Dive Brief:
- Owens & Minor has struck a deal to sell a unit that provides products and services to healthcare providers, the company said Tuesday.
- Platinum Equity is paying $375 million for the business. The Owens & Minor unit will join healthcare companies including ASP Global, LifeScan and NDC in the investment firm’s portfolio.
- The sale, which is scheduled to close near the end of 2025, will leave Owens & Minor focused on the delivery of medical supplies directly to patients and home health agencies.
Dive Insight:
Owens & Minor first reported the division was up for sale in February. Talking to investors on the day of the news, Owens & Minor CEO Edward Pesicka said the timing reflected “inbound interest” from multiple parties. The interest persuaded the company to start a broader sale process. By August, the sale was far enough along for Owens & Minor to list the unit as a discontinued operation in its financials.
The unit provides medical supplies for infection prevention, as well as services to healthcare providers. Last year, the division generated net revenue of $8 billion, compared to $2.7 billion for the patient direct business that Owens & Minor is retaining.
Patient direct is potentially a faster-growing, higher-margin business than the unit that Owens & Minor is selling. Operating income for the patient direct unit was $260 million last year, compared to $53 million for the divested business.
Owens & Minor tried last year to strengthen its patient direct unit by acquiring home medical equipment company Rotech Healthcare Holdings for $1.36 billion. However, the companies mutually agreed to end the deal in June in response to an investigation by the Federal Trade Commission.
While the sale to Platinum Equity could theoretically increase Owens & Minor’s capacity to strike deals, Pesicka told investors on an earnings call in August that the company is focused on paying down debt. The company remains open to smaller bolt-on deals, the CEO said.
Owens & Minor will retain a 5% stake in the divested business. If Platinum Equity sells the unit, Owens & Minor could receive a share of the proceeds.
