BGH buys health centers from Australia's Healius for $341m

Healius was put into play in late February when Partners Group offered to buy the entire business for A$2.1 billion, having been granted a call option on Chinese conglomerate Jangho Group’s 15.9% stake in the company. Jangho had failed in a A$1.7 billion buyout bid in 2019. Partners Group was rebuffed as well, with Healius saying the offer was too low.

The company said it was willing to engage with prospective buyers at a higher price. It also issued an information memorandum regarding the sale of the medical centers business. The divestment has been positioned as a move to simplify the portfolio and focus on pathology and day hospitals.

Healius’ stock reached a three-month high of A$3.19 after Partners Group submitted its offer of A$3.40 per share. However, public markets tumbled as COVID-19 spread to Australia, with Healius slipping below A$2.00 in early April. As of June 12, the stock had recovered to A$2.53. News of the divestment on June 15 pushed the share price to A$2.80 by late morning trading.

BGH will take ownership of 69 large-scale medical centers, 13 GP practices, and 62 dental clinics. Healius will retain four smaller medical centers as well as its day hospital and IVF operations, which currently sit within the medical centers division. The company will continue to operate its existing pathology collection and medical imaging services through the medical centers under long-term leases. In addition, the primary care business can continue using the Healius brand – and receive certain commercial services – for a period of 12 months.

Up to A$75 million of the proceeds may be deferred if earnings from the dental clinics have not returned to pre-COVID-19 levels by the time the deal closes, which is expected before the end of 2020. In March, BGH and Ontario Teachers’ Pension Plan (OTPP) scrapped plans to buy dentistry chain Abano Healthcare following government-mandated shutdowns of non-essential dental services in New Zealand and Australia.

“Over the past few years we have transformed the operations of the business, with new and extended patient offerings, more flexible doctor contracts and updated facilities and systems. I am confident that, backed by the financial strength of BGH Capital, the business will continue to successfully serve the Australian community in the provision of quality, accessible and affordable frontline healthcare,” Dr. Malcolm Parmenter, CEO of Healius, said in a statement.

The medical centers division – which includes assets that will not be acquired by BGH – generated A$327.4 million in revenue for the 12 months ended June 2019, up from A$289.7 million a year earlier. EBITDA rose from A$53.7 million to A$61.4 million. For the same period, Healius reported A$1.8 billion in overall revenue, A$236 million in EBITDA and A$93.2 million in net profit. For the six months ended December 2019, revenue and EBITDA were A$945.1 million and A$113 million, respectively. Medical centers contributed A$183.2 million and A$30 million.

The bulk of Healius’ revenue comes from the pathology business. As of year-end 2019, the company had 99 pathology labs and 2,235 approved sample collection centers; 73 medical centers, 13 GP practices, and 14 day hospitals; and imaging facilities in 29 hospitals, 61 community centers, and 55 medical centers.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Australasia
• Healthcare
• Buyouts
• Australia
• BGH Capital