Q4 2023 Durable Medical Equipment Update

Q4 2023 Durable Medical Equipment Update

While M&A activity across DME demonstrated a moderate uptick in Q4 relative to the muted transaction volumes seen in the prior 9 months, consolidation activity in the space remains well-below the historic levels observed in 2021 and early 2022. Large consolidators (e.g., AdaptHealth) have continued to focus on internal initiatives, streamlining operations, and improving cash flow as a challenging debt environment has continued to make inorganic growth a less attractive option.

Despite these headwinds, opportunistic buyers looking for avenues to expand their product offerings and consolidate market share found attractive acquisition targets in Q4. Specifically, National HME’s acquisition of Hospice Source represents a well-capitalized platform able to capture an opportunity to build scale within its core markets in a less competitive buyer environment.

At a macro-level, the Federal Reserves indication that interest rates should retreat from their current highs towards mid-2024 has created a boost in sentiment towards M&A markets. Provident expects sellers to utilize this momentum to explore transaction processes that should provide increased optionality and more attractive valuation multiples.

Provident is encouraged by the uptick in M&A activity as 2023 drew to a close and expects this upward trend to gradually gain momentum throughout 2024. Easing macroeconomic pressures and a desire for growth figures to bring both private equity and strategic consolidators to the table, as expansion via M&A remains a compelling avenue to gain scale, expand product offerings, and capture additional market share.

To print and download the full DME Update report, please click below…

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