NST poised to 'swim hard and fast'

NORWOOD, Mass. - Despite the industry upheaval of the past year, National Sleep Therapy (NST) is ready to scale its business. 

“We think there's a market in that there are a number of DME companies who don't have the resources or mental bandwidth to keep going,” said Eric Cohen, president. “We are hoping that there are others that are ready to be done because we are ready to keep going.”

In April, NST acquired Wallingford, Conn.-based Gaylord Sleep Medicine Equipment.

On the heels of that transaction, NST is speaking with private equity firms about possible backing, he said.

“We want to swim hard and fast and do it in a big and meaningful way,” said Cohen. “If we can work with private equity, we can swim out of New England.”

NST has a presence in all six New England states; it also services some re-supply patients in several states, including Florida and Virginia, where it used to have relationships with small labs—“dinosaurs,” says Cohen.

NST is eyeing sleep-focused companies with revenues in the $3 million to $6 million range that have good insurance contracts and a similar philosophy toward patient care, he says.

Quality patient care is getting tougher to provide, but it's critical if a provider wants to stay in business, says Cohen. You can spend money on back-end administration or you can spend it on patient care.

“The patient and the referral sources don't care about your processes,” he said. “They want to know they can get someone smart and helpful to help them. That's all they care about.”

Sleep is still a bright spot, with buyers mainly interested in the patients, say M&A analysts.

“A lot of buyers out there are looking to add scale but not any negative aspects of the business,” said Jonathan Sadock, managing partner/CEO of Paragon Ventures. “A lot of these (sellers) also do oxygen and bent metal and the buyers have zero interest in that. They are focused on the sleep patients.”

Although Cohen is optimistic about NST's future, he understands how tough the past year has been on providers. The provider's own year was one of “pain and rebuilding,” thanks to the start of Round 2 of competitive bidding, cuts to private pay reimbursement, and audits, said Cohen.

“It forced us to retool our business to make it much more efficient,” he said. “There's no tolerance in the system to have any of your operations less than perfect. Every penny counts.”