Owens & Minor Inc. (NYSE: OMI) has ended its plan to acquire Rotech Healthcare Holdings, citing problems with “regulatory clearance.”
Owens & Minor announced in July 2024 that it had signed an agreement to acquire Rotech for $1.36 billion in cash.
“For many months, our teammates, along with the Rotech team, have worked tirelessly in cooperation with the Federal Trade Commission to close this transaction, and while we believe there would have been ample benefits to patients, payors, and providers by adding Rotech to our patient-direct business, the path to obtain regulatory clearance for this merger proved unviable in terms of time, expense and opportunity,” Edward A. Pesicka, Owens & Minor’s president/CEO, said in a June 5 announcement.
Pesicka added that Owens & Minor will continue the business plan that led to the acquisition agreement of Rotech last year.
“We are confident in our strategy and will continue to focus our efforts on growing our patient-direct business while remaining committed to strengthening our balance sheet through the use of improved cash-flow generation for deleveraging,” Pesicka said. “The home-based care market is a dynamic, growing market, and we are extremely well positioned to help those with chronic conditions get the care and service they need and deserve. Also, we continue to work with a number of interested parties around the potential sale of our products and health-care services business, and, in the meantime, we will continue to actively work to strengthen that business and tap into its significant upside.”
When announcing the acquisition deal in July, Pesicka said, “Rotech squarely fits into our existing patient-direct segment and directly aligns with the strategy we outlined last December during our investor day, supporting our expansion in the very large and fast-growing home-based care space. We are excited to acquire a high-quality company like Rotech, an opportunity that doesn’t come along very often.”
With the deal now canceled, Owens & Minor has paid $80 million to Rotech and will “also redeem the $1 billion of notes issued in April 2025, which include a special mandatory redemption provision in accordance with their terms, and terminate the incremental term loan commitments and senior unsecured bridge loan commitments provided by our lenders, which would have been utilized to consummate the acquisition,” the announcement said.
Orlando, Florida-based Rotech is a home medical equipment supplier with nationwide reach. When the acquisition was originally announced, Rotech reported more than 4,200 employees and 325 locations. In 2023, Rotech generated approximately $750 million in revenue.
Owens & Minor, headquartered in Glen Allen, Virginia, currently owns home medical equipment provider businesses under the Apria (respiratory/sleep apnea) and Byram Healthcare (diabetes, ostomy, wound care, urological supplies, incontinence, nutrition) brands.
