Healius soars on $500m sale to BGH Capital

Shares in Healius have surged after the healthcare provider said it had agreed to sell its medical practices to a private equity group.

Healius will retain its day hospitals and IVF businesses, which currently sit in the medical centres division

Shares in ASX-listed Healius surged almost 20 per cent on Monday after the healthcare provider said it had agreed to sell its medical practices to private equity group BGH Capital for $500m.

The deal will see Melbourne-based BGH acquire 69 medical centres, 13 Health & Co practices and 62 dental clinics and comes months after Healius flagged its intention to offload the division as it focuses on growing its diagnostic and day hospital business.

Healius managing director and CEO Malcolm Parmenter said the sale was a seminal ­moment in the history of the company.

“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,” Dr Parmenter said.

The sale was achieved at an ­attractive valuation for the company despite the challenging environment, Dr Parmenter said. The price of $500m represents a little over 13 times the medical centres’ 2019 earnings of $37.5m.

“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.

While the transaction was subject to conditions, including ­approval from the Foreign Investment Review Board, it was not subject to arrangement of funding since BGH had provided committed debt and equity funding, Healius said.

Healius expects consent for the divestment from its own banking syndicate by the end of the month.

Healius will retain its day hospitals and IVF businesses, which currently sit in the medical centres division. It will also retain its pathology collection centres and imaging clinics in the medical centres under long-term leases, the company confirmed.

Commenting on the deal, BGH founding partner Robin Bishop said it was an important acquisition for the private equity firm. “We recognise the critical role Healius Primary Care plays and we are excited about the opportunity to invest in and expand its existing services,” he said.

Healius shares closed on Monday up 19 per cent at $3.02.