Your Primer to Healthcare Mergers and Acquisitions

New Kids on the Block: Shakeup in Home Medical Equipment Manufacturers

Feb 14, 2023

Volume 10 Issue 4, February 14, 2023

The home medical equipment (HME) industry was long dominated by legacy manufacturers with a high barrier of entry. But over the past few years, we've begun to see cracks in the decades-old status quo emerge. 

Cracks may be an understatement. What started as cracks in the industry has led to the levees breaking and the dam crumbling. We are now seeing a wave of new manufacturers enter the market in a shift that is changing the face and names of the HME industry.

For a bit of background, I've lived in and around the home health market since the early 90's, mainly in the repair and supporting services spaces. My family founded the original, third-party repair center providing supporting services for all major original equipment manufacturers (OEMs). I've been active in the medical device market since the days when oxygen concentrators sometimes had wood side panels and back when they didn't always have four wheels. 

What was once a thriving market evolving with advancements like the development of portable devices that finally allowed a form of patient independence and freedom slowly changed into a stagnant space. Innovation turned into advancements like blue-colored cabinets and using brass for outlet spouts.

For a brief period, we entered a space when critical devices for in-home support of patients were built to be nearly disposable, with every corner cut that could save a penny in design and manufacturing. In my eyes, we saw a focus more on profitably and less on patient care. A disruption to the status quo was overdue. COVID-19, recalls, and the associated pain points finally allowed it to take place. 

The Dam Breaks on HME

The pandemic rocked the HME market. We saw unprecedented shortages of raw materials, key components, and labors, with some still lasting to this day. While many spaces experienced slowdowns, we saw healthcare manufacturing and manufacturers forced into the spotlight and pushed to the limit. We experienced unprecedented backorders, production stops, and recalls that no one could have projected. 

With this came spotlights shown on decades-old pain points in our space that had never been addressed. This eventually became systematic breakdowns that halted productions and our availability to meet dealer demand globally. Then this led to devices that had long been retired being pulled out of supply closets, serviced, and put back into the field. We also saw lines of communication being opened between senior staff at the OEMs with the boots on the ground repair and distribution organizations. 

This congruence of factors triggered the start of the shift away from the status quo. As the issues affecting the current HME manufacturers were reaching critical mass and recalls began being announced, my phone started ringing. Numerous former manufacturing senior executives, leaders of what were just suppliers at the time, and non-U.S. healthcare manufacturing conglomerates were all on alert and moving quickly to launch their own lineups to assist in supplying devices into the U.S. market and to providers. 

An Industry Transformed and Transforming

What began to unfold was unprecedented. We saw emergency use authorizations (EUAs) granted and began seeing planes and freighters crammed with devices heading toward the United States. The new entrants were here. They were focused on the patients and dealers and were moving mountains to get devices and supplies into the hands of dealers across the country. This wasn't a short-term opportunistic play. They're here to stay. 

From speaking to and consulting for these companies, I am for the first time in a while excited to see what the future holds for HME. Competition is back, and new technology in connected devices are on the way. We are just now seeing the new kids on the block grow acquisitively and begin to capture real market share as they become players sharing the main stage with the likes of Invacare, Respironics, AirSep, and DeVilbiss. 

The high barrier of entry, while still there, is no longer insurmountable. I hear from new manufacturers every week looking to enter the market, current manufacturers that are looking to expand their offerings, and groups in the early stages of entering our space. I believe the baton has begun changing hands to a new generation of HME manufacturers.

Jonathan Hadley

Jonathan Hadley

Managing Director

Jonathan has a lengthy career in the medical device space. While growing the largest medical device service organization in North America, he served in various positions leading up to CEO. He steered his own company through a successful transaction that launched my M+A career. Through this journey, it enabled Jonathan to work directly with all medical device manufacturers (major and new market entries), HME/DME providers across the country, and with many former competitors as he executed upon a national network acquisition M+A strategy.

Jonathan is here to support fellow healthcare business owners who choose or are considering the same M+A path he ventured down. In his role as a buyer, he found every transaction to be unique with each seller’s goals differing; however, one common thread was that he ensured they were respected and listened to throughout the entire process.

At VERTESS, Jonathan is a Managing Director with extensive expertise in Medical Devices, Medical Manufacturing, and HME/DME support organizations within the US and International marketplace, where he bring hands on experience and knowledge for the business owners he is privileged to represent. Jonathan looks forward to ensuring you have a positive experience throughout the entire process.

We can help you with more information on this and related topics. Contact us today!

Committed to Constant Improvement?

Subscribe to our bi-weekly newsletter – VERTESSPress

No Spam Ever. We Promise.
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram