Lincare brings home Beecken Petty’s Preferred Homecare

Lincare Holdings, a subsidiary of Germany’s Linde Group, has purchased Beecken Petty O’Keefe’s Preferred Homecare, three sources said.

The transaction, which has not been publicly announced, concludes a process launched in September for the western U.S. provider of in-home durable medical equipment.

Houlihan Lokey was retained for sell-side financial advice on the process, Buyouts reported in October. The process also drew interest from PE, sources have said.

Preferred Homecare, Mesa, Arizona, was expected to produce 2018 Ebitda of about $30 million, one of the sources said at the time.

Terms of the transaction are unclear, but DME assets generally command a 6x to 8x multiple of free cash flow, or Ebitda less capital expenditures.

For Clearwater, Florida-based Lincare, the acquisition is its first in three years. The company in February 2016 bought American HomePatient, a Brentwood, Tennessee, company that generated revenue of €260 million ($297 million) in fiscal 2014, a statement at the time said.

Linde, a multinational gases and engineering company, acquired Lincare in August 2012 in a deal valued at $4.6 billion.

Founded in 1997, Preferred Homecare focuses largely on delivering in-home respiratory-therapy products and services tailored to individuals suffering from chronic obstructive pulmonary disease, congestive heart failure, sleep apnea, emphysema and other conditions.

It also delivers home medical equipment and supplies including hospital beds and walkers. And it offers negative-pressure wound therapy, a treatment for chronic and acute wounds.

The company contracts with managed-care organizations, traditional health insurers, preferred-provider organizations, at-risk health providers, third-party administrators, self-insured plans and provider-network managers, among other providers.

Preferred employs more than 800 in over 20 locations, with a network of more than 50 clinicians in Arizona, Colorado and Nevada.

William Keys is CEO of Preferred, while Robert Fahlman is executive chairman.

Chicago’s BPOC bought Preferred Homecare in 2007 from Halifax Group.

More broadly, PE interest in the DME segment has resurged in recent months as the regulatory outlook appears increasingly stable and buyers seek opportunities at more affordable prices.

For example, a suitor has yet to prevail for Quadrant Management’s QMES. The East-Coast-concentrated distributor of oxygen-therapy products retained JP Morgan Securities in 2018 to explore a sale, Buyouts reported.

A QMES peer, AeroCare, backed by Peloton Equity and SV Investors, also remains for sale via Triple Tree.

Representatives of BPOC, Lincare and Preferred Homecare couldn’t immediately be reached, while those with Houlihan declined comment.

Action Item: Reach out to Beecken Petty at +1 312-435-0300