The following popped up this morning.
Bateman ready to sell medics' software unit
- Nabila Ahmed Abacus
- From: The Australian
- May 20, 2011
SO Ed Bateman is finally ready to sell.
But unfortunately for the scores of investment banks knocking down his door on behalf of private equity predators, it's not all of Primary Health Care that Bateman is putting on the market.
It's believed he is considering a sale of the company's general practitioner software business, Health Communication Network. It's early days and it's understood the auction has not kicked off yet.
As for advisers, Greenhill Caliburn has traditionally done a lot of work for Primary, but Deutsche Bank is a big lender to the company and is thought to be in the frame.
The price tag is likely to be between $250 million and $300m for the business Primary picked up for $100.7m back in 2005 following a hard-fought battle with rival suitor IBA Health.
HCN generated $9.7m in earnings in the December half and analysts are forecasting $20.3m earnings for the 2011 financial year, and $21.3m for the 2012 financial year.
It is the market leader in doctors' desktop systems, and provides the software GPs use to make pathology referrals and write scripts, among other things.
But it is non-core to Primary's business of medical centres, pathology and radiology operations.
The business generates strong cashflow and is expected to attract private equity buyers such as Quadrant, Archer Capital and Ironbridge Capital, as well as international players such as US information technology services group Computer Sciences Corporation.
Bateman is not worried about the $900m or so he has to refinance by December next year but it is thought proceeds of the sale will be used to reduce that debt pile.
News of the sale comes at a time when investors are becoming increasingly hopeful that things in the pathology sector, which has been hit by funding cuts and deregulation of collection centres, are finally settling down.
Apparently this report has been confirmed by a later article in the Australian On-Line.
The implications of this are interesting in terms of co-operation with NEHTA and DoHA with respect to the PCEHR. You can be sure private equity owners won’t spend a cent more than they have to - and are pretty likely to drive hard deals with the Government for any support.
I wonder did Primary work out there might be some extra costs coming down the pike and that this was a good time to bail out?
There is also the possibility of some impact on e-prescribing integration and so on.
Will be fun to watch and wait to see what happens next!