Healthscope Ltd slumps on sale of its Asian Pathology operations

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Sale of Asian Pathology operations to TPG Capital Asia as per strategic review: Healthscope Ltd.’s (ASX: HSO) stock fell 1.12% on July 30, 2018 after the company signed an agreement to sell its Asian Pathology operations in Singapore, Malaysia and Vietnam for the consideration of A$279 million, to entities controlled by funds that are managed by TPG Capital Asia. TPG Capital Asia is the Asia’s investment platform within the global alternative asset firm, TPG. The consideration is on a cash-free and debt-free basis and is subject to customary completion adjustments. Overall, the transaction is expected to be completed by the end of August 2018. The sale represents part of the strategic review of the company, which will allow the company’s management to focus on the core operations. HSO’s Asian Pathology operations are operated under the Gribbles Pathology and Quest Laboratories brands. Moreover, in FY 17, the Asian Pathology operations had delivered EBITDA of A$18.2 million and A$9.6 million in 1H18, which represents approximately 4% of Group Operating EBITDA. The sale price reflects a FY17 EV/EBITDA multiple of 15.3x. Further, HSO expects to book a one-off gain on sale of approximately $165 million in relation to the transaction in the FY19 financial results. The company will be utilizing the net cash proceeds of the sale to pay down debt and fund the company’s expansion pipeline. Meanwhile, HSO stock has fallen 6.30% in three months as on July 27, 2018.

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