It’s
a big acquisition for Telstra Health, which was the heavyweight bidder in the
two-part auction run by Jefferies. Telstra lobbed a bid more than one month
ago, and has been in negotiations to finalise the agreement. Bank
of America advised Telstra.
Telstra
Health is fully owned by ASX-listed Telstra Corporation. It has been formed
over the past decade via a bunch of acquisitions, and is now the country’s biggest
eHealth company.
MedicalDirector
is one of the oldest management software companies in Australia and has been
operating for 25 years. It provides digital tools for patient scheduling,
billing and medical records with a focus on GPs, and is involved with 80
million Australian consultations each year.
Mr
Riley said Telstra Health was keen to engage with local doctors about
improvements that they would like to see made to the platform.
“I
think as a new owner, we want to definitely send a very strong message that we
are in it for the long term.”
“We
will have investment funds to make sure their voice is heard,” he said.
The
deal values MedicalDirector at an enterprise value of $350 million. Telstra
Health managing director Mary Foley said the company now intends to invest
further to take the platform “to the next level”, though details of these new
features would be hashed out after Telstra Health had met with MedicalDirector
staff.
More
here
https://www.brisbanetimes.com.au/business/companies/telstra-stumps-up-350m-to-fill-missing-piece-in-health-portfolio-20210809-p58h1k.html
And lots more here:
9 August 2021
Telstra buys
Medical Director: it all changes from here
By Jeremy Knibbs
At Telstra’s press conference today on the
acquisition of Medical Director, one of the journalists on the line awkwardly
suggested to Telstra Health’s CEO Mary Foley that she had paid way too much for
a company that had lost a lot of its market share and shine over the years.
The price has been reported as $350 million,
which would be about 11-15 times profit, and more than double what Affinity
private equity paid for the outfit five years ago ($155 million). Its share of
the GP market has probably dropped significantly in the past five years, some
suggest from a market leading 42% or so, down to as low as 28%.
That journalist wasn’t giving much credit to
what would have been a pretty expensive and experienced team doing the due
diligence for Telstra. And possiblly hadn’t done much mapping of the
possibilities that such an acquisition presented the company.
Yes, it’s a lot. Not out of range in profit
multiples for a digital platform group, though, but more importantly, there are
plenty of reasons to suggest that if Telstra handles the acquisition in the
right way, one day, the price could end up being a bargain price.
There’s a lot to do, of course, but the
timing is right, and if Telstra is prepared to invest, which in today’s press
conference they confirmed they were specifically in respect to this
acquisition, then Medical Director could end up transformative for the business
and, in many respects, for large parts of our healthcare system.
Telstra
Health has a truly ambitious vision to create a single Australian digital
health vendor providing cloud-based interoperability between all points of the
system. But whether they succeed or not, the acquisition will have major market
repercussions regardless. And most of those repercussions are going to be good
for everyone.
In
one respect, it’s now Telstra Health vs the rest in Australia from a vendor
perspective.
Telstra
Health is the only single provider trying to stitch up all the current
disparate points of data in the system . They are going to try to do this by
overlaying some sort of cloud-based infrastructure over its acquisitions in
pharmacy, aged care, hospitals, allied health and now general practice, which
will allow far more interoperability across all these sectors. Foley said today
that most investment now will be focussed on their assets not more
acquisitions, citing that they now had a large position in every major health
sector. But that’s not entirely true. They may still find some room to buy a
suitable allied health platform provider, such as CoreHealth, or substantively
shore themselves up on the patient side by acquiring a HotDoc or HealthEngine.
They have the money, and clearly there is a lot of intent.
Now
everyone else is in market is going to need to organise to get a position in
what is suddenly a vastly changed digital health vendor landscape.
It’s
likely we will see a lot of new alliances, and partnerships developed in order
to compete with what will be Telstra’s emerging vertically integrated offering.
It
isn’t likely we will see anyone able to compete one to one with Telstra’s
strategy, because no one locally has this sort of money, and no one globally at
this point of time, has even tried it what Telstra is attempting here, and
wouldn’t likely start in another country.
If
Telstra gets anywhere near succeeding in this vision, the group has a
strong footprint in both Canada and the UK, both countries with similar enough
healthcare systems to overlay their successes into those countries.
Vastly more here:
https://medicalrepublic.com.au/telstra-buys-medical-director-it-all-changes-from-here/50566
To me the real issue is not going to
be strategy – which is prima facie more than reasonable - , but execution of
delivery of a Digital Health offering which is both of high quality as well as
being well integrated to it can deliver a reasonable and effective solution at
a cost that the user can afford.
Top 20 ASX companies – which Telstra
is – are often not all that flexible and agile and really, right now, in terms
of the scale of Telstra it is rather a ‘barnacle on a battleship’,
Of course you can also be sure Sonic
Healthcare - Presently a totally health focused
ASX/50 constituent – and 30% owner of the current market leader – Best Practice
– is hardly going to be sitting on its hands you can be sure.
For me I think I will watch closely
while coming back in about 5 years so see how it has all played out!
Will be an interesting ride!
David.
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