Durable Medical Equipment M&A Market Intelligence Report: The PGP Perspective · 2025–2026

Independent DME owners are being squeezed from two directions at once: competitive bidding is compressing reimbursement while private equity and national operators are aggressively competing for quality assets. 

If you own an independent durable medical equipment business, you are facing one of the biggest shifts the DME industry has seen in over a decade. On one side, the revival of the DMEPOS Competitive Bidding Program is compressing reimbursement and concentrating pressure on smaller operators. On the other side, private equity and national strategic buyers have never been more active, more capitalized, or more motivated to acquire quality DME platforms.

The U.S. durable medical equipment market has grown from approximately $60 billion in 2020 to $85 billion in 2024, and is projected to exceed $110 billion by 2028.¹ 

The demand outlook continues to be strong with adults 65 and older are expected to account for approximately 21% of the U.S. population by 2030, driving sustained demand for home-based management of chronic conditions including COPD, sleep apnea, and diabetes.²

Government and commercial payors are actively driving the shift of patients from acute care settings to lower-cost home environments. This trend works in favor of well-positioned DME providers with the infrastructure to capture those referrals. Despite this favorable demand picture, the competitive landscape is shrinking rapidly. The number of DME locations across the U.S. dropped by 36% between 2013 and 2025, reflecting years of reimbursement pressure, compliance burden, and the structural advantages that scale provides.⁹

M&A transaction volume tells the same story. Deal activity surged from roughly one or two transactions per quarter in early 2023 to nearly nine transactions per quarter by mid-2025, reflecting strong buyer confidence in the sector’s long-term outlook and growing urgency among independent owners to find partners before competitive bidding reduces their leverage.¹,⁸

• Respiratory & Sleep Therapy: The largest sub-sector, encompassing oxygen equipment, ventilators, and CPAP devices

• Diabetes Management: Driven by continuous glucose monitors and insulin pumps

• Mobility & Safety: Wheelchairs, walkers, hospital beds, and related equipment represent the traditional foundation of the DME industry
• Wound Care & Consumables: Covers the full continuum of home-based wound management: advanced wound dressings, Negative Pressure Wound Therapy systems, ostomy pouching and skin barrier supplies, urological and continence products, and surgical dressing consumables

Strong demographic tailwinds and a structural shift toward home-based care are driving sustained demand for independent DME providers, while reimbursement pressure, rising compliance costs, and labor challenges are making it increasingly difficult for smaller operators to compete without institutional support.

As a result, scale has become the defining competitive advantage in this sector, leading many independent owners to explore sales or partnerships at a time when buyer interest and valuations remain strong.

Key dynamics that continue to make independent DME businesses highly attractive acquisition targets:

• Demographic demand floor. Adults 65 and older will represent 21% of the U.S. population by 2030. COPD, sleep apnea, and diabetes all increase in prevalence with age, providing growth of patient referrals.²
• Payor-driven shift to home. Medicare and commercial payors are actively incentivizing the shift of patients out of acute care settings and into lower-cost home-based care.³
• Respiratory reimbursement protected. CMS excluded CPAP and oxygen equipment from the next competitive bidding round, allowing reimbursement for these high-volume categories to increase with inflation.⁴
• Home access as a strategic asset. Direct access to the patient in the home is increasingly viewed as critical distribution infrastructure by health systems and national operators. 

Staying independent is becoming increasingly difficult. Key pressures facing independent DME operators today:

• Competitive Bidding revival. CMS finalized the return of competitive bidding in November 2025, effective January 2028, forcing suppliers to bid against each other for Medicare contracts. Historically this has driven steep payment reductions, and nearly half of independent owners are already considering a sale as a result.⁴,⁹
• Diabetes reimbursement cuts. CGMs and insulin pumps are moving to a monthly rental model under competitive bidding, with distributors expected to absorb most of the margin impact.⁵
• Compliance costs. Federal Anti-Kickback and Stark law requirements, combined with state-by-state licensing, demand significant administrative resources that independent operators struggle to fund on their own.⁷
• Labor costs. Rising wages and difficulty finding quality and qualified staff.

The DME buyer universe spans national public strategics, private equity platforms, and health-system-affiliated acquirers.

Physician Growth Partners tracks the following active buyer pools:

• National public strategic operators – Owens & Minor (Patient Direct / Apria / Byram) and AdaptHealth continues to actively acquire health-system DME businesses and expand chronic care service lines. ¹⁰
• Growth-oriented mid-market strategics – Quipt Home Medical is executing a tuck-in acquisition strategy in respiratory and HME. ¹⁰
• Private equity platform builders – DME Express recently partnered with Palladium Equity Partners, and AIP LLC announced the acquisition of Avanos Medical, signaling continued PE appetite for chronic care and pain management DME assets. These sponsors are actively seeking add-on acquisitions to build platform scale.¹⁰
• Health-system-affiliated acquirers – Large hospital systems are selling off their DME operations, as seen with WellSpan and Ballad Health, creating a growing number of acquisition opportunities for national operators and private equity buyers.¹⁰

Independent DME operators are facing some of the biggest industry pressures seen since competitive bidding began in 2013. Owners who sold early or built enough scale to compete were generally more successful than those who waited. Today, a similar situation is developing, but buyer demand and available capital are currently very strong, creating a favorable window for sellers that may not last forever.

• Competitive bidding is the single largest catalyst. Owners who complete a transaction before the January 2028 implementation are likely to be in a stronger negotiating position, before reimbursement uncertainty begins impacting valuations.
• Buyer demand is at peak levels. M&A activity grew from one to two deals per quarter in early 2023 to nearly nine per quarter by mid-2025. National platforms and private equity sponsors are all simultaneously deploying capital.¹
• Technology costs are compounding. AI-driven order processing, revenue cycle automation, and compliance systems are becoming essential to compete effectively. For many independent operators, the cost of implementing these technologies alone is hard to justify, while larger platforms can spread those costs across a much bigger business.⁷
• Independent operators are losing managed care leverage. National operators are using their scale to negotiate favorable managed care contracts that independent operators cannot match.⁷

Reimbursement is one of the most important factors in DME valuations, and the current environment presents both opportunities and risks. Certain categories, including CPAP and oxygen equipment, are exempt from the next round of competitive bidding and are expected to receive inflation-based reimbursement increases, helping support strong buyer demand and valuations. A broader fee schedule increase for 2026 also provides some near-term benefit across the industry.⁴,⁶

At the same time, other product categories face reimbursement pressure. Continuous glucose monitors, insulin pumps, and advanced wound care products are seeing payment changes that may reduce margins. Buyers are evaluating these areas closely, making it important for operators to clearly document the financial impact and position their business proactively during a transaction process.⁷

One of the biggest valuation mistakes DME sellers make is presenting total revenue without clearly separating protected service lines from those facing reimbursement pressure. Buyers will analyze these categories carefully, and businesses with clean financials, a clear EBITDA story, and strong recurring revenue typically achieve better outcomes.

The right buyer depends on the company’s strengths and the owner’s goals. National operators often value recurring respiratory and sleep revenue most highly, while private equity buyers focus on businesses with scale or regional expansion potential. Some operators may also benefit from health system partnerships tied to strong referral relationships. Each path offers different benefits and requires a different transaction strategy.