MergeWorthRx to merge with PE-backed AeroCare


MergeWorthRx Corp. has agreed to merge with AeroCare Holdings, a provider of home oxygen and sleep therapy services. At the closing of the deal, AeroCare’s existing stockholders will own 53 percent of the newly combined company. Cain Brothers & Co. was financial advisor to AeroCare in the transaction while EarlyBirdCapital provided investment banking advisory services to MergeWorthRx. AeroCare is backed by Ferrer, Freeman & Company and MTS Health Partners.

PRESS RELEASE

MIAMI, Oct. 15, 2014 (GLOBE NEWSWIRE) — MergeWorthRx Corp. (Nasdaq:MWRX), a special purpose acquisition company focused on the U.S. healthcare services market, and privately-held AeroCare Holdings, Inc. (AeroCare), a national leader in home respiratory therapy services with annual revenue of approximately $150 million, announced today that they have signed a definitive merger agreement pursuant to which AeroCare will become a publicly traded company through an all-stock merger with MergeWorthRx. The transaction, when consummated, will provide the post-merger company with additional capital as well as public company currency to enhance and expand its organic growth initiatives and for future strategic transactions.

AeroCare Highlights
A leading provider of home respiratory/home oxygen and sleep therapy services
Merger creates a well-capitalized national platform for accelerated growth in a highly fragmented home respiratory therapy market primed for consolidation
Led by CEO Steve Griggs, AeroCare’s management team has significant healthcare services industry and public company experience
Close alignment of interests – management and private equity sponsors own approximately 78% of AeroCare before merger and will roll 100% of their equity into the combined company
Proven track record of growth achieved through internal business development and strategic and accretive acquisitions
Acquired and integrated 23 companies in 2013 alone, representing approximately $43 million in annualized revenue
Annual compounded revenue growth rate of 31% since inception in 2002
Strong focus on healthcare compliance with significant investments in IT

MergeWorthRx’s co-founder, President & COO, Stephen Cichy, joins Mr. Griggs, Ted Lundberg, partner at Ferrer Freeman & Company and Bruce Lunsford, Chairman of Lunsford Capital, on AeroCare’s Board of Directors

AeroCare is one of the nation’s leading providers of respiratory / home oxygen and sleep therapy services in the U.S. with 175 locations in 20 states. MergeWorthRx, completed its initial public offering (“IPO”) in July 2013, and was founded and sponsored by Anthony Minnuto, Executive Chairman; Charles Fistel, CEO; and Stephen Cichy, President and COO; three healthcare industry veterans. MergeWorthRx could deliver up to $60.0 million of cash at closing (assuming no shareholder redemptions and net of closing expenses), which will be available to fund AeroCare’s strategic growth initiatives. In conjunction with the business combination, MergeWorthRx intends to list the shares of common stock issued to AeroCare stockholders on the Nasdaq Stock Market.

Steve Griggs, Chief Executive Officer and founder of AeroCare, commented, “This is an exciting time for AeroCare. We are rapidly becoming one of the leading providers of respiratory services by taking advantage of market conditions and leveraging our scalable, best-in-class platform. Recent changes in the industry, including payment reform and increased compliance demands, have created a unique opportunity in the market by raising the level of complexity and limiting the number of viable providers. The agreement with MergeWorthRx and AeroCare’s emergence as a public company will increase our visibility in the market and provide the capital we will need to accelerate our growth and take further market share.”

Anthony Minnuto, MergeWorthRx’s Executive Chairman, said, “We are pleased to deliver this transaction to our shareholders and look forward to its completion. We are eager to support the AeroCare management team as they execute on their strategic growth initiatives as a prime consolidator of this large, growing, and highly fragmented market.”
Ted Lundberg, partner of Ferrer Freeman & Company, commented, “Since partnering with AeroCare in 2002, we have supported their growth and watched them develop their highly efficient and profitable platform. We believe in management’s vision that this is an opportune time to consolidate the industry and capitalize on the tremendous potential ahead. We are pleased to continue to be part of the new AeroCare and their life as a public company.”

Total revenue has increased at a compound annual growth rate of approximately 31% since inception in 2002. Since 2006, growth has been driven by a combination of organic growth, strategic acquisitions and the opening of new locations. AeroCare intends to continue this growth strategy and invest in infrastructure and operational efficiencies to increase operating leverage.

Summary of Merger Transaction
Under the terms of the agreement, MergeWorthRx will issue approximately 11.3 million new shares and approximately 0.5 million options to existing AeroCare stockholders at closing, resulting in AeroCare’s existing stockholders owning 53% (on a fully-diluted basis) of the post-merger company, assuming no shareholder redemptions. In addition, existing AeroCare stockholders have the right to receive up to $30 million of additional shares of MergeWorthRx common stock, at a price per share of $8.36, under a three-year earn-out period subject to certain adjusted EBITDA targets being achieved.

EarlyBirdCapital, Inc. provided investment banking advisory services and McDermott, Will & Emery LLP served as legal counsel to MergeWorthRx. Cain Brothers & Co., LLC acted as AeroCare’s exclusive financial advisor in connection with the transaction and Goodwin Procter LLP served as legal counsel. AeroCare is a portfolio company of Ferrer, Freeman & Company, LLC and MTS Health Partners, LP.

The terms of the transaction have been approved by the Boards of Directors of both companies. The transaction is conditioned upon approval of MergeWorthRx’s shareholders and obtaining customary governmental and regulatory approvals and other standard closing conditions. MergeWorthRx and AeroCare anticipate closing the acquisition as soon as possible after satisfaction of the closing conditions, which is expected to occur by the end of the fourth quarter of 2014. Additional information about the transaction, as well as AeroCare operations and historical financial information will be contained in the investor presentation filed by MergeWorthRx at a later date with the Securities and Exchange Commission. Interested parties should visit the SEC website at www.sec.gov.

The description of the transaction contained herein is only a summary and is qualified in its entirety by reference to the definitive agreement relating to the transaction, a copy of which will be filed by MergeWorthRx with the SEC as an exhibit to a Current Report on Form 8-K.

About MergeWorthRx
MergeWorthRx is a special purpose acquisition company formed on January 22, 2013, for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more target businesses, with specific investment focus on the U.S. healthcare industry. MergeWorthRx raised approximately $63.5 million in its IPO in July 2013 and its common stock is traded on NASDAQ under the ticker symbol MWRX.

About AeroCare
AeroCare Holdings Inc., together with its subsidiaries is one of the nation’s leading providers of oxygen, respiratory, sleep and other chronic therapy services to patients in the home. The Company’s patients typically suffer from chronic obstructive pulmonary disease (“COPD”), such as emphysema, chronic bronchitis or asthma, and require supplemental oxygen, respiratory and other chronic therapy services in order to alleviate the symptoms and discomfort of respiratory dysfunction. The Company also provides sleep apnea devices, including CPAP/bi-level devices to individuals suffering from obstructive sleep apnea (“OSA”). Based in Orlando, FL, AeroCare serves more than 150,000 patients and generates annual revenue of approximately $150 million through a network of 175 locations across 20 U.S. states.

Additional Information about the Transaction and Where to Find It
MergeWorthRx intends to file with the Securities and Exchange Commission (SEC) a Registration Statement on Form S-4, which will include a preliminary proxy statement/prospectus of MergeWorthRx in connection with the proposed transaction. MergeWorthRx will mail a definitive proxy statement/prospectus and other relevant documents to its stockholders. MergeWorthRx stockholders and other interested persons are advised to read, when available, the preliminary proxy statement/prospectus, and amendments thereto, and definitive proxy statement/prospectus in connection with MergeWorthRx solicitation of proxies for the special meeting to be held to approve the transaction because the proxy statement/prospectus will contain important information about AeroCare, MergeWorthRx, and the proposed transaction. The definitive proxy statement/prospectus will be mailed to stockholders of MergeWorthRx as of a record date to be established for voting on the transaction. Stockholders will also be able to obtain copies of the Registration Statement and the proxy statement/prospectus, without charge, once available, at the SEC’s Internet site at http://www.sec.gov or by directing a request to: MergeWorthRx Corp., 3123 McDonald Street, Miami, Florida, 33133, tel. (305) 785-3900, Attention: Stephen B. Cichy.

Participants in the Solicitation
MergeWorthRx and its directors and officers may be deemed participants in the solicitation of proxies to the MergeWorthRx’s stockholders with respect to the transaction. A list of the names of those directors and officers and a description of their interests in MergeWorthRx is contained in MergeWorthRx’s annual report on Form 10-K for the fiscal year ended December 31, 2013, which was filed with the SEC, and will also be contained in the Registration Statement on Form S-4 (and will be included in the definitive proxy statement/prospectus for the proposed transaction) when available.

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