Telstra mulling e-health play with Medical Director

Telstra could be considering entering the medial market with a tilt a software group Medical Director.

Telstra is believed to be firming as the favourite to win the contest to buy Affinity Equity Partners’ Medical Director business, according to sources.

It comes as the third sales process for Everlight Radiology also ramps up after Pacific Equity Partners walked away from a deal to buy the business.

Medical Director has been on and off the market through advisory firm Jefferies Australia since 2019 but the understanding has been that the sales process started ramping up again around April, as revealed at the time by DataRoom.

Covid-19 is thought to have held up plans for a divestment.

Telstra has been keen to bulk up its e-health business due to the booming demand for services and this column revealed Telstra’s interest in November last year.

Sources say some at least one other group out of Europe or Great Britain has been looking at the business that is understood to generate about $30m in annual earnings before interest, tax, depreciation and amortisation and may sell for 15 to 20 times its earnings, adjusting for Covid-19 impacts.

Medical Director’s software is used by more than 20,000 clinicians each year and its platform processes over 70 million patient consultations.

The software offers assistance with electronic health records, patient management, billing, scheduling, care co-ordination, medicines information, clinical content and population health management for general practitioners and healthcare specialists.

The Sydney-based company with about 230 staff has a contract with the NHS in Britain to provide its Helix cloud software to UK-based general practitioners.

Affinity Equity bought Medical Director in 2016 for $155m from Healius, then named Primary Health Care.

Meanwhile, information memorandums are now in the market for the Rothschild-advised sales process of Everlight Radiology, owned by Intermediate Capital Grop.

PEP had been in exclusive negotiations to buy the operation but the deal collapsed when the buyout fund was understood to have come in with a lower price after applying scrutiny.

Yet, it is returning to the market at a time that such companies are in hot demand by buyout funds, dying to put funds to work in the low interest rate market.

It is understood that up to 10 groups are currently assessing whether to lob an indicative offer at the end of June, with the list largely comprising private equity.

Earlier, price expectations were about $400m, with annual earnings before interest, tax, depreciation and amortisation of about $30m.

With bases in Australia and London, Everlight has embarked on hospital work for the South Australian government and ran Radiology Reporting Online, which secured part of a £3.8m contract from NHS Scotland.

It is Australia’s largest teleradiology provider, working with hospitals and clinics to provide urgent after-hours reporting as well as routine, overflow and backlog reporting.

Everlight Radiology prides itself on offering affordable, around-the-clock service, given that it employs radiologists in different time zones, and delivers almost all its reports within an hour.

A move to sell Everlight comes after ICG offloaded Cura Day Hospitals in 2017 to Fresenius Medical Care for a price that was believed to value the company at more than $400m.