AdaptHealth Corp., a leading provider of home medical equipment, supplies and related services in the United States, announced that it has entered into two separate definitive agreements to acquire San Diego, California based Solara Medical Supplies, LLC and Minneapolis, Minnesota based ActivStyle, Inc.
Founded in 2002, Solara is the largest independent distributor of continuous glucose monitors (“CGM”) in the United States and offers a comprehensive suite of direct-to-patient diabetes management supplies to patients throughout the country, including CGMs, insulin pumps and other diabetic supplies. The company maintains extensive relationships with leading national manufacturers, managed healthcare plans and is a registered pharmacy in all 50 states. Solara is currently owned by Linden Capital Partners, a leading healthcare-focused private investment firm.
ActivStyle is a leading direct-to-consumer supply company that provides incontinence and urology products to patients throughout the United States. The company currently serves patients in 48 states with a substantial presence in Illinois, Minnesota, Iowa, Ohio, Pennsylvania, Florida and Texas. ActivStyle maintains extensive relationships with leading manufacturers, allowing the company to leverage a strong supply chain to provide an array of products to patients, including Rely, its comprehensive private label incontinence product line. ActivStyle is currently owned by the Riverside Company.
“As AdaptHealth seeks to provide more value to patients, healthcare professionals, and insurance payors managing chronic conditions in the home, we believe offering a more comprehensive solution for diabetes, including CGMs, is an important addition to our expanding suite of products,” commented Luke McGee, CEO of AdaptHealth. “The acquisition of Solara allows AdaptHealth to add scale in CGM and other diabetes management supplies and offer enhanced care for our patients with co-morbidities like obstructive sleep apnea. We believe that Solara and ActivStyle will further AdaptHealth’s vision of becoming a leading provider of connected health solutions and care in the home.”
Steve Foreman, CEO of Solara, Gayle Devin, CEO of ActivStyle, and their respective management teams will join AdaptHealth.
“We are extremely proud of the organization we have built at Solara, which is based upon an unwavering commitment to serve our patients,” said Mr. Foreman. He added, “We are excited about the capabilities that AdaptHealth will bring to Solara and the ways in which they will enhance our patient service.”
Ms. Devin commented, “We are excited to join the AdaptHealth team. Our cultures are aligned, and we have a very compelling value proposition to offer patients, payors and referrals. These synergies coupled with the resources of AdaptHealth and the combined strengths of our teams will be a winning formula to expand and grow the medical supply business.”
AdaptHealth intends to fund the transactions and associated costs through a combination of incremental debt and newly-issued equity. The Company has committed financing from its core lender group for an incremental $240 million add-on to its existing Term Loan A facility. AdaptHealth has also received commitments for equity investments of $190 million from One Equity Partners (in the form of common stock and non-voting stock) and $35 million from funds managed by Deerfield Management (in the form of non-voting stock), and is issuing $62.5 million in common stock to the sellers of Solara, including Linden Capital Partners, as part of the consideration for Solara. The Company expects to fund any remaining amounts from cash on hand or through its current line of credit.
Brad Coppens, Managing Director with One Equity Partners commented, “We strongly believe in the strategic vision and exceptional leadership team at AdaptHealth, and are pleased to have the opportunity to partner with the Company. AdaptHealth is well positioned to be at the forefront of connected care in the home, and we look forward to supporting them in realizing that vision.” Brad Coppens will join the board of AdaptHealth following the closing of One Equity Partners’ equity investment.
“We recognize that these are uncertain times, and we have purposely chosen to fund these transactions with a combination of equity and debt, keeping our leverage profile relatively unchanged,” said Mr. McGee. He added, “The equity investments from One Equity Partners and Deerfield Management are a strong endorsement of our strategy and we are pleased to have their support as we embark on the next phase of growth for AdaptHealth.”
The acquisition and financing transactions have received necessary board approvals and are expected to close in the third quarter of 2020, subject to certain customary closing conditions and regulatory approvals, including expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
Deutsche Bank Securities Inc. is acting as the exclusive M&A advisor to AdaptHealth and RBC Capital Markets, LLC is acting as financing advisor. Willkie Farr & Gallagher LLP, Polsinelli PC and K&L Gates LLP are acting as legal advisors to AdaptHealth.
Robert W. Baird & Co. served as Solara’s financial advisor and Kirkland & Ellis LLP served as Solara’s legal counsel in connection with the transaction.
About AdaptHealth Corp.
AdaptHealth Corp. is a leading provider of home healthcare equipment, medical supplies to the home and related services in the United States. AdaptHealth provides a full suite of medical products and solutions designed to help patients manage chronic conditions in the home, adapt to life and thrive. Product and services offerings include (i) sleep therapy equipment, supplies and related services (including CPAP and bi PAP services) to individuals suffering from obstructive sleep apnea, (ii) home medical equipment (HME) to patients discharged from acute care and other facilities, (iii) oxygen and related chronic therapy services in the home, and (iv) other HME medical devices and supplies on behalf of chronically ill patients with diabetes care, wound care, urological, ostomy and nutritional supply needs. The company is proud to partner with an extensive and highly diversified network of referral sources, including acute care hospitals, sleep labs, pulmonologists, skilled nursing facilities, and clinics. AdaptHealth services beneficiaries of Medicare, Medicaid and commercial insurance payors. AdaptHealth services over approximately 1.6 million patients annually in all 50 states through its network of 220 locations in 38 states.