Following the announcement of the sale of certain of its properties, shares of Great Elm Group Inc. (NASDAQ: GEG) were up 9.26% to trade at $2.30 in pre-market at the last check.
What possessions did GEG sell?
The sale of the company’s majority stake in its Durable Medical Equipment (DME) division, Great Elm Healthcare, LLC, was completed, according to Great Elm (GEG). In order to focus on end-to-end respiratory treatment, Great Elm sold the interests to QHM Holdings, Inc., a fully owned division of Quipt Home Medical Corp., a leader in the US home medical equipment market.
Transaction Details and Key Points
- Approximately $73 million in cash, $5 million in assumed debt, and 431,996 Quipt common shares valued at $2 million each, based on a 20-day volume-weighted average price, make up the total consideration of $80 million.
- The parent firm of the DME industry, Great Elm Healthcare, LLC, was bought by Quipt for 100% of the stock holdings.
- After fulfilling all of its obligations related to the transaction, GEG acquired 346,028 shares of Quipt common stock and almost $26 million in net cash proceeds.
- The purchase will streamline GEG’s corporate structure and reporting.
- Additionally, it will give GEG money to expand the Investment Management division.
How would the deal aid Quipt’s expansion?
With this purchase, Quipt has made substantial progress toward its objective of becoming as the top national supplier of home medical equipment in the US, with an emphasis on end-to-end respiratory care. Quipt may expand and enhance its patient-centric ecosystem by combining these two pulmonary care providers with a proven track record of business success, technological innovation, and patient service.
The combined company will have a broad geographic reach, enabling the buyer firm to effectively build on and deepen connections with patients, important market partners, and payors. It will be present coast to coast in 26 U.S. states. In this complex and fragmented industry, the purchase also offers new chances to expand the organizational size.
How will GEG proceed with this?
GEG has undergone a transformation as a result of the profitable sale of its DME business and the newly publicized Forest deal. The two deals could boost holding company cash by more than $70 million when combined. By harnessing the knowledge and connections of its board and management team, enables GEG to allocate greater resources to growing its Investment Management business. Great Elm (GEG) will keep assessing different tactics, which can involve making investments in its current funds or buying the management rights to brand-new, long-term capital vehicles.