New HME Direct Delivery Company on Horizon

GERMANTOWN, Wis. — ALC Inc., a
Wisconsin-based lift chair manufacturer, has announced the
formation of an HME delivery company that projects sales exceeding
$167 million and EBITDA of $16 million by the end of 2013.

HomeCare DSD, LLC, is currently shopping for investors “and we
are seeking to raise $1.65 million, upon which time, we will launch
the first three routes in Florida with a centralized warehouse,”
said Lucien Campolo, CEO of the new company and CFO/director of
sales for ALC. “After that, we will sell routes to owner-operators
across the country.”

The new company is specifically targeting small HME companies
for its goods because they have suffered the most from
manufacturers cutting back on their independent sales reps, as well
as services, Campolo said, citing pharmacies with retail HME as an
example.

“Smaller companies are an untapped market,” said Campolo, who
has had experience with direct store delivery via a successful sun
care product company. “The big dealers are getting the big
attention. But there are others that are not getting any attention
at all. What’s better than to show up and say, ‘Do you need
anything today? Because I have a bunch of things on my truck.’”

The company’s plan is to purchase branded HME products from
manufacturers at deep discounts, with only one manufacturer per
category, and sell them at a low margin to route owners, who will
pick them up at centralized warehouses and, in turn, sell them at a
discount to HME retailers.

“The route owners will use the time-tested sales method of
direct store delivery, each with a decorated box truck filled with
inventory for immediate sale. Their inventory will be limited to
the branded products offered by the company,” the company said in a
press summary last week.

HomeCare DSD will carry a mix of high-ticket, high-volume and
niche items, including ALC’s Action Lift Chair, Campolo said. A new
ALC manufacturing facility in Jefferson, Wis., utilizes a workforce
of furniture workers who were idled when the century-old Schweiger
Furniture Company closed five years ago. With more than 30 years in
the business, ALC has redesigned its Action Lift Chair and is
producing it and other new and private-label products at the
plant.

HomeCare DSD has already reached agreements with several other
companies, including Active Care Medical, Life Station and Stander
Inc., according to Campolo. And not everything will be on the
truck. Some items will be drop shipped, he said.

The company plans to offer exclusive routes to entrepreneurs in
72 of the largest metropolitan areas in the U.S., Campolo said, and
has enlisted Route Brokers, which brokers route distribution
opportunities, to sign on route owners.

“We are constructing a network that is nationwide,” Campolo
said. He added that each route owner will have a handheld computer
to use in running the route, writing invoices, printing them out
and having them signed “on the spot.”

Eventually HomeCare DSD, to be based in Boca Raton, Fla., will
add repair services, he said.

Route owners can purchase routes for about $110,000. While they
furnish the trucks, HomeCare DSD will provide training, the aid of
a manager for two months or until the route operator has
established the first 20 to 25 accounts, the first-round inventory
and access to financing.

The company expects first-year sales of $4.1 million and a gross
margin of 10 percent. Revenue projections are based on initial
monthly sales of $1,200 per account. Campolo believes that’s a
conservative estimate since some products are priced between $800
and $1,200.

All in all, HomeCare DSD is a way of returning service to the
industry, Campolo said. The challenges in the HME industry have
resulted in cost-cutting measures that have “sabotaged” the service
component, he said. Manufacturers have reduced service to providers
as profit margins have waned, and the spike in fuel prices has
resulted in fewer visits from sales reps and less frequent
deliveries from freight carriers.

“My answer,” he said, “is to climb above the fray and provide
service that people really want and need … Service
is the business.”