Apria acquired by Owens & Minor: fairness opinion by Goldman Sachs
Deal terms
Implied value per share by method vs. $37.50 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Goldman Sachs to the target board
Discounted cash flow assumptions
Discounted to present value as of September 30, 2021; includes present value of net operating loss benefits. Using the Forecasts: $31.74-$43.99; using the Corrected Forecasts (after D&A error correction): $32.16-$44.43. Goldman Sachs confirmed on January 21, 2022 that there was no change to its opinion conclusion.
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Implied Premia Analysis | Implied premia of $37.50 vs. $30.18 closing price on 1/5/2022 (24.3%), highest closing price since IPO $38.11 (-1.6%), 1-month VWAP $30.79 (21.8%), 3-month VWAP $31.74 (18.1%), 6-month VWAP $32.56 (15.2%), VWAP since IPO $30.14 (24.4%). | — |
| Illustrative Present Value of Future Share Price Analysis | Applied EV/NTM Adjusted EBITDA Less Patient Equipment Capex multiples of 9.5x-11.5x to NTM estimates beginning 9/30/2021, 9/30/2022 and 9/30/2023; subtracted net debt as of 9/30/2021 and discounted implied future share prices back to 9/30/2021 at an 8.8% cost of equity. | $29.72–$37.16 |
| Premia Paid Analysis | Reviewed 250 acquisitions of all outstanding equity of U.S. public companies with enterprise values of $500 million to $2 billion announced January 2017 - December 2021; median premium 16%, 25th percentile 7%, 75th percentile 25%. Applied a 7%-25% reference range to the $30.18 undisturbed closing price. | $32.29–$37.73 |
Transaction fee estimated at approximately $21.1 million, $5.0 million of which became payable upon execution of the merger agreement and the remainder contingent upon consummation of the merger.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | CAGR |
|---|---|---|---|---|
| Revenue | $1.2B | $1.3B | $1.3B | 4.9% |
| Revenue growth | 5.6% | 5.0% | 4.8% | |
| EBITDA | $137M | $147M | $149M | 4.3% |
| EBITDA growth | -2.8% | 7.3% | 1.4% | |
| EBITDA margin | 11% | 12% | 11% | |
| Implied EV / EBITDA | 12.3x | 11.5x | 11.3x |
Year-1 growth is against LTM at announcement ($1.1B revenue, $141M EBITDA); later years are year over year.
Apria management prepared non-public Financial Projections provided to the Apria Board on December 14, 2021 and approved for Goldman Sachs' use, covering 2021E-2024E: Net Revenue of $1,136M in 2021E rising to $1,321M in 2024E; Adjusted EBITDA of $232M in 2021E rising to $272M in 2024E; Adjusted EBITDA Less Patient Equipment Capex of $141M (2021E) to $149M (2024E); Unlevered Free Cash Flow of $95M (2021E), $85M (2022E), $109M (2023E) and $107M (2024E). After announcement, management identified a depreciation/amortization error affecting 2022-2024 unlevered free cash flow, which corrected to $88M, $110M and $109M; Goldman Sachs used both the Forecasts and Corrected Forecasts (extended through fiscal 2031) in its DCF.
Process notes
Other Distribution and Equipment Services fairness opinions
- Covetrus / Clayton, Dubilier & Rice 2022 · 14.0x EV/EBITDA
- Patterson Companies / Patient Square Capital 2024 · 12.0x EV/EBITDA
- Agiliti / Thomas H. Lee Partners 2024 · 9.4x EV/EBITDA
- Quipt Home Medical / Kingswood Capital Management / Forager Capital Management 2025 · 4.7x EV/EBITDA
- Universal Hospital Services / Federal Street Acquisition 2018 · 11.9x EV/EBITDA
- PSS World Medical / McKesson 2012 · 10.6x EV/EBITDA
All Distribution and Equipment Services opinions → · Goldman Sachs opinions