superior service under Focus’ care,” added Ed DeLashmutt, President of MRC, which will continue to provide hospice and nursing home equipment rental throughout the Midwestern U.S.
Date: June 17, 2019
Source: Yahoo Finance