Owens & Minor Terminates $1.36B Rotech Acquisition Amid Regulatory Hurdles

Owens & Minor, a leading healthcare solutions company, has announced the termination of its planned $1.36 billion acquisition of Rotech Healthcare Holdings, a home medical equipment provider. The decision comes after both companies concluded that obtaining regulatory clearance from the Federal Trade Commission (FTC) was "unviable in terms of time, expense and opportunity," according to Owens & Minor CEO Edward Pesicka.

Regulatory Roadblocks and Financial Implications

The merger, initially announced in July 2024, aimed to bolster Owens & Minor's position in respiratory and sleep apnea products, supporting the company's goal of nearly doubling patient direct sales by 2028. However, the deal faced significant delays due to an extensive FTC review process.

Despite entering into a timing agreement with the FTC that gave the agency until June 10, 2025, to complete its review, both companies opted to terminate the agreement just days before the deadline. As a result of the termination, Owens & Minor has paid Rotech an $80 million fee, surpassing the initially disclosed $70 million termination fee.

The acquisition's collapse has had a substantial financial impact on Owens & Minor. The company reported acquisition-related costs totaling $22 million in 2024 and an additional $16 million in the first quarter of 2025. When combined with the termination payment, Owens & Minor's total spending on the failed deal exceeds $100 million.

Market Response and Future Outlook

Despite the setback to Owens & Minor's growth strategy, investors responded positively to the news of the deal's termination. The company's shares experienced a significant 14% increase, closing at $7.61 on the day of the announcement.

The termination raises questions about Owens & Minor's ability to achieve its 2028 patient direct sales target. However, the company remains committed to exploring alternative growth opportunities in the healthcare solutions sector.

Rotech, which reported $750 million in net revenue for 2023, has faced its own challenges. The company's revenue declined by nearly 4% to $725.8 million in 2024. Owens & Minor CFO Jonathan Leon attributed this decrease to the waning of "COVID-era benefits" that the industry experienced in early 2024.

As both companies move forward independently, industry observers will be closely monitoring their strategies for growth and adaptation in an increasingly competitive healthcare market.