AdaptHealth announces high-profile merger

PLYMOUTH MEETING, Pa. - In the nearly 10 years that the HME industry has grappled with competitive bidding, AdaptHealth, formerly QMES, has found a way to grow, leading up to last week's news that it's combining with DFB Healthcare Acquisitions Corp. and becoming a public company.

The combined company, which will go by AdaptHealth Holding Corp. and which will be listed on the NASDAQ under a new ticker symbol, will have a value of $1 billion and a market capitalization of about $800 million.

“Adapt is already a huge company,” said Brad Smith, managing director/partner at Vertess, of the company, which serves more than 1 million patients annually through more than 150 locations across the country. “They came up with a buy-and-build strategy, and executed on it and I think it's going to go extremely well going forward.”

DFB is sponsored by Deerfield Management and Richard Barasch, the former chairman and CEO of Universal American, a health insurance and healthcare services company acquired by WellCare Health Plans in 2017. He will serve as chairman of the company. Adapt's current management team, including CEO Luke McGee, will remain in place.

Adapt has acquired 56 companies since 2012, including Landauer Metropolitan in 2013 for $22 million ahead of that company's filing for Chapter 11 bankruptcy protection.

“They took advantage of an industry that was beaten down by reimbursement rates,” said Pat Clifford, managing director, The Braff Group. “They felt like they could improve things with operational efficiencies and they've done quite well.”

Going forward, Adapt will continue to buy. It says it has identified a “significant volume” of potential acquisition opportunities for this year and early next year, with PAP and ventilators likely areas of focus, Smith says.

“The market is brimming right now,” he said. “From the standpoint of further market penetration, there's plenty to go after.”

Adapt's size and its merger with DFB sets up the company well for the not-so-distant Round 2021, Clifford says.

“If the next round is upward (reimbursement), for which we are all hopeful, then I think they are very well-positioned,” he said.

A spokesman for DFB said the company couldn't comment ahead of the deal closing some time in the fourth quarter.