Q2 2023 Durable Medical Equipment (DME) Update
M&A activity within the DME space in Q2 2023 was marked by a flurry of add-on activity across various product segments. Transaction volume has been led by smaller private-equity backed platforms as the larger strategic acquirers who have been more active historically, such as AdaptHealth, have taken a step back from M&A to focus on internal operational initiatives. One notable exception to this is VieMed, who completed its $32M acquisition of Home Medical Products in June 2023 and is actively pursuing additional deals.
While new platform creation and M&A activity for larger ($100M+) transactions was relatively muted in Q2, the DME space has shown positive momentum across several areas that should drive growth across the space and attract investor interest. Notably, Humana’s recently announced value-based contracting agreements with AdaptHealth and Rotech demonstrate the increased traction innovative payor arrangements have generated in the space, a trend Provident expects to continue.
Further, similar to the improved Medicare reimbursement and eligibility criteria for continuous glucose monitors in Q1 2023, mobility providers stand to benefit from Medicare’s new coverage for seat elevation systems for complex power wheelchairs. This represents a meaningful opportunity to capture incremental revenue across existing power wheelchair patients and should drive growth across this segment, which has continually attracted private equity investor interest.
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