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Court Square seeks buyer for National Seating & Mobility

Court Square Capital is evaluating the sale of National Seating & Mobility, a supplier of specialized wheelchairs for those suffering from long-term or permanent mobility loss, according to three people familiar with the matter.

Harris Williams is advising on the process, the people said.

A private-equity-focused auction for NSM launched in mid-August, one of the people said. Another person said first round bids have been submitted and management meetings recently kicked off.

Two of the people placed Ebitda in the $60 million to $70 million range, suggesting the company is likely to command a 10x to 12x Ebitda multiple.

Court Square, a New York growth investor focused on the middle market, acquired NSM from Wellspring Capital Management in August 2016. Terms weren’t disclosed, but sources at the time placed the deal’s valuation a little south of $400 million.

Founded in 1992, Franklin, Tennessee-based NSM is one of the country’s largest providers of complex rehab technology, or CRT.

NSM is largely known for its highly customized power and manual wheelchairs and related accessories; however, it also designs products to help improve daily living and mobility. Other equipment supplied includes beds, bath equipment, communication devices and lift chairs.

The company is a direct competitor of Numotion, which AEA Investors acquired a majority stake in about a year ago from existing investors Audax Group and LLR Partners.

Theoretically speaking, NSM and Numotion would generate significant synergies in a potential combination, one of the sources, plus a separate source, said. They cautioned that it remains uncertain if the management teams would be interested in pursuing such a transaction.

CRT providers are part of the broader durable-medical-equipment industry, which some investors consider to be an alternative means to investing in patients’ increasing preference for home-based care.

Still, the broader DME industry faces regulatory risk associated with Medicare’s competitive bidding program. Under the program, DME suppliers submit bids to provide medical equipment to people with Medicare in certain areas. The program was designed to award contracts to suppliers that met compliance standards and offered the best prices.

Like Numotion, it is understood that most of NSM’s product offerings—including CRT wheelchair bases—are not reimbursed under DME’s competitive-bidding codes, minimizing regulatory risk, some of the people said.

While accessories added to power CRT bases are also currently exempt, those added to manual bases remain subject to competitive bidding pricing, one of the people said. If policies were to change in the CRT category, causing pricing to fall, suppliers like NSM and Numotion would face more reimbursement pressure, another source said.

Court Square also backs healthcare companies Celerion, Integrated Prescription Management and National Distribution and Contracting.

Representatives of Court Square, NSM and Harris Williams did not return requests for comment.

Action Item: Check out Court Square’s latest Form ADV: https://bit.ly/2k6Zwwf