Manufacturers whet appetite for more products

There's been a steady stream of acquisitions by HME manufacturers in the past few months and industry sources say they're all driven by products.

By that, they mean manufacturers are looking for: more of the products they already have, which helps  them build market share; or products they don't yet have, which helps them diversify.

“They're not so much looking at companies; they're looking at products,” one source said. “They want to have as broad a line of products as possible. It's not a specialty market anymore. They want to cover the whole spectrum.”

Drive Medical kicked off the stream of acquisitions late last year by buying ActiveCare Medical, Inovo/Chad Therapeutics and Mountway Holdings. In recent months, Meridian Medical bought Air Lift and CareForce Medical; GF Health Products bought Pressure Management Group; and Roscoe Medical bought Current Solutions.

That last acquisition was definitely a case of a manufacturer looking for more of the products they already have, helping to build market share. Before Roscoe Medical bought Current Solutions, it had only a small offering in TENS. Current Solutions not only significantly broadens its product line but also introduces it to another dealer base: chiropractic offices.

“We're not looking to acquire for the sake of acquiring,” said Paul Guth, president and CEO of Roscoe Medical. “It has to be an acquisition that matches what we do today, or that's going to make us more well-rounded.”

Well-roundedness was certainly a factor for Meridian Medical, which manufactures gel overlays and seating/positioning cushions. The companies it bought, Air Lift and CareForce Medical, manufacture respiratory accessories and oxygen carriers.

“Primarily, we were trying to get our hands in a different market for diversification,” said Mike Cofer, president and CEO of Meridian Medical. “They also have some things that aren't coded by Medicare and are cash items, which is attractive.”

For GF, it was a combination of the two: It wanted to add products it does not yet have (pressure reduction support surfaces, gel overlays, mattresses, foam and gel cushions), but that will still build on what it does have (beds).

“They're obvious items for us to bundle,” said Ken Spett, president and CEO at GF.

As smaller manufacturers continue to struggle with the increased costs of doing business, particularly as they relate to sales and marketing, industry sources expect the acquisitions to continue.

“The smart manufacturers will survive,” one source said, “but the industry will look completely different in two years.”