AeroCare Announces Completion of Acquisition by AdaptHealth

ORLANDO, Fla., Feb. 2, 2021 /PRNewswire/ -- AeroCare Holdings, Inc. ("AeroCare") announced today that it has been acquired by AdaptHealth Corp. AHCO ("AdaptHealth").  The acquisition was consummated for total consideration consisting of approximately $1.1 billion in cash and 31 million shares of AdaptHealth stock. AeroCare's shareholders – including management and employees, and private investors Peloton Equity ("Peloton"), SkyKnight Capital ("SkyKnight"), SV Health Investors and investment funds managed by Morgan Stanley AIP Private Markets' Secondaries Team ("MS AIP Private Markets") – will become shareholders in AdaptHealth as a result of the transaction.

Founded in 2000 by CEO Steve Griggs, and headquartered in Orlando, Florida, AeroCare is a leading national technology-enabled respiratory and home medical equipment ("HME") distribution platform in the United States. It offers a comprehensive suite of direct-to-patient equipment and services including CPAP and BiPAP machines, oxygen concentrators, home ventilators, and other durable medical equipment products. AeroCare maintains extensive relationships with leading national manufacturers and managed healthcare plans, and services over 1,000,000 patients annually from over 300 locations across 30 states, and online through affiliated websites. Since inception, AeroCare has achieved 20 years of consecutive revenue growth, driven by a combination of strong organic growth and targeted acquisitions.

The combined company will operate under the name AdaptHealth, and Steve Griggs will serve as co-CEO with Luke McGee, CEO of AdaptHealth, to lead the company. In addition, Steve Griggs and shareholder designee Ted Lundberg of Peloton will join AdaptHealth's Board of Directors, which will expand to eleven directors. Michael O'Rourke from Peloton and Jordan Milich from SkyKnight will join as observers to the board.

 "I am very excited for AeroCare to join forces with AdaptHealth," said AeroCare CEO, Steve Griggs. "The combined company is positioned to transform our industry and positively impact the lives of chronically ill patients across the country. Our management team and employees look forward to working with AdaptHealth to build an even stronger business, sharing best practices across each organization to drive operational efficiencies and create enhanced opportunities for our patients, referral sources and other stakeholders."

Ted Lundberg, Co-Founding Partner of Peloton Equity, added, "We are growth investors who back quality management teams and companies in the healthcare industry that can deliver value to patients and the healthcare system broadly. Our partnership with AeroCare is a great example.  Steve and his team have built a strategic, high growth company that has leveraged technology to transform a critical segment of the industry."

SkyKnight Managing Partner Matthew Ebbel said, "It has been a privilege to partner with Steve Griggs and AeroCare. We have been truly impressed with the company's digital innovation and its consistent delivery of high-quality care. We are very excited about the growth and value creation opportunities ahead for the combined AdaptHealth, and we look forward to working with Steve, Luke, and the AdaptHealth team to help create the clear tech-enabled market leader in the HME sector."

Tom Flynn, Managing Partner of SV Health Investors, commented, "AeroCare and AdaptHealth have been at the forefront of the industry's transition to technology-enabled workflows that drive operational efficiency and better care. This combination strengthens both companies and will benefit patients as more healthcare moves to the home." Nash Waterman, co-head of the secondaries group at MS AIP Private Markets added, "We partner with leading managers like Peloton to back exceptional companies and management teams. Our investment in AeroCare is a case in point, and we are excited to be part of its next phase of growth."

AeroCare and its shareholders were advised by Morgan Stanley & Co. LLC, Goodwin & Procter LLP, and Brown & Fortunato, P.C. AdaptHealth was advised by Jefferies LLC, Truist Securities, Inc., Willkie Farr & Gallagher LLP and K&L Gates LLP.  

About AdaptHealth Corp.

AdaptHealth 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) medical devices and supplies to patients for the treatment of diabetes (including continuous glucose monitors and insulin pumps), (iii) home medical equipment (HME) to patients discharged from acute care and other facilities, (iv) oxygen and related chronic therapy services in the home, and (v) other HME medical devices and supplies on behalf of chronically ill patients with wound care, urological, incontinence, ostomy and nutritional supply needs. AdaptHealth 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. Upon the closing of the AeroCare transaction, AdaptHealth now services nearly 3 million patients annually in all 50 states through a network of over 500 locations across 46 states. Learn more at www.adapthealth.com.

About Peloton Equity

Formed in 2014, Peloton Equity, LLC (www.pelotonequity.com) is a Connecticut-based private equity firm that focuses exclusively on growth capital investments in the healthcare industry. Peloton seeks companies with between $20 and $200 million of revenue and the management team, market opportunity and business model to grow revenues meaningfully over the life of its investment. Peloton leverages its extensive healthcare network and portfolio management playbook to support management teams and add value to its portfolio companies. The Peloton investment team worked together for over a decade prior to forming Peloton and the team has been responsible for 33 portfolio company investments across the healthcare industry representing over $770 million of invested capital. 

About SkyKnight Capital

Founded in 2015, SkyKnight Capital manages over $1.5 billion in private equity capital on behalf of leading institutional family offices, foundations, endowments, and pensions. SkyKnight makes long-term investments into high quality businesses in acyclical growth sectors alongside exceptional management teams. More information is available at www.skyknightcapital.com.

About SV Health Investors

SV Health Investors is a leading healthcare fund manager committed to investing in tomorrow's healthcare breakthroughs. The SV family of funds invests across stages, geographic regions, and sectors, with expertise spanning biotechnology, dementia, healthcare growth, healthcare technology and public equities. With approximately $2.2 billion in assets under management and a truly transatlantic presence with offices in Boston and London, SV has built an extensive network of talented investment professionals and experienced industry veterans. Since its founding in 1993, SV has invested in more than 200 companies with more than 90 of these having achieved successful acquisitions or IPOs. For more information please see www.svhealthinvestors.com.

About Morgan Stanley AIP Private Markets

Morgan Stanley AIP Private Markets, an investment team within Morgan Stanley Investment Management, seeks to deliver innovative private market solutions to a global client base. Its built-for-purpose investment team of 50 dedicated professionals draws on decades of investment experience across the breadth of private markets – including growth, buyouts, venture capital, credit, and real assets. The team focuses on structurally, compelling opportunities within less efficient markets and has committed more than $20 billion across more than 900 investments globally through December 31, 2020. For further information about Morgan Stanley AIP Private Markets, please visit www.morganstanley.com/im.

SOURCE SkyKnight Capital