Owens & Minor talks product play, synergy drivers 

RICHMOND, Va. – Owens & Minor’s acquisition of Rotech Healthcare will provide the company with an on-ramp to DME, as it continues to diversify its product portfolio and accelerate growth across its Patient Direct segment. 

With Rotech as part of the company, Owens & Minor’s Patient Direct segment, on a pro forma basis, is comprised primarily of sleep (28%) and respiratory (24%) services, followed by diabetes supplies (23%). 

“Rotech is certainly fairly heavily deep into sleep and oxygen, and they're followed by vents,” said Jon Leon, interim CFO, senior vice president of finance and corporate treasurer for Owens & Minor. “The team has done a really nice job the last few years of growing their diabetes business, but it's roughly 5%, 6% of their total business right now.” 

Owens & Minor announced its plan to buy Rotech, which generated about $750 million in revenues and an EBITDA margin of nearly 30% in 2023, for $1.36 billion in cash on July 23. 

‘Tremendous opportunity’ 

Despite headwinds in the sleep market, including the increasing popularity and potential therapeutic scope of GLP-1s, Owens & Minor remains “bullish,” says CEO Edward Pesicka, and welcomes Rotech’s business in the category. 

“There's still a significant number of people that are going to need this product and GLP-1s doesn't necessarily cure the sleep issue,” he said. “In addition to that, we also looked at it with the significant number of Americans with sleep apnea that haven't been diagnosed yet – tremendous opportunity there. So, those are some of the reasons why (we're) comfortable continuing in at least this part of our Patient Direct space.” 

‘Drivers of synergy’ 

Throughout the call, Owens & Minor execs pointed to Rotech as a “well-run business” and to the synergies of both companies, which will help them get to their long-term revenue target of $5 billion for the Patient Direct segment by 2028. 

“As we begin understanding the business deeper and we start to think through the integration process, we're completely comfortable with taking best practices from either direction and putting them together, and that's going to be some of the drivers of the synergy,” said Pesicka. “Rotech is an extremely well-run business, and I think there's learnings we can take from that and bring it back to the entire Patient Direct segment and vice versa.” 

• Perry Bernocchi, executive vice president and CEO of Owens & Minor’s Patient Direct business, spoke with HME News recently about the company's growth plans.