KKR takes majority stake in Australia’s GenesisCare
KKR has picked up a 63% interest in Australia’s GenesisCare, which provides services to patients with cancer and cardiovascular disease. It represents the latest in a string of healthcare sector deals by private equity firms, with TPG Capital and The Carlyle Group acquiring Healthscope in 2010 and Archer Capital buying Healthe Care from CHAMP Ventures last year.
Sources earlier told The Wall Street Journal that KKR would pay around 10x forward earnings. The company posted EBITDA of A$60 million ($60.3 million) for the most recent fiscal year, which implies a purchase price of up to A$378 million.
UBS is said to have advised GenesisCare, while Record Point worked with KKR.
"KKR acknowledges the essential role played by GenesisCare in providing the healthcare outcomes to patients in communities right around Australia," said Justin Reizes, head of KKR Australia. "We look forward to supporting GenesisCare as it seeks to expand services further into areas of unmet need."
Sydney-based GenesisCare was founded seven years ago. It has 1,000 employees nationwide and was responsible for more than 350,000 patient treatments in the last 12 months. In addition to cancer and cardiovascular services, the company helps patients suffering from sleep disorders and sleep disordered breathing.
GenesisCare operates in private clinics and public hospitals. Last year it signed an agreement with the Western Australia government to provide cancer care services in some state-run facilities.
Interest in the healthcare sector is driven by a combination of fundamentals and reform. Australia's population is aging, with the World Health Organization predicting that the number of people aged 65 or more will reach 8.1 million in 2050, up from 3 million in 2010. The sector is also undergoing a privatization drive, which promises to bring consolidation and more lucrative returns.
According to Nomura, PE is attracted by the fact that Australian healthcare companies operate in areas with high barriers to entry and limited competition. Furthermore, these firms deliver strong cash flow, which can be used to recoup debt and costs associated with any investment, and are relatively immune to downturns in the economic cycle due to the nature of healthcare funding.
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