HME Distributor AdaptHealth to Merge, Go Public

PLYMOUTH MEETING, Penn. (July 9, 2019)—AdaptHealth, which claims to be third largest distributor of home medical equipment (HME) in the United States, announced that it will combine operations with DFB Healthcare Acquisitions Corp. (DFB), a publicly traded company.

According to a news release, DFB is expected to be renamed AdaptHealth Holding Corporation and remain NASDAQ-listed under a new ticker symbol. The combined company will represent an initial enterprise value of approximately $1 billion and market capitalization of about $800 million.

AdaptHealth’s net revenue has grown from $174 million in 2016 to an estimated $522 million in 2019.

Proceeds generated by the transaction will be used by AdaptHealth primarily to reduce debt and fund future growth and acquisitions. A fund managed by Deerfield Management, the sponsor of DFB, has signed a subscription agreement to support the transaction to backstop redemptions and/or provide additional capital to the company. AdaptHealth’s current management team is expected to remain in place, supplemented by Richard Barasch, the former chair and CEO of Universal American, as newly appointed chairman of AdaptHealth.

“Healthcare is increasingly moving into the home and we believe Adapt occupies a unique place in the home-based healthcare value chain as the most efficient provider in the space,” Barasch said in a news release. “We believe the company’s multiple touch points for patients with chronic conditions and its demonstrated ability to provide efficient solutions should become increasingly valuable as health care continues to migrate to the home.”

Founded in 2012 and is based in Plymouth Meeting, Pennsylvania, Adapt offers medical products for rental and sale, with a focus on respiratory and mobility equipment, including CPAP, oxygen equipment, wheelchairs, walkers and hospital beds. Adapt serves more than a million patients and makes 7,000 deliveries per day across 49 states. Its payers primarily include commercial insurers, Medicare and Medicaid.

Since 2012, Adapt has acquired 56 companies with an aggregate purchase price of approximately $286 million. The company intends to continue to focus on increasing net revenue organically and via acquisitions and has identified a significant volume of potential acquisition opportunities it will target in late 2019 and early 2020, according to the news release.

“We believe that in order to be successful in the evolving HME marketplace, companies must possess scale and technological expertise without sacrificing service and product diversity,” said Adapt CEO Luke McGee. “We expect to remain an active participant in the consolidation of our industry, while adhering to our core principles of providing tailored healthcare products and services that empower patients to live their best lives. We look forward to this next, exciting phase of our growth.”