Seven Hills Capital continues to consolidate the complex rehab technology market through Reliable Medical Supply, clinching a deal for A&A Medical Supply as it remains on the hunt for acquisitions, the firm told PE Hub.
The add-on is the second for RMS since its November 2018 recapitalization by Seven Hills, a healthcare-focused private equity firm headquartered in Chicago. The platform bought Med City Mobility in mid-2019.
Led by CEO Debra Kalk, RMS provides complex rehab technology, clinical respiratory products, and durable medical equipment and supplies. The company serves a fragile patient base of pediatric and adult patients with conditions such as ALS, multiple sclerosis, cerebral palsy, severe spinal cord injury and stage four COPD.
A&A expands the platform’s patient base in Kentucky and Ohio. RMS, based outside of Minneapolis, also serves patients in Minnesota and parts of Western Wisconsin.
RMS remains relatively insulated from the economic downturn and intends to continue its growth plan.
“As it relates to covid, there have been expected operational challenges with the demand of services, and while somewhat complicating the delivery cycle, the company [RMS ] has not been drastically impacted,” Seven Hills Founding Partner Matthew Pettit told PE Hub. “The company provides specialized products that are life sustaining and improving the quality of life for its customers.”
Pettit declined to comment on financial aspects of the deal, but said RSM seeks to grow to achieve benefits of scale, as seen by other large industry players such as AEA Investors’ Numotion and Cinven Partners’ National Seating and Mobility.
Cinven Bought NSM in 2019 from Court Square Capital for a total enterprise value of approximately $850 million, sources told PE Hub at the time. AEA bought Numotion from Audax Group and LLR Partners a year earlier.
Although RMS is focused on the Midwest, the company is also actively evaluating potential acquisition opportunities throughout the Central US, Pettit said.
Seven Hills remains open for business outside of RMS. The firm is also seeking add-ons for VersiCare, which provides supported living services for individuals with intellectual and/or developmental disabilities, the investor said.
Outside of its existing portfolio, Seven Hills is focused on evaluating new opportunities in healthcare services, with an interest in post-acute care, tech-enabled services and other outsourced provider services, Pettit said.
McGuireWoods LLP provided legal counsel to RMS and Seven Hills on the transaction, while Twin Brook Capital Partners provided debt financing.
Seven Hills, launched in 2017, seeks majority investments in founder-run healthcare businesses generating up to $8 million in EBITDA.
Action Item: Reach Seven Hills at 312-620-7711
Correction: This story has been updated with the correct spellings of RMS and Matthew Pettit’s last name.