Healius has tapped UBS to sell its Lumus Imaging division

Healius has put its Lumus Imaging division on the market with bids ranging up to $800m tipped.

Healius is selling its imaging division.

Healius has formally put its Lumus Imaging division up for sale with speculation private equity buyers are already in the mix to snap up the business for as much as $700m-$800m

If such a price were to be achieved for the division it would be a well north of Citi’s $525m valuation of Lumus earlier this year, after the division generated EBITDA of $45.6m for the six months to end of December.

Healius managing director, former Network Ten chief executive Paul Anderson, announced a wide-ranging strategic review, headed up UBS, after taking over the top job in March.

Mr Anderson replaced Maxine Jaquet who herself had only been in the managing director role for a year before resigning to “pursue other opportunities”.

There was speculation the review could lead to widespread job cuts at Healius, with Mr Anderson flagging in March that finding greater efficiencies, particularly in the company’s pathology business, which employs about 6000 people, would be a priority.

Early last year, Healius told the market it had reduced the headcount in the pathology division by about 500 as it wound down numbers following the pandemic surge in pathology operations.

Mr Anderson announced on Monday that Lumus would be put up for sale, despite the division itself performing well.

“Lumus Imaging has a strong market position as one of Australia’s largest diagnostic imaging providers,’’ Mr Anderson said.

“Recent investment and strategic initiatives at Lumus are delivering strong growth in revenue and profitability.

“Realising value from Lumus will enable Healius to drive the earnings recovery in the company’s large-scale national pathology network and maximise growth in our clinical trials business, Agilex.

“Focusing on these businesses will reduce complexity and allow Healius to simplify our corporate cost base without impacting the quality of our services.”

The company said in the statement to the ASX more details on its strategic initiatives would be released “with respect to pathology and Agilex” when it reports its full year results in August.

The Australian reported last week that private equity players have already shown interest in Lumus, with Quadrant Private Equity, Adamantem Capital and Bain Capital understood to be in the mix.

Bain Capital last year purchased aged care provider Estia Health for $838m, while Quadrant made a windfall in the sale of its Qscan diagnostic imaging business in 2020 to Morrison & Co for $735m, including debt, and Adamantem owns Zenitas community health business and Heritage Lifestyle aged care.

Healius raised $187m at $1.20 late last year – a steep discount to the prevailing share price – to get its balance sheet in better shape, however Barrenjoey analysts commented after the release of the company’s half year results in February that “the pathology division needs to deliver a material step-up in profitability in the second half to ensure covenants are not breached’’.

Healius reported an underlying loss of $14.2m for the first half, down from an $8.1m profit.

Healius also announced on Monday that Kate McKenzie, who has been on the board since February 2021, would take over as chair.

Ms McKenzie currently chairs NBN Co and is a non-executive director of Stockland.

Healius shares were unchanged at $1.32 at noon on Monday.

Originally published as Healius has tapped UBS to sell its Lumus Imaging division