Healthy balance of supply, demand keeps market hot

YARMOUTH, Maine - Despite recent upheavals in the HME industry, quality businesses remain hot acquisition targets. "At the end of the day, it's a matter of supply and demand, and that balance still favors sellers," said Braff Group associate Bob Leonard. "In spite of the cuts, good quality companies are still bringing pretty robust valuations." Established companies with a profitable business mix, growth potential and a clean track record with billing and documentation have an edge in the current climate. "We've had significant cuts already and valuations have held up pretty good," said Rick Glass, president of Steven Richards and Associates. "Good businesses are in high demand, and there's not that many $5 million, $10 million, $20 million dollar companies left (to buy)." Company values generally reflect how much profit the buyer will make in the future. Presumably, future reimbursement cuts will drive profits and valuations down, but that hasn't stopped potential buyers, Glass said. "They're going to buy come heck or high water," he said. Demand for companies with respiratory remains high but a cap on oxygen could change that, said Regina Bienkowski, vice president at Ultimate Resource in Newtown, Penn. "I will not be surprised in the next six months if there is going to be interest in some other areas," said Bienkowski. Bienkowski said one trend she has seen is buyer caution. "We're not sure what's stopping and starting them, but we have noticed deals are not as quick to go through," said Bienkowski. Regardless, the HME market--with its growing demographics--remains a hot property, say industry watchers.