Rotech ready to expand

ORLANDO, Fla. - Rotech Healthcare last week announced its first acquisition in several years and the company has indicated that's only the beginning.

“Rotech is looking to leverage its platform to expand its presence in existing and new markets,” said CEO Tim Pigg in a release. “Unlike many of our smaller distressed competitors, we have the staying power to ride the current market difficulties and capital available to invest in our core products.”

Rotech acquired “certain assets” from Specialized Medical Services in Cody, Wyo., which it said will allow the company to serve respiratory-related patients.

“I think they are going to stick very close to as much oxygen as possible and, secondarily, sleep,” said Rick Glass, president of Steven Richards & Associates. “They are back in business and looking to do acquisitions.”

Rotech accepted nearly 200 contracts in Round 2 of competitive bidding, mainly for oxygen and CPAP.

Rotech emerged from Chapter 11 bankruptcy protection in September 2013. In January of this year, Pigg took the reins and announced “aggressive goals” for turning the company around.

“Somehow or another, they might think that there is a position for them if they can find the right amount of profitability,” said Don Davis, president of Duckridge Advisors. “It's an attractive market for people to buy if they have the cash available.”

If nationals are buying, that's a good thing, say analysts, who are closely watching a planned merger of AeroCare with MergeWorthRx, a special purpose acquisition company. A meeting is scheduled for Dec. 22 to approve the transaction. The company announced Dec. 16 that its sponsors are offering to transfer up to 800,000 shares of common stock in exchange for the purchase or retention by the investors of up to 4 million shares of common stock, according to a release.

“Whatever the multiples are going to be to drive that is going to be of interest to everybody and certainly the larger nationals because they'll be looking at their business valuations in that range as well,” said Davis.