Coloplast deal signals larger trend

MINNEAPOLIS - Coloplast's willingness to pay an eye-popping $160 million for Comfort Medical points to the attractiveness of the disposable medical supplies market, say analysts.

“Urologicals and catheters, in particular, check so many lists,” said Brad Smith, managing partner at Vertess, a Tucson, Ariz.-based M&A advisory firm. “It's disposable, it's ordered monthly, it has good reimbursement, and you can drop ship what you need so there's little infrastructure or overhead needed.”

Coloplast, a manufacturer of ostomy, urology, continence and wound care supplies which has its U.S. headquarters here but is based in Denmark, announced the acquisition of Coral Springs, Fla.-based Comfort Medical, a provider of those supplies, in November.

In announcing the deal, Coloplast said that Comfort Medical fits well into its “overall consumer ambition” and that it plans to leverage the provider's “strong patient acquisition model and efficient and scalable setup.”

Comfort Medical, a subsidiary of Liberty Medical, expects to have sales of $38 million in 2016—far less than what Coloplast paid. But you can't put a price on the direct line to consumers that Comfort Medical offers Coloplast, analysts say.

“It's a big deal and I think we are going to see more of these manufacturers going downstream,” Smith said.

Other recent examples of manufacturers buying into the medical supplies space include Domtar's acquisition of Home Delivery Incontinence Supplies for $45 million in October; and C.R. Bard's acquisition of Liberator Medical for $181 million in late 2015.

The trend will likely continue, analysts say.

“There's been rumored and actual manufacturers buying and looking at buying,” said Rick Glass, president of Steven Richards & Associates.

Comfort Medical, which didn't respond to a request for comment, has itself been on an acquisition trail. In April, it acquired Wheel:Life, a digital media publication and social community for wheelchair users. In 2015, it acquired the ostomy and urological business of Liberty Medical and Medical Direct Club.