OM’s Byram and Apria ‘complete each other’

YARMOUTH, Maine – Owens & Minor’s anticipated acquisition of Apria Healthcare, announced earlier this month, follows the playbook of a deal generating synergies between buyer and “buyee,” but the companies have their work cut out for them, says Dexter Braff, president of the Braff Group. 

“You’ve got two mammoth organization trying to find a way to work with one another to optimize these and leverage those opportunities,” he said. “It’s not easy – it comes down to execution.” 

Braff was a recent guest on the HME News in 10 podcast, where he took a closer look at the deal as he sees it. 

About that synergy 

Byram, with its logistics and distribution capabilities, and Apria, with its comprehensive suite of products and large footprint, “complete each other,” says Braff. The two companies will operate as part of Owens & Minor’s patient direct platform.  

“Byram can help Apria with what people refer to as the ‘last mile of delivery,’ which tends to be the most costly and the most inefficient,” he said. “The combined entity is more suited to be able to compete for capitated contracts.” 

Another growth prong 

The combined strength of Byram and Apria, in turn, gives OM a platform to become a significant player in the home health care industry, says Braff. 

“They are a pretty diversified company, with a strong complement of manufacturing, distribution, logistics and supply chain management,” he said. “This is another growth prong for them. Companies are getting more aggressive about getting into home health care. My read on that is it is all part of this movement toward population-based health.” 

About that price tag 

As recently as late October, Apria was trading at just under $37.50, the price OM paid per share, representing a 26% premium. However, the stock dropped significantly when Blackstone sold off a 12.7% stake in the company at a price of 31.50 per share, points out Braff. 

“It’s hard for me to look at that price and consider it a premium when it fell from that same level several months prior,” he said.  

End of an era 

Apria was one of the industry’s first major consolidators, doing as many as 30 or 40 deals a year, says Braff. 

“We represent all kinds of companies that are consolidating rapidly but nothing like what we saw with Apria, Lincare and Rotech,” he said. “We’re in a situation where one of the big companies that kind of shaped where we are today (is) a different company now as part of OM.”