Healius confirms sale of imaging business to Affinity, nets $800m in proceeds

Lumus Imaging has been sold to Affinity Equity Partners. Picture: iStock

Healius shareholders were surprised on Monday about how much Affinity Equity Partners was prepared to pay for its Lumus Imaging business with the stock rallying more than 7 per cent on the news.

The enterprise value of the deal is $965m, but after factoring in the repayment of equipment leases, working capital, lease balances, capital expenditure it was $835m or $800m after transaction fees, separation costs and other fees, it told the market on Monday.

DataRoom reported at the weekend that the transaction was expected to be worth at least $750m after first revealing on September 18 Affinity was expected to win the competition with a strong final bid.

The market was expecting a net price of $700m, which was belived to be closer to what TPG Capital and Pacific Equity Partners were prepared to pay in the final round.

But the understading is that Affinity’s Australian team has been motivated to win and lock in an acquisition in the Australian market, which has been a long time coming, with its last major transaction here being the purchase of Scottish Pacific in 2018 for $612m.

UBS and law firm Herbert Smith Freehills advised on the sale, while Allier Capital worked with Affinity, which has $US14bn of assets under management and is investing out of its $US6bn Fund V.

Healius said in a statement that the transaction price equated to 17 times earnings before interest, tax, depreciation and amortisation.

It generated $97.3m of underlying EBITDA and $41.9m of EBIT, but with the property and equipment lease impact underlying EBITDA was $51.3m and EBIT $34.4m.

Proceeds will be used to refinance debt, return proceeds to shareholders and improve the pathology performance.

Lumus Imaging is the nation’s third-largest diagnostic imaging operation behind Sonic and Permira’s I-MED, which is also for sale.

The deal leaves Healius as a pure play pathology provider and some now are anxious about whether the group can deliver the margin improvements it has promised for its remaining business.

Although the share price gained 11.7c, to $1.72 on Monday, the stock was only trading at that level a week ago.

DataRoom first revealed at the weekend that the two other contestants in the three-way contest had fallen out of the race, leaving Affinity as the winner.

The result bodes well for Permira hoping to sell I-Med, which has so far taken unofficial offers after releasing a flyer in the market, but it has not kicked off an official process yet.