Rotech looks to 'fill out'

Thursday, December 22, 2011

ORLANDO, Fla. - Rotech Healthcare's announcement last week that it had acquired three home medical equipment companies came as little surprise to industry watchers who say the provider has been looking to grow.

Rotech on Dec. 19 announced that it has acquired Best Care HHC Acquisition Company, NeighborCare Home Medical Equipment of Maryland and NeighborCare Home Medical Equipment. NeighborCare has locations on the East Coast, including Philadelphia and Baltimore, both Round 2 competitive bidding areas (CBAs). 

Is it possible that Rotech is specifically targeting providers in those bid areas?

"My gut would say not yet," said Patrick Clifford, a managing director with The Braff Group. "They didn't buy in Round 1 areas, from what I can tell, until the bid winners were announced. I don't know that that strategy would change."

More likely, Rotech is looking to "fill out" in markets it already has a presence in, say analysts. On its website, Rotech indicates that it has 25 branches in the first nine CBAs, and 97 branches in 63 of the 91 CBAs included in Round 2. In all, it has about 453 branches.

"They are buying assets more or less in any area that they have an existing presence to consolidate the markets they feel they are the strongest in," said Don Davis, a financial consultant with Duckridge Advisors.

Last fall, Rotech acquired North Huntington, Pa.-based QualiCare, which holds contracts in the Pittsburgh CBA.

In all, Rotech won 17 contracts in Round 1.