Australia's Healius Ltd <HLS.AX> said on Monday it is selling its portfolio of medical centres and dental practices to funds managed by private equity firm BGH Capital for A$500 million ($342 million).
The deal, which comes as Healius' businesses face the frontline challenges of the coronavirus pandemic and marks the company's move away from running general practice clinics, sent its shares higher.
Australia's healthcare companies are generally considered attractive investments for private equity due to generous government subsidies and a reliable customer stream via the country's aging population.
"The successful sale of Medical Centres has been achieved at an attractive valuation for us, despite the challenging environment from the COVID-19 pandemic," Chief Executive Malcolm Parmenter said.
Healius said its diagnostics businesses had "experienced good growth in activity" since mid-April as Australia began to emerge from a coronavirus lockdown. The company's dental and IVF businesses were moving back towards pre-COVID levels, while its medical centres reported "strong revenues throughout the COVID period, underpinned by telehealth services."
Healius shares were 10.7% higher mid-morning at A$2.80, easily outperforming a 0.3% dip in the broader market.
The deal comes just months after Healius turned down a A$2.12 billion offer from Swiss private equity firm Partners Group <PGHN.S> to acquire the whole company.
Under the BGH deal, Healius will retain its day hospitals, IVF business, pathology collection centres and imaging clinics.
Healius said it will use the around A$470 million deal proceeds, post costs, to strengthen the balance sheet and fund growth in its pathology and images divisions.
It added that A$75 million of proceeds may be deferred if dental clinic earnings do not return to pre-COVID-19 levels by the deal's completion, scheduled before the end of 2020.
Healius also agreed to refinance its syndicated bank debt facility, increasing it to A$570 million and extending its maturity to January 2024.
(Reporting by Soumyajit Saha and Shashwat Awasthi in Bengaluru and Byron Kaye in Sydney; Editing by Tom Hogue and Jane Wardell)
