Great Elm Capital acquires Valley Healthcare, Northwest Medical for $63.6M
Great Elm Capital announced that it has partnered with the management team of Valley Healthcare Group to acquire and combine VHG and Northwest Medical to create a leading regional provider of sleep and respiratory-focused durable medical equipment and services across five states in the United States, serving approximately 70,000 patients annually. The acquisition of NWM represents VHG management's eighth acquisition since Ron and Pam Evans co-founded VHG in 2006. The combined company will be a leader in the distribution of positive air pressure machines and supplies, sleep studies, ventilators and oxygen equipment for patients with sleep and respiratory conditions, such as obstructive sleep apnea, in Arizona, Nebraska, Washington, Oregon and Alaska. The combined company, which will continue to operate under local brand names, is well positioned to grow organically and to consolidate the fragmented durable medical equipment industry. The acquired businesses have reputations for providing the highest quality patient care, education and customer service, internally observing patient compliance rates well in excess of national averages. Great Elm has purchased an 80.1% equity interest in an entity formed to acquire and combine VHG and NWM. The transaction purchase price of $63.6 million, excluding financing, closing professional fees and expenses, as well as the contingent consideration described below, was funded using $19.7 million of cash from GEC's balance sheet. The remainder was funded using $31.3 million of secured debt, $5.3 million of qualified preferred stock and $7.3 million of equity rollover from Ron and Pam Evans and Corbel Capital Partners. All debt incurred to fund the transaction is non-recourse to Great Elm. In addition, up to $2.4 million of deferred purchase price consideration may be paid to the sellers upon achieving increased financial targets in 2018 and 2019. The combined companies generated $43.6 million in revenue, net income of $2.5 million and $11.1 million of Pro Forma Adjusted EBITDA in the calendar year ended 2017, including estimated cost synergies. For the trailing twelve months ended June 30, 2018, the combined companies generated $47.1 million of revenue, net income of $3.4 million and $12.9 million of Pro Forma Adjusted EBITDA, including estimated cost synergies.