Wright & Filippis sells to Lincare

ROCHESTER HILLS, Mich. - Wright & Filippis said goodbye to 35 years of providing home medical equipment and respiratory services on June 30, when it sold that part of its business to Lincare.

“In Medicare's eyes and the payers' eyes, those businesses have moved to a commodity business,” said A.J. Filippis, CEO. “We decided we wanted to get back to our roots and focus on prosthetics and orthotics, complex rehab and our accessibility business.”

The family-owned Wright & Filippis, which celebrated 70 years in business in April, has a sizable presence in Michigan, with 32 locations. In 2012, for example, the provider received about $1.4 million from Medicare for oxygen concentrators and $496,234 for CPAP devices, according to the HME Databank.

The terms of the deal were not disclosed, but Filippis confirmed that Wright & Filippis had closed a few locations and laid off employees, although many of them were rehired by Lincare. Lincare will co-locate with Wright & Filippis in many of its existing locations, he said.

“For the patients, it's not going to look much different,” said Filippis. “A lot of these patients we've serviced for 15 or 20 years and we wanted to make sure the service levels were going to be consistent.”

Also driving the sale: competitive bidding. In Round 2, Wright & Filippis won only a few contracts, for oxygen, CPAP and negative pressure wound therapy.

The deal didn't surprise industry analysts.

“Wright & Filippis has been struggling with the DME business since they didn't win the awards they wanted,” said Don Davis, president of Duckridge Advisors. “And at the end of the day, at least in that part of the world, there's nobody else to buy them. Lincare has the capital and they are taking advantage of the very low multiples in our industry.”

Although Lincare is gaining a big slice of market share in Michigan, local providers say they are not ready to throw in the towel.

“You are always concerned when competing with somebody that big,” said Kevin Druzinski, president of Motor City Medical in Madison Heights.“They bought the largest independent in Michigan and Wright & Filippis was very strong. Everybody just keeps rolling along and there's opportunity every time there's a misfortune like that.”

Wright & Filippis, meanwhile, plans to grow its remaining business, with plans to close on a couple of acquisitions this summer, said Filippis.