Healthscope Limited Gets FIRB Approval For Brookfield Transaction

Healthscope Limited (ASX:HSO) provides healthcare services. The Company manages a network of hospitals, clinics, and physicians for the provision of emergency care, women's facilities, cancer care, and pediatric services. Healthscope serves customers worldwide.

The company, today on 20 March 2019, has come out with an update stating that Brookfield Business Partners ("Brookfield"), NorthWest Healthcare and Medical Properties Trust ("MPT") have received written correspondence from the Foreign Investment Review Board ("FIRB") that the Australian Government has no objections under the Foreign Acquisitions and Takeovers Act 1975 to the proposed acquisition by Brookfield of 100% of Healthscope by way of scheme of arrangement and a simultaneous off-market takeover offer (announced on 1 February 2019); and the associated sale and leaseback of 22 freehold properties by Healthscope to NorthWest and MPT.

Brookfield has provided assurance that the mentioned correspondence satisfies the applicable conditions the transaction was subject to as was rightly contained in the Implementation Deed executed between the company and Brookfield. The company very much remains committed to sending an Explanatory Booklet to the company’s shareholders in the months of April / May 2019. Also, following this distribution of booklet, a scheme meeting is expected to be held in May / June 2019.

The company recently reported its 1HFY19 results. As per the same company saw a significant turnaround in Hospital's first-half earnings, with EBITDA growth of 8.8% in contrast to a decline of 8.7% in the prior period. The management continues to see growth from its brownfield investments and to reap the benefit of operational efficiencies realised across the portfolio.

The Hospitals division delivered revenue of $1,101.8 million, up 3.0%, and Operating EBITDA of $185.7 million, up 8.8% and in line with FY19 guidance. This growth, in the context of continued challenging market conditions, was underpinned by the disciplined execution of its strategic priorities in FY18. In particular, performance reflects the realisation of operational efficiencies, contributions from completed hospital developments, and the closures of loss-making operations.

Ongoing private hospital market pressures and inconsistency in patient case mix had a continued affect on the growth and margins. However, Operating EBITDA improved in all regions and its Victorian / Tasmanian portfolio benefited from renewed leadership.

As regards FY19 outlook, the management feels that subject to there being no material change to the external market conditions and barring unforeseen circumstances; the company continues to target FY19 Hospital Operating EBITDA growth of at least 10% compared with FY18.

On the price-performance front, the stock has posted the YTD return of 11.42%. The company also has posted returns of 17.31% over the past three months. At the time of writing (20 March 2019 AEST 04:00 PM), the stock of the company is trading at a price of A$ 2.44, performing flat during the day’s trade with a market capitalisation of ~A$ 4.25 Bn. The stock opened the day at A$ 2.440, reached the intraday high of $ 2.450 and touched an intraday low of $ 2.430, with an average daily volume of ~ 31,708,446. It had a 52-week high price of $ 2.590 and a 52 weeks low price of $ 1.770, with an average volume of, 14,383,815 approximately.

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