ASIC Registered Healthscope’s Transaction Booklet And Healthscope Provides FY19 Guidance

ASIC Registered Healthscope’s Transaction Booklet And Healthscope Provides FY19 Guidance

Healthscope Limited (ASX: HSO) is in the healthcare sector and provides services in many countries including Australia, Singapore etc. The company has over 18,000 employees and has 43 private hospitals in Australia alone.

On 16th April 2019, the company announced that in relation to the proposed acquisition of Healthscope by an entity controlled by Brookfield Business Partners and its institutional partners, the transaction booklet has been registered by the Australian Securities and Investments Commission (ASIC). The acquisition will take place via a scheme of arrangement and a simultaneous off-market takeover offer. Earlier on 20th March 2019 the company got FIRB approval for Brookfield transaction.

Brookfield has proposed to acquire 100% stake in the Healthscope. The scheme needs to be approved by having 75% of the voting rights in favour of the acquisition with other conditions to be satisfied. After the approval and satisfactory meeting of other conditions, the acquisition may take place, following which the shareholders of Healthscope will receive $2.465 cash per share.

However, if the scheme is not approved then a takeover offer would be placed in front of shareholders which needs at least 50.1% acceptance of issued shares and other conditions to be satisfied or waived. If the takeover offer is accepted, then the shareholders of Healthscope will receive $2.365 cash per share, including the special dividend and the capital return

Financial performance

The company reported a revenue of $1.22 billion in the 1HFY19 results whereas revenue in FY18 stood at $2.34 billion. The highest expense incurred by the company during the reporting period is on the employee benefits which stood at $556.5 million. Profit for 1HFY19 stood at $66.9 million which is relatively higher (considering six months period) than the full-year profit of $75.8 in FY18. The total profit in FY17 stood massively higher at $151.1 million. The company outshined on the total comprehensive income for the reporting period which stood at $250.6 million in 1HFY19 compared to 87.1 million and 118.2 million in FY18 and FY 17 respectively. Full detail of financial results for the 1HFY19

FY19 Outlook

The outlook for FY19 was on a positive side. The company expects Australian public and private hospitals to generate total revenues of approximately $88 billion. The growth is expected to be backed by an increase in the volume of services and higher average prices. In the next five years, the revenue is expected to grow by an annual rate of 4.5% and reach $110 billion till FY24.

Talking about the private hospitals alone, they were growing at an estimated average annual rate of 4.8% over the five years to FY18 and generated total revenue of approximately $16 billion. This is expected to increase at an average annual rate of approximately 4% to $20 billion by FY24.

Technical outlook

The market capitalisation of the company is A$1.74 billion. The 52-week high and low of the stock are A$2.59 and A$1.77 respectively. The stock closed the session with no change at A$2.46 as of 17th April 2019. In the last six months, the stock has given a return of 28.1% while the YTD return stands at 12.33%.


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