Saturday, June 5, 2021

Giant Medical Supplier to Go PEU

Americans can expect healthcare costs to continue soaring.  Bloomberg reported

A consortium of private equity firms reached an agreement to buy medical supply company Medline Industries Inc. in what would be one of the biggest leveraged buyouts of all time.

The group, comprising Blackstone Group Inc., Carlyle Group Inc. and Hellman & Friedman, will take a majority stake in Medline.

The deal is worth as much as $34 billion including debt and would include a $17 billion so-called equity check.

Medline is the biggest private U.S. manufacturer and distributor of medical supplies like medical gloves, gowns and exam tables to hospitals and doctor’s offices.  

At least eight buyout firms had last month been preparing offers for the company, some lured by the prospect of getting the first shot at slashing costs and maximizing profits at a massive company in Medline that’s never been touched by another buyout firm.

Blackstone's healthcare affiliates are known for surprise medical billing.  Carlyle bankrupted nursing home giant ManorCare and long-term acute care hospital chain LifeCare.  

Carlyle and Hellman & Friedman took out pharmaceutical testing firm PPD.  Initial purchase price was $3.9 billion.  They bought themselves out in 2017 for nearly $9 billion.  ThermoFisher will buy PPD from Carlyle/H&F for nearly $21 billion.  

PPD's PEU owners stuck the company for over $2.7 billion in dividends between 2015 and 2019.  

The greed and leverage boys dance in and out of healthcare.  Added interest costs, management fees, sponsor dividends and deal fees help healthcare consume a greater and greater portion of the U.S. economy.   

Patients can expect to pay more and get worse service.  

Update 6-9-21:  The PEU boys spent "decades focusing on labor as a cost to be managed and not an asset to be invested in."  Medline employees, prepare for PEU shafting.