Great Elm DME unit acquires respiratory assets of Midwest Respiratory Care
Great Elm Capital announced that on June 12, Focus Respiratory, a wholly owned subsidiary of Great Elm DME, acquired the respiratory assets of Omaha, Nebraska-based Midwest Respiratory Care in an all-cash transaction valued at approximately $6.25M or 4.6x MRC's EBITDA less capital expenditures for the twelve months ended April 30. The acquisition expands the company's geographic reach in the Midwestern U.S. beyond its existing Omaha presence by adding respiratory operations in Lincoln, NE, Fort Madison, IA and Lenexa, KS, significantly increasing the pool of potential patients who may be serviced by the company. The acquisition also presents potential cost synergies, including combining corporate offices in Omaha, implementing best practices with respect to billing and collection and purchasing rental equipment. The acquired assets represent approximately $3.5M of trailing twelve-month revenue, including approximately $2.8M of recurring rental revenue, and are estimated to increase the company's unleveraged free cash flow by approximately $1.7M per annum. The acquisition was funded through $3.4M of additional debt under the company's existing term loan facility, $2.7M of equity from Great Elm Capital Group and the remainder from pro rata equity contributions by the company's other shareholders. Upon the closing of the acquisition, MRC's non-hospice patients became customers of Focus, while MRC focuses its operations on its durable medical equipment business servicing hospice customers.