With hospitals at large struggling to retain staff following the pandemic, healthcare companies like Healius (ASX: HLS) have had to reevaluate their portfolio and cut their losses. So, four years after acquiring it, Healius has decided to let go of Montserrat Day Hospitals based in North Lake, Australia.
The Company has entered into a binding agreement to sell Montserrat Day Hospitals, an operator of 11 specialist short-stay hospitals and haematology/oncology clinics to Nexus Hospitals—which also operates short-stay and day hospitals—for an enterprise value of up to $138.6 million (including deferred contingent consideration of up to $11.4 million).
Healius had acquired Montserrat in 2018 for $122 million including earn-outs.
Healius’ Managing Director and Chief Executive Officer, Dr Malcolm Parmenter, shared, “The sale of Montserrat is in-line with our strategy to focus on the growth of our diagnostics businesses. The proceeds of the sale will enable us to strengthen our balance sheet during this transition period as we reset our cost base and operating model for the post-pandemic era and, over time, deploy capital in growth opportunities.”
Healius has two core diagnostics businesses, pathology and imaging. It aims to provide a fully digitised end-to-end diagnostic experience to make things easy for patients and clinicians. Healius’s strategy clearly worked as, in FY22, the Company reported a revenue increase of $2,333 million from $1,900 million in FY21. Plus, its net profit after tax grew significantly from $43.7 million to $307.9 million. Even though its financials are positive, there is no denying that day hospitals suffered due to lockdowns and staff shortages, and Montserrat was not exempt. It felt the squeeze during Covid, and hopefully, Nexus will be able to breathe new life into it.
Nexus Hospitals is controlled by funds managed by the Queensland Investment Corporation (QIC). It operates hospitals peppered across the country, primarily providing specialist day and short-stay hospitals. Together with Montserrat Day, Nexus Hospitals will operate a portfolio of 29 short-stay hospitals across Australia, thus creating the largest short-stay hospital platform in the country. Day and short-stay hospitals are pocket-friendly and efficient solutions for Aussie patients, especially those undergoing surgery and who require recovery space.
CEO of Nexus Hospitals, Andrew Petering, commented, “Montserrat’s strong patient focus aligns well with Nexus Hospitals’ core values. We look forward to the scale and depth that the combined businesses will provide for our patients and the overall Australian healthcare system through the ongoing delivery of affordable healthcare services with excellent clinical outcomes and patient experiences.”
That’s not all the associations the Company is forming with Nexus. In a bid to secure renewable energy for its sustainability initiatives, it is also in discussions with QIC regarding participation in the latter’s upcoming green power purchase agreement process. If successful, Healius expects to benefit from QIC’s larger scale to access more attractive terms.
The Montserrat Day transaction is set to go through in the first half of the calendar year 2023, which is also when Healius’s new CEO Ms Maxine Jaquet will be taking over following Parmenter’s resignation.
Till then, Healius will continue to provide pathology services across a number of existing Montserrat facilities with the potential to expand the provision of diagnostic services with Nexus Hospitals.
Alinda is a Business Reporter for The Sentiment
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