- Healius (HLS) has signed a binding agreement with BGH Capital to sell its primary care business for $500 million on a cash and debt-free basis
- The sale includes 69 large scale medical centres, 13 Health & Co practices and 62 dental clinics
- The decision comes as the company looks to simplify its portfolio and focus on its diagnostics and day hospital segments
- A portion of the proceeds may be deferred as a result of disruptions brought on by the COVID-19 pandemic
- Healius is 5.32 per cent higher on the market today, trading for $3.17 each
Healius (HLS) has signed a binding agreement with BGH Capital to sell its primary care business for $500 million on a cash and debt-free basis.
Under the terms of the deal, BGH Capital, an Australia-based private equity firm, will acquire 100 per cent of Healius’ primary care portfolio, which includes 69 large scale medical centres, 13 Health & Co practices and 62 dental clinics.
Healius will retain its day hospital and IVG segments, which form part of its medical centres division. In addition, the company will maintain the operation of its pathology collection centres and imaging clinics under long-term leases.
Following completion of the transaction, the company expects to receive a total of $470 million, representing a $500 million enterprise value, with the exception of separation costs. Healius will fund these separation fees and, in order to facilitate a smooth transfer, continue to provide certain services to the primary care assets for a period of 12 months.
However, a portion of these funds may be deferred should earnings from the dental clinics not return to pre-COVID levels by the time the deal closes. In such a case, any outstanding balance will be paid out over an 18-month period following the resumption of regular business volumes.
Dr Malcolm Parmenter, Managing Director and CEO of Healius, noted that the sale of the medical centres was achieved at an attractive valuation, despite the challenging environment brought on by the COVID-19 pandemic.
“This sale is consistent with our strategy of simplifying our portfolio and focusing on our leading and scalable diagnostics and day hospital business, in order to deliver on our mission of seeking and sustaining life-enhancing healthcare through people who care,” Malcolm noted.
“The proceeds will strengthen the company, reducing our net debt and freeing up capital for investment, while enabling shareholders to realise the value of the Medical Centres business, which has not been reflected in our share price,” he said.
The transaction is expected to be completed before the end of this year, but remains subject to regulatory approval, including that of the Foreign Investment Review Board.
Healius is 5.32 per cent higher on the market today, trading for $3.17 each at 11:24 am AEST.