Ramsay Health Care is believed to be examining Quadrant Private Equity’s healthcare operation Qscan for a potential acquisition.
While delivering its half-year results in February, the country’s largest private hospital provider told the market it was interested in acquiring diagnostic imaging assets.
Quadrant has hired Stanton Road Partners and Citic-CLSA to sell Qscan, which describes itself as a leading diagnostic imaging provider, operating at least 70 clinics with more than 100 radiologists and 730 staff.
The divestment plans for the business have been on again, off again as market uncertainty plays havoc with sales processes across the board.
Most businesses are difficult to price due to the tentative COVID-19-impacted outlook.
The $14bn-plus Ramsay is said to be eager for acquisitions to drive growth, with a particular focus right now on Britain.
But when it comes to diagnostic imaging, Ramsay has outsourced the service to different providers on long-dated contracts.
Analysts say Ramsay plans to review the contracts, and they will not be extended when they come up for renewal.
However, they could take years to unwind.
Market observers believe Ramsay will kick the tyres on Qscan at the very least.
While it faces challenges with elective surgery being postponed in Victoria, most see this is a temporary glitch that would not stand in the way of an acquisition.
Radiology is seen as a solid performer, and is more lucrative if the service providers are co-located with hospitals.
Quadrant invested in Qscan in June 2017, along with North Coast Radiology, reportedly valuing the operations at $200m.
It has been operating 33 clinics with 40 radiologists.
The business in the past has generated $65m in annual earnings before interest, tax, depreciation and amortisation.
At the earliest, the thinking is that a sales process for Qscan will start in August, but Quadrant is known to negotiate with a prospective buyer before a formal sales process for an asset kicks off.
Quadrant’s logic for buying Qscan was gaining exposure to the $4.5bn diagnostic imaging market and it has grown the business through acquisitions.
The last time Quadrant placed a healthcare business on the market it netted more than $1bn, offloading cancer care provider Icon to the Queensland Investment Corporation.
Icon is Australia’s largest provider of cancer care, offering patients medical and radiation oncology, and is also said to have caught Ramsay’s interest this year.
Quadrant is also selling its Journey Beyond travel group, which is on offer through Jefferies, and its MotorOne through Miles Advisory.
Before COVID-19, Quadrant launched a takeover bid for listed outdoor advertising company QMS, valuing the business at $420.6m excluding debt.
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