PE firm acquires Liberty Medical

PORT ST. LUCIE, Fla. - Palm Beach Capital outbid 32 other parties to acquire Liberty Medical for $22 million above its asking price—a “stunning” result, say industry analysts.

“If there are that many people bidding, clearly there's value in what they are doing and a lot of people think there's a platform there to grow a business,” said Patrick Clifford, managing director at The Braff Group. “It's stunning.”

Liberty in October proposed selling the majority of its assets with a stalking horse minimum bid of $46.5 million. The provider of mail-order medical supplies has been in Chapter 11 bankruptcy protection since February 2013.

“This is good for Liberty, but also for the debt holders,” said Clifford. “They got a fair market value.”

This is not Palm Beach Capital's first foray into the mail-order supply space. In May 2011, it acquired Coral Springs, Fla.-based Arriva Medical; it turned around and sold Arriva to Alere, a disease management and diagnostics company, in November of that same year.

“I think what they'll probably do is to put the train back on the track,” said Jonathon Sadock, partner and CEO of Paragon Ventures. “They acquired Liberty at the right price and a big attraction there is its huge accounts receivable. All they have to do is collect it.”

In 2012, Liberty was the largest provider of diabetes test strips, with more than $150.5 million in Medicare payments. That number dropped to just over $29.75 million in 2013, the same year Medicare implemented its national mail-order program for diabetes testing supplies. In its bankruptcy filing, Liberty Medical cited assets and liabilities of between $100 million and $500 million.

Liberty has also indicated plans to sell its mail-order pharmacy business, LMSP.