Drive taps into new investor

PORT WASHINGTON, N.Y. - With a forthcoming “significant investment” from New York-based private equity firm Clayton, Dubilier & Rice, Drive DeVilbiss Healthcare is ready to double down on the HME industry, a company exec says.

“Clearly, there is a lot of change in this industry, but it still presents tremendous opportunity for a company like ours,” Ed Link, chief marketing officer, told HME News.

At closing, likely in the fourth quarter, CD&R will become a majority stockholder in Drive, and the management team at Drive will become a minority stockholder, according to a source close to the deal. CD&R will replace Ferrer Freeman & Co., a New York-based private equity firm that has been a minority stockholder in the company since 2008.

After rumors of the deal began circulating earlier this summer, Drive acknowledged in an Aug. 12 letter to its customers that it sought “additional equity capital to continue our growth strategy.”

Drive has completed 25 acquisitions since 2002, expanding its product portfolio, its geographic reach and its manufacturing capabilities. Last year, it made the “transformative” acquisition of DeVilbiss Healthcare, giving it a stronger foothold in the fast-growing respiratory market. It does business in 80 countries.

A press release announcing the deal states CD&R and Drive will continue to grow the company organically and through acquisitions. Link characterized the company's organic growth as “double-digit.”

Link declined, however, to provide additional details on Drive's growth strategy.

“We have four sales verticals (provider-based home care, long-term care, retail and e-commerce), and we will continue to invest in businesses around the world to help us reach our goals,” he said.

It's possible the company will focus future investments on its long-term care business, a source familiar with the company said.

Because of Drive's diversification, “the future is extremely bright,” Link said.

CD&R declined to be interviewed. Its previous healthcare investments have included AssuraMed, which it sold to Cardinal Health for $2.1 billion in 2013.

As part of the investment, CD&R has lined up financing from a number of banks: Barclays, JPMorgan Chase Bank, Citigroup Global Markets, Capital One, National Association and HSBC Securities.