Owens & Minor, Inc. (NYSE: OMI), a leading distributor of medical supplies and equipment, announced today the definitive agreement to acquire Rotech Healthcare Holdings, Inc. (Rotech) for $1.36 billion in cash. This acquisition strengthens Owens & Minor’s position in the home-based medical equipment market and expands its Patient Direct business segment.

Rotech is a privately held company headquartered in Orlando, Florida, specializing in providing home medical equipment to patients across the United States. With over 4,200 employees and operating in 46 states through approximately 325 locations, Rotech boasts a robust national presence. In 2023, the company generated approximately $750 million in revenue with a near 30% EBITDA margin, highlighting its financial strength and profitability.

Owens & Minor views this acquisition as strategically advantageous, particularly for its Patient Direct business segment. The combined entity will offer a more comprehensive portfolio of home-based medical equipment products and services, encompassing respiratory aids, sleep apnea solutions, diabetes management tools, wound care supplies, and durable medical equipment (DME). This expanded range of offerings allows Owens & Minor to cater to a wider range of patient needs within the home healthcare setting.

The financial details of the transaction reveal an all-cash purchase structure of $1.36 billion. However, anticipated tax benefits of approximately $40 million reduce the net purchase price to $1.32 billion. Owens & Minor confirms it has secured the necessary financing to complete the acquisition, utilizing a combination of existing cash reserves and incremental borrowings.

The acquisition is expected to generate significant synergies for Owens & Minor. The company projects to achieve approximately $50 million in cost savings within three years of closing the deal. Additionally, the expanded national footprint and broader product portfolio are anticipated to fuel growth within the Patient Direct segment, with a projected target of reaching $5 billion in revenue by 2028.

The transaction’s closing is subject to customary regulatory approvals and is expected to occur by the end of 2024. This acquisition signifies Owens & Minor’s commitment to expanding its presence in the home healthcare market and strategically positions the company to capitalize on the growing demand for convenient and accessible home-based medical equipment solutions.