Australia's GenesisCare files for US bankruptcy protection

The company has secured commitments, subject to court approval, for a debtor-in-possession (DIP) financing facility comprising AUD 300m (USD 200m) in new money from existing lenders. This is intended to support day-to-day operations while the financial restructuring and reorganization of the business is underway.

The DIP facility also includes the roll-up of USD 600m in outstanding loans on a 3:1 basis, according to a bankruptcy court filing. The company has USD 1.71bn in secured debt: USD 1.55bn in term loan B (TLB) facilities, a USD 81m revolving credit facility, and loans of USD 56m and USD 31m provided last year by KKR and China Resources Group, respectively, to address a near-term liquidity shortfall.

KKR acquired a 45% stake in GenesisCare in 2012 at a reported enterprise valuation of around AUD 600m. GenesisCare’s doctors and management retained majority control.

In 2016, a China Resources-led consortium took out KKR and purchased additional equity that would give it an interest of between 50.01% and 74%. The enterprise valuation was AUD 1.7bn. The deal was backed by a AUD 790m five-year buyout loan, according to Debtwire, AVCJ’s sister title.

Two years later, KKR returned to the fray, paying AUD 400m for 20% of GenesisCare, with an option to invest another AUD 250m. The firm participated through its core investments strategy, which focuses on assets that require extended holding periods.

This was part of a broader capital raising exercise that saw GenesisCare refinance its existing debt through the issuance of a AUD 875m TLB split into euro and Australian dollar tranches. In 2020, the company tapped the debt markets once again - with the acquisition of US-based 21st Century Oncology - raising a TLB of approximately USD 1bn comprising US dollar, euro, and Australian dollar tranches, Debtwire reported.

GenesisCare has expanded aggressively. At the time of KKR’s initial exit, the company ran 27 clinics in Australia and it had entered the UK and Spanish markets through bolt-on acquisitions. It claimed to be treating more than 2,500 patients every day in over 150 locations across the three countries.

The company now has more than 440 locations that see 400,000 people each year, with the 21st Century Oncology deal having added a substantial US footprint. GenesisCare is the world’s largest radiotherapy provider and offers various diagnostics, medical oncology, and surgical oncology services. It is also active in precision medicine and novel drug development.

The company exited its cardiology business last year – through a divestment to Australia-based Adamantem Partners – to focus on the oncology space.

“GenesisCare plays a critical role for the patients, doctors and communities it serves. However, the past three years have presented significant operational and financial challenges, requiring a comprehensive restructuring of the operations and balance sheet of the company,” David Young, the company’s CEO, said in a statement.

“We are grateful for the demonstration of confidence in our doctors and our underlying business, represented by the commitment of substantial new financing from the lender group.”

Young, who has previously run specialist healthcare businesses in the US, was appointed CEO of GenesisCare in April. He replaced Dan Collins, who launched the company in 2003 by teaming up with a practice of seven cardiologists in Brisbane.

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

• Topics
• Australasia
• North America
• Europe
• Restructuring
• Financing
• Healthcare
• Australia
• KKR
• Leveraged finance