Axios Pro Exclusive Content

Scoop: Performance Health braces for sale

Mar 16, 2022
Illustration of a knee brace with the hinge made out of a quarter.

Illustration: Gabriella Turrisi/Axios

Madison Dearborn Partners is seeking a buyer for Performance Health, a global supplier of rehab products that range from TheraBand resistance bands to clinic equipment for patient recovery, sources tell Sarah.

What’s happening: A UBS-run sale process is underway for the Warrenville, Illinois-based company that sources say generates around $70 million of EBITDA.

  • MDP in July 2015 took Patterson Medical private for $715 million in cash; a year later, Patterson bought Performance Medical from Gridiron Capital, taking on its name.
  • The process comes a year after Performance Health sold consumer brands Biofreeze and TheraPearl to Reckitt Benckiser Group in a move to focus deeper on its core rehab, recovery and sports medicine end-markets.

Zoom in: Performance Health is a multichannel distributor of a wide variety of low-tech products, both B2B and direct-to-consumer.

  • The revenue model is not clear, but sources say it's likely that Performance Health has a mix of Medicare, commercial and private pay businesses.
  • Having revenue cycle management capabilities with government and commercial payors is important, sources say, as this acts as a big barrier to entry to large behemoths like Amazon, Walgreens or CVS.

Be smart: There’s a fairly small world of potential acquirers, sources say, and among the most logical is Medline, which Hellman & Friedman, Carlyle and Blackstone bought last summer in one of the largest leveraged buyouts in history.

  • Valued at approximately $34 billion in last year’s LBO, Medline is already a big supplier of low-complexity health care supplies to surgery centers, acute care facilities, hospitals, nursing homes and the home care and hospice markets.
  • Hypothetically, Medline via Performance Health could push further into the home and direct-to-consumer markets, as well as into rehab and sports medicine settings.

Yes, and: Potential interest from both private equity and strategics like Owen’s or Cardinal is less obvious, as the latter would need to want to grow their outpatient rehab supply businesses.

  • Owen’s has been pushing deeper into the home setting, recently buying durable medical equipment supplier Apria for $1.45 billion and uniting it with its Byram unit.
  • Cardinal Health owns direct-to-consumer medical supplies distributor Edgepark, and lately, it's been tied up with its opioid settlement.

The bottom line: Performance Health might not have a long line of buyers circling it. But efficiently getting health care products where they need to be is crucial to holding together the industry's infrastructure. MDP declined to comment, while UBS did not return Axios' requests for comment.

Go deeper