M&A Strategy: Buying a “Winner” vs. Selling a “Loser” in the Contract Phase

Answer Summary:

The issuance of Competitive Bidding contracts triggers a massive wave of Mergers & Acquisitions (M&A) in the DME space. The market instantly splits into “Haves” (Winners) and “Have-Nots” (Losers). If you lost the bid, your company still has value as a “bolt-on” asset (patient list/inventory) for a winner who needs capacity. If you won the bid, you may need to acquire smaller losers to fulfill the volume requirements. This guide covers the “Change of Ownership” (CHOW) rules that allow contracts (or patients) to be transferred during a sale.

Introduction:

October 2026 is not just “Contract Month.” It is “Deal Month.”

The moment contract offers go out, phones start ringing.

• The Winner’s Problem: “I won the contract for the whole city, but I only have 3 trucks. I need 10 trucks by January 1st.”
• The Loser’s Problem: “I have 10 trucks and 500 patients, but I can’t bill Medicare after December 31st.”

The solution is obvious: Consolidation. But Medicare M&A is tricky. You can’t just buy the trucks; you have to navigate the federal rules on transferring contracts.

Selling the “Loser” (The Exit Strategy)

If you lost the bid and want to exit the market:

• The Asset Sale: You generally cannot sell your PTAN if it doesn’t have a contract. Instead, you sell your Assets(Patient List, Inventory, Phone Number).
• The Value: Your value is your active patient census. The Winner wants to buy your patients to migrate them to their contract.
• The Grandfathering Leverage: You can elect to grandfather your patients, keep the revenue for a few months, and then sell the patient list slowly to maximize value.

Buying the “Winner” (The Entry Strategy)

If you lost the bid but are determined to stay in the market:

• The Stock Purchase: You cannot simply “buy the contract.” You must buy the Stock (100% equity) of the company that won the contract.
• The CHOW Exception: Under CMS rules, if you buy the stock, the provider entity remains the same, and the contract stays intact.
• The Risk: When you buy the stock, you inherit all the past liabilities. If that company committed fraud 3 years ago, you just bought the fine. Due diligence is critical.

The “Subcontracting” Option

If you don’t want to sell, you can become a Subcontractor.

• The Role: You contract with the Winner to perform deliveries and service on their behalf.
• The Limits: You generally cannot do the billing. The Winner bills Medicare; you bill the Winner. It turns you into a logistics company, but it keeps your trucks moving.

WWS Value Proposition: We Manage the M&A Transition

Whether you are buying or selling, the paperwork determines if the cash flow survives the deal. Wonder Worth Solutions handles the CHOW (Change of Ownership) paperwork in PECOS. We ensure the NPIs, PTANs, and EFT agreements transfer correctly so billing doesn’t stop during the handover.