The durable medical equipment (DME) market has shown robust growth in recent years and is projected to continue expanding significantly through the next decade. Some segments face more headwinds than others, as some investors believe GLP-1 weight loss drugs may reduce demand for certain types of equipment.
Grand View Research estimates that the global DME market, valued at approximately USD $208.5 billion in 2022, will reach $331.1 billion by 2030, with a compound annual growth rate (CAGR) of 5.9% from 2023 to 2030.
Mordor Intelligence projects the market size to be $232.54 billion in 2025, growing at a CAGR of 5.44% to reach USD $303.05 billion by 2030.
Polaris Market Research anticipates the DME market will exceed $377.20 billion by 2032, with a forecasted CAGR of 6.1% during the period from 2024 to 2030.
Key Growth Drivers
Key growth drivers for the industry include the following:
Aging Population: The increasing global elderly population, expected to reach 2.1 billion by 2050, is driving demand for DME products.
Rising Prevalence of Chronic Diseases: Approximately 43% of the U.S. population suffers from one or more chronic illnesses, necessitating long-term use of DME.
Shift Towards Home Healthcare: Growing preference for home-based care is boosting demand for portable and user-friendly DME devices.
Technological Advancements: Innovations in smart technologies, IoT, AI, and telemedicine are enhancing DME product capabilities and efficiency.
Favorable Reimbursement Policies: Expanded insurance coverage and supportive government initiatives are facilitating greater access to DME.
Increasing Surgical Procedures: The rise in surgical interventions, with a 3.4% increase in total procedures in 2023, is driving demand for post-operative DME.
Focus on Preventative Healthcare: Growing emphasis on proactive health management is increasing the adoption of monitoring and diagnostic DME products.
Home Medical Equipment M&A Volume Trends
Announced durable medical equipment / home medical equipment deal volume has cratered since its 2021 peak. However, a number of large deals such as ADSG, Rotech, and currently on-the-market National Seating and Mobility provide optimism for a rebound sooner rather than later.
The universe of potential buyers for smaller tuck-ins is fairly large, and includes almost 30 publicly announced durable medical equipment platform investments since 2020.
HME / DME EBITDA Multiples
Local Owner / Operator Run (typically revenue under $5M):
These companies usually sell for lower multiples, ranging from 3x to 5x EBITDA. The lower multiple is often due to higher operational risk, lower revenue diversification, and limited geographic reach, as well as a heavy reliance on the owner / operator, which can lead to employer contract retention and business continuity concerns.
Medium-Sized Regional Providers (revenue $5-30M):
Larger, more established companies with proven profitability, strong brand equity, and a broader customer base may command higher multiples. These can range from 5x to 8x EBITDA, depending on size, product mix, payer mix, local market conditions, growth rate, and the stability of the cash flow.
Large Regional or National Platforms:
Multiples for large DME providers have showed significant variance in recent years, driven mainly by timing and product mix.
Cardinal Health Acquires Advanced Diabetes Supply Group (~11x EBITDA)
Healthcare distribution conglomerate Cardinal Health announced it has acquired Advanced Diabetes Supply Group (ADSG) from private equity firm Court Square for $1.1 billion. The buyout was announced less than four years after Court Square's initial investment in ADSG dating back to early 2021. ADSG will merge with Cardinal's at-home solutions business, which has performed swimmingly in recent quarters, posting double-digit growth. According to Cardinal Health's CEO:
Last January, we elevated the priority of investing in our growth businesses like at-Home Solutions because this is exactly where the future of health care is going. Like at-Home Solutions, ADS has a proven track record for leading this industry with innovation, knowledge and unparalleled commitment to patients. We're confident that the highly synergistic combination will enhance our ability to take advantage of positive industry trends and drive further growth, deliver on our promise of exceptional service and solutions to customers, and create shareholder value.
According to press reporting, ADSG was marketed based off of EBITDA of $100 million, implying an acquisition multiple of 11x EBITDA, which is more or less in line with historical DME transactions of similar size. ADSG is also the first HME / DME deal to fetch a reported multiple above 8x since early 2022, as the even larger Rotech deal in July occurred at only 6.5x (most of the other deals with disclosed financial information since 2022 are much smaller).
THE HME / DME Valuation Disparity
ADSG and NSM received, or are reportedly seeking, healthy multiples, begging the question why Rotech's multiple was so low. We've heard rumors of questionable asset quality and mediocre ROI on acquisitions - retaining top sales staff can be a challenge for acquisitive DME platforms. The company has also been involved in a number of past lawsuits, including one that resulted in a false claims settlement in 2018. Beyond company specific concerns, there also appears to be a (widening?) divide between CPAP / oxygen focused suppliers like Rotech and those focused on other DME segments like diabetes supplies (ADSG) and wheelchairs (NSM). Public companies AdaptHealth and Quipt Home Medical are predominantly respiratory suppliers, and their stock prices have declined precipitously in recent years. While there may be other factors at play, the timing of the declines correspond perfectly with the rise of optimism around GLP-1s, which theoretically have the potential to reduce demand for respiratory machines and supplies if they do in fact put a major dent in the obesity epidemic.
Not everyone is a believer in the overhang, though, as CPAP manufacturer ResMed performed a study that seems to indicate that GLP-1 users are more likely to enroll in sleep studies, hinting at a potential market opportunity.
Actively Listed HME / DME Providers for Sale
The following is a summary of a few actively listed durable medical equipment opportunities from our active listings database:
(links will break over time)
Central Michigan DME and Medical Supply: Listed for sale at $1.9m, this company is marketed based on estimated revenue and adjusted EBITDA of $1.9m and $546k, respectively, implying multiples of 1x revenue and 3.5x EBITDA. According to the listing, the business has been operating for over 20 years and serves a 17-county area. It specializes in providing manual wheelchairs, power wheelchairs, hospital beds and supplies, patient aids, and respiratory equipment.
National Online Orthopedic DME Provider: Listed for sale at $2m, this company is marketed based on estimated revenue and cash flow of $5.4m and $454k, respectively, implying multiples of 0.4x revenue and 4.4x cash flow. According to the listing, the business provides DME for orthopedic rehabilitation including soft goods and training to patients, hospitals and facilities across the country. The company’s corporate office is located in Colorado with satellite offices and warehouses in Minneapolis, Portland, Denver among others.
Nebraska DME Provider w/ Two Locations: Listed for sale at $2.85m, this company is marketed based on estimated revenue and cash flow of $2.6m and $640k, respectively, implying multiples of 1.1x revenue and 4.5x cash flow. According to the listing, the business supplies DME to hospitals, clinics, and through two retail locations, with 80% of revenue stemming from long-term relationships with over 40 healthcare facilities.
Alabama DME Provider: Listed for sale at $1.2m, this company is marketed based on estimated revenue and cash flow of $1.8m and $350k, respectively, implying multiples of 0.3x revenue and 4x cash flow. According to the listing, it has a retail presence but also derives significant revenue from its online division using lockers at Amazon. It has a diversified payer base including Medicare, Medicaid, commercial insurers and worker's comp.
HME / DME Services Historical Deals
Read Scope Research's take on durable medical equipment and home medical equipment M&A transactions:
About Scope Research
The Scope Research Healthcare M&A Valuation Database currently has financial details for 57 durable medical equipment deals going back to 2010, 39 of which include reported EBITDA multiples. The DME data can be purchased individually, while our affordable annual subscriptions provide access to all of our healthcare M&A databases and segments, updated continuously.
Don't hesitate to reach out to Will Hamilton at will@scoperesearch.co with questions about our durable medical equipment valuation services or healthcare M&A databases.