Client Objective

UniMed served the Kansas City area for more than 30 years as a rental distributor and retailer of quality home healthcare equipment. Brothers Donnie and Danny Thomas purchased UniMed from their father in 2003 after helping him grow the company to 24 employees and three locations, including two in Kansas City and another in Wichita, Kansas.

In 2010, changes in healthcare legislation expanded the Medicare competitive bidding program, putting pressure on many small, privately owned durable medical equipment (DME) companies. After January 1, 2011, Kansas City area DME companies would have to compete for reimbursement contracts in order to be reimbursed by Medicare for certain products.

The Medicare competitive bidding program forced DME suppliers to compete on product and service quality, rather than just on price. UniMed had built a strong reputation within the industry for providing outstanding customer service and quality products. As a result, UniMed was able to win a contract for its oxygen products. However, the Thomases knew that it would be extremely difficult to win contracts for additional products and remain competitive. To maintain success, the owners realized they would need to either grow UniMed through acquisitions or sell the company to a strategic buyer. Ultimately, the Thomases decided to sell their company and engaged Mariner Capital Advisors to facilitate the transaction.

Solution

Ultimately, the Thomases decided to sell their company and engaged Mariner Capital Advisors to facilitate the transaction. Mariner Capital Advisors began the sale process by preparing materials that would be used to attract the attention of prospective buyers through a confidential marketing process. We first developed a confidential information memorandum and one-page blind prospectus that highlighted UniMed’s strengths, and communicated the benefits that a larger DME supplier could gain by acquiring the company.

Next, our team compiled a comprehensive list of potential strategic acquirers and private equity contacts using our own proprietary buyer database and third-party research tools. We focused our research on large companies in the DME industry and identified key contacts within each organization. Through a confidential marketing campaign, we reached out to executives at each company, presenting the sale of UniMed as a strategic growth opportunity.

Our efforts drew interest from a variety of local and national DME companies, as well as several private equity firms. A handful of strategic buyers made bids for the company, and our team managed competitive negotiations between the interested parties.

Result

In April 2011, the Thomases sold UniMed’s Kansas City operations to Pacific Pulmonary Services, Inc. (PPS), a national player in the DME industry. PPS had a small, existing operation in the Kansas City area, but was eager to expand in the region, which had been dominated historically by competitors Lincare and Apria.

By acquiring UniMed’s Kansas City operations, PPS gained a customer base comprised of oxygen patients under long-term equipment rental agreements. Additionally, PPS obtained key referral sources in the area that would help facilitate expansion throughout the Midwest. The Thomases retained UniMed’s Wichita, Kansas operation and continued to focus on distributing quality home healthcare equipment.

About UniMed

UniMed is a privately owned distributor and retailer of quality home healthcare equipment, including oxygen products, nebulizers, sleep therapy, and CPAP supply programs. At the time it was sold, UniMed had locations in Kansas City, Missouri, and Lenexa and Wichita, Kansas.

About Pacific Pulmonary Services

Pacific Pulmonary Services (PPS) specializes in serving patients with chronic obstructive pulmonary disease (COPD), obstructive sleep apnea (OSA), and congestive heart failure (CHF). PPS delivers exceptional care and service for home oxygen therapy, sleep therapy, and nebulized medications. The company has more than 120 locations throughout the United States.

This document is for informational use only and may be outdated and/or no longer applicable. Nothing in this publication is intended to constitute legal, tax, or investment advice. There is no guarantee that any claims made will come to pass. The information contained herein has been obtained from sources believed to be reliable, but Mariner Capital Advisors does not warrant the accuracy of the information. Consult a financial, tax or legal professional for specific information related to your own situation.