VGM/HME News Benchmarking Survey

This was the 14th annual update for the survey. While the number of participants (sample size) is not extremely large at 125 this year, the year-over-year data allows a respectable trend assessment for analysis. While the details of the survey are beyond the scope/word limit of this summary (and I urge readers to go to hmesummit.com for a recording; a “toolkit” with the raw data and a comparator feature will be available shortly), I’d like to share some of the key takeaways: • Almost 60% of the respondents indicated they were “full line HMEs,” with a slight increase in hospital-owned or -operated facilities. Rehab technology unique tax IDs continued to decrease, likely reflecting the continued consolidation/acquisition efforts of two large national entities. • The proportion of rentals to sales continues to trend downward. A decade ago, respondents maintained an average “60% rental, 40% sales” mix; those numbers have exactly reversed to a 40/60 basis.

• Operating profit before interest and depreciation (EBITDA) rose to an average of 14%. From a decade low of 9% in 2013, EBITDA has remained relatively steady over the past five years. • Almost half of the respondents reported operating from a single location. The industry remains in a mode of “one” (as it has throughout the history of the survey) but the amount of 5+ locations has been steadily increasing. With the advent of continued acquisition and private equity funding, expect this trend to continue. • With a choice of “decline, stay steady, increase 1–10%, 11–20%, or over 20%,” the total collectible HME revenues for 2019 had 40% of the respondents decline or stay steady, 60% increased—14% more than 20%.

• Traditional Medicare remains the largest payer, albeit the percentage of overall revenues continues to decline. When the survey began, Medicare FFS approached 50% of revenue; this year the figure was 29%. As expected (citing the increase in Medicare Part

C Advantage Plans throughout the country),

Managed Medicare grew, as did private health insurance.