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Clayton, Dubilier & Rice and GS Capital acquire HGI

Clayton, Dubilier & Rice and GS Capital Partners have signed a definitive agreement to acquire HGI Holdings from The Jordan Company and members of the Harrington family.

HGI is a mail-order, direct-to-home provider of specialty medical products serving chronic disease patients. 

The company offers more than 30,000 products addressing a range of rapidly growing chronic disease market segments including ostomy, diabetes, urological, enteral, incontinence and wound care. 

"HGI is a market-leading distributor in the large and growing home health market and will continue to benefit from highly favourable long-term trends," says Richard J. Schnall, a Clayton, Dubilier & Rice partner. "The company operates an attractive and efficient business model that improves the quality of care and lowers healthcare costs for both patients and payors, while providing manufacturers with cost-effective access to a highly fragmented commercial customer and patient base."

The company operates through two segments, Edgepark Medical Supplies and Independence Medical. Edgepark contracts directly with over 600 managed care organisations to provide direct-to-consumer home delivery of products to approximately 300,000 patients. Independence serves as an outsourced supply chain for approximately 5,500 commercial customers, including durable medical equipment suppliers, independent pharmacies and wholesale distributors.

"We have had a very rewarding relationship with The Jordan Company and look forward to making HGI an even more valuable enterprise with our new equity partners," says Ronald M. Harrington, chief executive of HGI. "Clayton, Dubilier & Rice and GS Capital Partners have demonstrated that they understand how our business delivers value, from both a financial and operating standpoint, and strongly support our vision to continue to be the highest quality provider of medical supplies and customer care."

Paul Pressler of Clayton, Dubilier & Rice will serve as the company’s chairman. Prior to joining Clayton, Dubilier & Rice, he served as president and chief executive officer of Gap and before that spent 15 years with The Walt Disney Company in various senior management roles.

Debt financing for the transaction will be provided by affiliates of Goldman Sachs, Jefferies and Morgan Stanley Senior Funding and funds managed by GSO Capital Partners.

The transaction is expected to close in the beginning of the fourth quarter.

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