ResMed Acquires MatrixCare for $750M, Expanding Into Long-Term Care
ResMed (NYSE: RMD, ASX: RMD) announced Monday that it signed a definitive agreement to acquire post-acute software provider MatrixCare for $750 million.
“We were looking for another great addition to add a third leg, if you like, to the stool of our out-of-hospital software investments, and MatrixCare just came straight to the top,” ResMed CEO Mick Farrell told Skilled Nursing News. “[It’s] just a great business, really good revenues and profit and verticals in skilled nursing, senior living, life plan communities and private duty that are 100% complementary to everything that we do.”
The deal is expected to close by the second quarter of San Diego-based ResMed’s fiscal 2019, subject to customary closing conditions and any applicable regulatory approvals, and it is expected to be “immediately accretive to non-GAAP gross margin and non-GAAP diluted earnings per share after close and beyond,” according to the press release announcing the deal.
That said, the deal could close even more quickly, Farrell said.
“I think the actual official closing of this could be within the next couple weeks,” he told SNN. “We haven’t fully defined exactly when that will be, but it’s more in the order of weeks than months.”
The Bloomington, Minn.-based MatrixCare is expected to keep operating as a standalone business within ResMed’s software-as-a-service (SaaS) portfolio, with targeted operating, technical, and commercial links to both ResMed and Brightree — the company’s software platform for home medical equipment, home health, and hospice providers, which ResMed bought for $800 million in 2016.
MatrixCare, which provides software solutions to more than 15,000 operators in the post-acute care sector, had pro-forma net revenue estimated at approximately $122 million in calendar year 2018, with pro-forma earnings before interest, tax, depreciation and amortization (EBITDA) of about $30 million.
The company’s offerings include point of care, lead and referral management, claims processing, payroll, and nutrition management services.
MatrixCare CEO John Damgaard will continue in his current role, reporting to ResMed SaaS president Raj Sodhi.
ResMed, which closed on the acquisition of home health and hospice software provider HEALTHCAREfirst earlier this year, was looking to grow its out-of-hospital SaaS, where it has had a presence for the last five years.
“A patient doesn’t exist in only one care setting and always sit there,” Farrell noted. “Patients move from long-term acute care to skilled nursing to hospice. They move around. So patients don’t exist in one place, providers and payers don’t only exist in one place, and neither does ResMed.”
With this goal, ResMed is “really excited” about SNFs, Farrell said.
“With an aging population and the needs of people to have strong nursing care … SNFs provide an excellent service,” he said. “And it’s a growing area. One thing I have noticed as we’re looking at the industry, particularly in the senior living and SNF side, is that there is some consolidation and there’s some need for … software and efficiencies to help these businesses grow and to treat more patients without having excessive investments.”
Consolidation in the sector is increasing the need for efficient solutions to keep businesses growing without excessive investment, Farrell added, and as reimbursement comes under pressure and patient volume grows, more solutions are going to be needed.
“MatrixCare has a great solution for customers in the SNF,” he said. “ResMed’s job is to invest in MatrixCare and help them continue to grow and serve their customers as best they can. It’s in all our best interests to do that.”
Written by Maggie Flynn