Healthcare / Aged Care

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Tough competition ahead in IVF sector

Health Trevor Hoey
737 words
22 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

When provider of reproductive services, Virtus Health, listed on the ASX in mid-June its shares opened at $6.07, which was ahead of the initial public offering price of $5.68 but not all that outstanding given the hype surrounding the industry.

Much of the positive commentary surrounding the outlook for the IVF sector stems from organic growth likely to flow from the trend towards women staying in the workforce longer and having children later, when fertility rates are not as high.

However, the other key dynamic investors need to take into account is the competitive landscape. Granted, this is a niche industry dominated by only a few major players but there is already evidence of heightened competition for market share.

More recently this has come in the form of pricing pressure as diversified medical services provider Primary Health Care entered into the low-cost IVF market, establishing its first bulk-billing clinic in Sydney.

Analysts at Moelis highlighted Primary offered an average out-of-pocket expense for patients of $500, significantly lower than current providers.

Those providers include Virtus Health and Monash IVF Group which only listed in June. Its background prior to listing included the acquisition of a number of IVF providers in Victoria. The group's most prominent areas of representation are Victoria and Queensland, accounting for about 70 per cent of its clinics.

With 21 clinics across Australia, Monash is represented in every state except Western Australia and Tasmania. The group also entered Malaysia in January 2013 through the acquisition of KL Fertility Centre.

That region is mainly serviced by single-practitioner clinics and Moelis sees it as a potential growth driver in itself, as well as being a platform for expansion in the broader Asian region.

But Virtus has also taken aim at the Asian region with its first branded clinic anticipated to be operational by December. The group also acquired a 70 per cent stake in SIMS Clinic in Ireland. Virtus already has a strong share of the Australian market, being one of the two largest providers in NSW, Victoria and Queensland.

It conducts about 36 per cent of all IVF cycles performed in Australia, and its prominent position in NSW which accounts for nearly half of Australia's total IVF cycles is an important strategic advantage.Expansion should not be discounted

Primary Health Care's tilt at the sector coincided with Monash's entry, seemingly not just a coincidence.

With its large network of medical centres in Australia and the second-largest pathology provider, as well as being the third-largest diagnostic imaging provider, expansion into the IVF industry should not be discounted.

Analysts at Citi are of the view the recent selloff in its shares, which sees it trading well below its 12-month high of $5.06 and at a significant discount to the broker's 12-month price target of $5.77, represents an opportunity to enter the stock at an historically low multiple and an implied yield of about 5 per cent.

Looking at the valuations of the two listed specialised IVF players, Monash appears more compelling with a 2014-15 price-earnings multiple of about 13 compared with Virtus, which has a multiple of 17.

However, based on consensus estimates the latter has a superior growth profile, with analysts forecasting earnings per share growth of 20 per cent and 18 per cent in fiscal years 2015 and 2016 respectively.

By comparison, Moelis is expecting Monash to deliver EPS growth of about 15 per cent in both 2014-15 and 2015-16.

Though this makes Virtus appear the better option, analysts at Bell Potter were unimpressed with the company's 2013-14 result, noting both revenues and earnings before interest, tax, depreciation and amortisation were below prospectus forecasts.

The broker subsequently downgraded earnings for fiscal years 2015 and 2016 by 6 per cent and 7 per cent respectively, slashed its share price target from $8.66 to $7.25 and slapped a sell recommendation on the stock.

Bell Potter highlighted IVF cycles grew more slowly than expected and this was the key driver of the lower than anticipated revenues and earnings.

It also noted year-on-year volumes in the full service clinics declined for the first time.

Fundamentally, these businesses are underperforming expectations and while that remains the case expect further share price weakness.


Fairfax Media Management Pty Limited

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Heathley invests in the aged

Mercedes Ruehl
558 words
21 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

What Westfield did to retail 50 years ago is happening to healthcare property.

At least that is the view of boutique fund manager Heathley. It has launched a fund that will target $150 million in ­medical real estate such as day surgery centres and private hospitals.

A well-respected name in funds ­management, Heathley has already tapped existing investors and seeded the fund, called the Heathley Direct Medical Fund 1, with four properties worth just under $20 million.

Heathley's head of distribution and investor relations, John Taylor, said fragmented ownership and mobility challenges for older people is one example of opportunity in the sector.

"What is increasingly happening is similar to what Westfield did years ago for the retail sector," he said. "So you might need to visit the GP, then get an X-ray and then visit the pharmacy. That type of 'one stop shop' model is only just starting to get rolled out more broadly. "

Andrew Hemming, the managing director of Heathley, said the current ­fragmented ownership in the sector means there is room for better and more efficient management of healthcare properties. At the same time, better ­technology has given rise to new day ­surgeries built to accommodate ­procedures such as keyhole surgery.

"There is potential to form partnerships with operators and developers ­and we are looking at doing that," Mr Hemming said. The move comes with a brand new team, including John Taylor, Jacob Treder, Dan Vickerman, Vijitha Yogavaran and Toby Kreis, who joined Heathley this year to focus on health.

"Health has proven itself in boom and bust markets, has well-established corporate players and is well-positioned thanks to an ageing population," Mr Hemming said.Looking to invest $150m

The ownership of GPs, medical ­centres and day surgeries is fragmented. A rise in the number of older people requires more of these properties to be built in the coming years to meet the demand. There is an opportunity for real estate owners such as Heathley to build scale quickly.

The fund manager is also talking to existing operators and groups of doctors who own real estate. Some of these doctors could invest with Heathley and retain some ownership. HDMF1 is looking to invest up to $150 million over the next two years. It will continue to raise equity over the investment period and then have a five-year management period.

The forecast distribution based on the seed properties is 8 per cent per year, to be paid quarterly.

The fund will have a targeted gearing of 35-45 per cent and is looking for ­properties in the $5 million to $20 million range. Heathley has tapped ­existing investors for about $11 million for the seed assets which are 100 per cent leased.

Spread across Victoria, Queensland and NSW, the properties are 100 per cent leased.There are two Victorian assets: 87-89 Langtree Avenue in Mildura is a GP Clinic leased to TriStar Medical and ­Mildura Optical while 547 Melton ­Highway in the Melbourne's Sydenham is leased to St ­Vincent's Hospital.

There is also a two-storey private ­hospital in Cardiff in NSW leased to Healthe Care & Pendlebury.

In Queensland, the fund owns three strata lots of the Chermside Medical Complex in Brisbane. Tenants include Sonic Healthcare, and Southernx Imaging.


Fairfax Media Management Pty Limited

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Estia’s roadshow

ESTIA’S management and its advisers are presenting to investors in Asia this week as part of a roadshow for the aged-care business that is now earmarked to list before Christmas.

The roadshow will move to London next week before finishing in Australia to secure investor support for the company, which is likely to have a market capitalisation close to $1bn.

A prospectus will be lodged in November ahead of a bookbuild, slated for the second week of ­December.

Pricing for the float was likely to be similar to that of rivals Japara Healthcare and Regis, sources said.

A move by private equity firm Quadrant to float its aged care Estia before Christmas was flagged yesterday by The Australian, in a deal happening through investment banks Morgan Stanley, UBS and Deutsche.

Plans were accelerated after its $1.2bn rival Regis, performed strongly amid choppy market conditions on its ASX debut this month.

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Estia set for $1.2bn float

AGED-CARE provider Estia is set to list as a company worth as much as $1.2 billion, according to Morgan Stanley analysts.

They believe Estia is worth $1.05bn-$1.19bn. The estimated range equates to between 21.3 and 24.2 times its earnings for the 2015 financial year. Rivals Japara Healthcare and Regis both successfully listed earlier this year and have been used as benchmarks for the pricing of the float.

Owned by Quadrant private equity, founder Peter Arvantis and fund manager Mercury, Estia has 3613 beds at 44 aged-care facilities spread across Australia’s east coast and in South Australia. The company is positioned for growth at a time the country is in growing need of accommo­dation facilities with an ageing population.

Estia is scheduled to list on the Australian Securities Exchange on December 8, ahead of a bookbuild to take place next month.

Its advisers are UBS, Deutsche and Morgan Stanley. Its international roadshow is currently under way.

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Aged-care operator Japara vows to meet earnings target
THE AUSTRALIAN NOVEMBER 06, 2014 12:00AM

Sarah Danckert

Property Reporter
Melbourne

NURSING home operator and owner Japara Healthcare has brushed away concerns from investors over increasing competition in the aged-care space, saying the company welcomes the challenge.

Japara chairman Linda Nicholls and managing director Andrew Sudholz were both upbeat on the prospect of other companies looking to ride on the aged-care company’s coat-tails by listing on the Australian Securities Exchange. In that group is listing hopeful Estia and Regis Healthcare, which last month listed on the ASX with the assistance of Macquarie Capital.

“We are seeing a growing number of larger corporate entities emerging and it is very positive for aged-care in this country that we have a number of corporate entities that are choosing to go for ASX listing (and) now have better access to debt and equity markets,” Ms Nicholls said responding to a shareholder question at the company’s annual general meeting in Melbourne yesterday.

Mr Sudholz said competition was a good thing, referring to Japara as a “minnow” in the aged-care space that is dominated by not-for-profit providers.

“We’re not fearful from a competitor coming in and taking market share. There is more market share out there for everybody because of the growth profile,” he said. The comments came as the company confirmed it was on track to deliver forecast 2015 earnings of $48.9 million outlined in the company’s prospectus.

Japara listed in April after a restructure that saw it combine a property trust with the operating entity. The listing followed a tough couple of years for the company which ahead of the float was burdened with heavy debts and a bitter legal battle with its former chief executive Arnan Rouse.

Since its listing Japara has been buffeted by changes to key regulations governing aged-care providers, including those announced in the May federal budget.

“Obviously, some of the announced changes have provided some headwinds for the business, such as the removal of the payroll (tax) and dementia supplements,” Mr Sudholz said. “However, we’re confident that the impact of these will be mitigated,” he added.

Japara is also looking to expand the services it offers to patients with dementia and Alzheimer’s disease in hope of attracting a greater number of patients with these conditions to the company’s homes.

Already the group has added to its business through the acquisition of Whelan Care which owns and operates four nursing homes.

Mr Sudholz flagged more acquisitions in 2015. “There are quite a few acquisitions in the market at the moment. We are very selective in our acquisition approach,” he said.

All resolutions at the meeting were resoundingly passed, including the adoption of the company’s remuneration report, on majorities of at least 98 per cent.

Japara’s shares closed down 4c to $2.60.

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How to navigate the aged care maze
PUBLISHED: 8 HOURS 8 MINUTES AGO | UPDATE: 4 HOURS 53 MINUTES AGO

How to navigate the aged care maze
The average cost of aged care accommodation is estimated at about $300,000 to $400,000, payable as a refundable accommodation deposit. Illustration: Sam Bennett
BINA BROWN
Clever ways to finance the move
Reverse mortgage can free up equity

Deirdre Border knew it was time to talk to her 84-year-old mother, Margaret, about stepping up her care needs when she arrived to find the water to her home had been cut off. What Deirdre hadn’t realised was that Margaret had unpaid utility bills going back several months. The once busy accounts director was now living the life of a virtual hermit in one room of her substantial home in Melbourne’s eastern suburbs.

Deirdre’s concern prompted a conversation about the need to increase the level of home care and the possibility of going into residential care.

Margaret was initially appalled at the ­idea of going into a home but, after she was assessed and there was an independent voice presenting the scenarios, she resigned herself to at least look at her options. When she fell and injured herself and was no longer able to get home care, the move to residential care was inevitable.

Within days, the family had to find a bed in a facility they were happy with and a vacancy they could afford.

There were dozens of phone calls to ­Centrelink, potential homes and advisers. On the advice of Equity Trustees, which Deirdre engaged to help advise on finances, it was decided to keep the family home and use other assets (Margaret’s deceased husband’s superannuation) to pay for her move to the aged-care facility.

AGED CARE CAN BE A DIFFICULT SUBJECT
Like Deirdre’s situation, finding and ­funding the right level of home and residential care for older relatives is an increasingly pressing issue for Australian households.

Even with recent reforms and a focus on assisting the country’s ageing population, the aged care system is a minefield where the help of younger family members and professionals is highly sought.

“An emotional and stressful situation can be made easier with some prior planning – starting with a conversation about care when a parent or relative is fully cognisant,” says Denise Tomaras, of aged care placement specialist Tender Living Care.

“It is a hard conversation to have at any time but if residential care is something that is inevitable, it is better to have the discussion when someone fully understands. If they get to the stage of dementia, then paranoia sets in.”

The average cost of aged care accommodation is estimated at about $300,000 to $400,000, payable as a refundable accommodation deposit (replacing the old bond), a daily accommodation payment or a combination of both.

About 5 per cent of facilities charge $550,000-plus under ­special government approval. Someone without the means to pay for accommodation will get government assistance.

One big improvement since the introduction of the Living Longer, Living Better reforms is that all aged-care facilities are required to publish the cost of the accommodation on the Government’s My Aged Care website (myagedcare.gov.au), as well as whether they offer “supported” beds (that is, paid for by government).

A residential care fee estimator on www.myagedcare.gov.au can help work out potential care costs. But this is just the start of what can be a very stressful and emotional process for individuals and their families.

Equity Trustees aged care advice senior manager Anna Lawton says a shift in ­attitude to aged care means more people are starting to factor it into their plans earlier.

“Earlier generations saw it as ‘don’t you dare move me’. But the next generation has a growing awareness and acceptance that there is the potential for a move into care. So from a planning point of view, people need to be thinking about saving for that,” she adds.

Lawton says the move to a “user pays” ­system from July 1 this year means that people may have more choice as to where they go, but if they want to be near family and have all the bells and whistles, planning is needed. The best way to do this is – much like ­saving for an overseas trip – is to have capital saved for entry into aged care. Plan B is to ­discuss it with family ­members and consider all the options, including whether to sell the family home before it becomes a decision made under pressure in a short time frame.

MEANS-TESTED CARE
Where someone does own their own home, it is counted as an asset by the government in its calculation of the means-tested daily care fee but only up to the value of $155,823. Where a spouse remains in the home, it is not assessed.

As of July 1 this year, all refundable accommodation deposits (RADs) are ­published on www.myagedcare.gov.au, and on the facility’s website.

As the name suggests, this is a deposit and any balance is refunded when a person leaves the facility less any amounts that have been agreed will be deducted. (The reduced amount could be because of daily payments or extra care fees.)

The deposit can also be paid in periodic payments – called the daily accommodation payment (DAP), calculated by converting the refundable accommodation deposit into a daily charge using the maximum permissible interest rate at the time someone goes into care. The current rate is 6.63 per cent.

As well as the accommodation charge (which covers the cost of a bed only), there is also a basic daily fee (for costs such as meals, cleaning, laundry, heating and cooling), as well as a means-tested fee as an additional contribution towards the cost of care.

Everyone entering an aged-care facility can be asked to pay the basic daily fee, which for new residents is 85 per cent of the single person rate of the basic age pension (current rates put this at $47.15 a day).

The means-tested fee is calculated by the government based on your income and assets. A member of a couple being assessed would have half of the combined income and assets considered in determining the means-tested care fee, regardless of which partner earns the income or owns the asset.


STILL MUCH CONFUSION
Annual and lifetime caps apply to the means-tested care fee of $25,349 and $60,838 respectively. Some facilities offer extra services such as hairdressing or a as a glass of wine with meals, for which they will charge an additional fee.

This can vary between $20 and $100 a day.

Just as the services may vary, so will the charges. But from July 1 this year, aged-care facilities with dedicated “extra service” places are required to publish their extra service fees on the My Aged Care website, their own website and in other relevant materials provided to prospective residents.

Ipac Financial Care adviser Paul ­Intagliata says six months into the reforms, there is still much confusion. Part of this stems from the requirement that everyone looking to enter aged care is presented with a ­Centrelink assets and income form, irrespective of whether they are on an age pension or self-funded. This assessment will tell the facility just how much the resident will need to contribute to the cost of care (with the ­government paying the rest). For residents of limited means this test may also help determine any government support.

Where someone doesn’t complete the form and the facility accepts them, the resident is liable for the full amount of the cost of care and accommodation (subject to the caps mentioned previously)

Later Life Advice founder Brendan Ryan says ignoring the government’s means ­testing will result in the resident paying the full cost of care, with daily amounts reaching up to $240 a day.

“The daily limit is the extent of the ­payments the government pays the ­provider, and it can be substantial,” Ryan says. “For example, if a resident has high-level requirements for care, the government’s payment to the aged-care facility for providing the care could be $208 per day. At this rate, the $25,349 cap would be reached in four months, requiring high payments in the early months and nothing later,” he says.

Ryan says based on the government’s assessment, a resident would need to have assets of $2.5 million (including the home) to be paying for the cost of care at this rate.

FRONT-LOADING OF COSTS
“If the resident had financial assets less than $2.5 million, the government would assess they should not have to contribute the full $208 in care fees per day and the overall cost of care would be more evenly spread over the whole year.”

Based on calculations using the government residential care fee estimator, Ryan says a resident with $1.2 million in cash would be limited to paying $74 a day.

The way the system is set up leads to a “front-loading” of costs, as fees can be charged at a high rate until the cap.

Where it was taking Centrelink 12 weeks to process the income and assets forms, it’s down to about three weeks, Intagliata says .

“Where some facilities won’t accept a ­person without the necessary Centrelink form, others have been letting people in an on agreed-cost basis and charging an agreed means-tested care fee until they are able to get the full picture,” Intagliata says.

While this arrangement will work better for some, he says, “It makes the process longer – which was not the intention.

The accommodation costs are more transparent because facilities are required to advertise their costs – which means ­people can plan on how they may pay for it.

REFORMS TO GIVE FAMILIES MORE CONTROL
But someone can be ready to go in and the facility won’t take them because the forms aren’t complete,” Intagliata says.

One aim of the reform was to give greater control to the individual or families than the facilities over the payment of the accommodation charges.

“Since July 1, 2014, a resident has 28 days [after moving in] to inform the facility how they intend to pay the accommodation charge – whether it is by refundable accommodation deposit or daily accommodation payment,” Intagliata says.

If after 28 days the resident hasn’t informed the facility, it defaults to a daily accommodation payment. “The payment by deposit [RAD] or daily payments [DAP] may be optional in theory but the practical side is different, especially when it comes to the resident’s liquidity,” says aged care specialist adviser Jeremy Gillman-Wells, authorised representative of AMP Financial Planning.

“It’s important to find out the minimum RAD the facility charges. This will help the family and/or adviser work out the best funding strategy to achieve the quickest placement,” he adds.

Financial considerations will include whether to pay a full or part deposit, or a combination of deposit and daily fees, as well as whether the daily fee should be deducted from your cash flow or drawn down from the partial deposit.

ADVICE ON MINIMISING COSTS
“The [daily accommodation payment] can be deducted from the lump sum[partial deposit], which is a huge benefit, especially where the care contribution fee makes cash flow difficult to manage until you hit the $25,000 annual maximum,” ­Gillman-Wells says.

He says the timing of entry into aged care for members of a couple, and the timing of completing the income and assets assessment, can have a huge impact on the accommodation payment, means-tested fees and government entitlements.

Other key considerations are whether the family home is kept and rented out or sold. Gillman-Wells says an experienced adviser will help people maximise their ­Centrelink or Department of Veterans’ Affairs entitlements and give advice on how to minimise aged-care costs, maximise cash flow and preserve maximum value for the estate.

“In one instance, after negotiation with a facility and restructuring of assets, we were able to save a resident over $50,000 a year in care and extra services fees,” he says.

*Not her real name

Like Smart Money on Facebook for more personal finance stories

The author runs aged-care placement service www.thirdagematters.com.au
The Australian Financial Review

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Estia Health seen pricing float from $5.20/share
PUBLISHED: 12 HOURS 1 MINUTES AGO | UPDATE: 9 HOURS 30 MINUTES AGO
EDITED BY SARAH THOMPSON, ANTHONY MACDONALD AND JAKE MITCHELL
Estia Health seen pricing float from $5.20/share
Aged care operator Estia Health is expected to price its float from $5.20 a share, which represents 20 times forecast profit, while the top of the range will be at 23 times.  Photo: Steven Siewert
Aged care operator Estia Health has priced its initial public offering at 20 to 23 times forecast profit and is set to formally launch the offer on Monday.

It’s understood Estia will lodge a prospectus with the Australian Securities and Investments Commission on Monday, signalling the start of a formal marketing roadshow ahead of its institutional bookbuild set for December 5.

Estia is expected to price its float from $5.20 a share, which represents 20 times forecast profit, while the top of the range will be at 23 times. The offer is a discount to listed aged care companies Japara Healthcare and Regis Aged Care, which trade at 25 times and 26 times profit respectively.

The IPO is expected to value Estia at about $1 billion, while the precise amount of funds raised will be determined by how many shares are sold by Estia’s largest investor, Quadrant Private Equity.

It is understood Quadrant has committed to keep at least half of its stake, but its exact holding will not be known until after the float prices at the institutional bookbuild.

Estia, and its bookrunners, Deutsche Bank, Morgan Stanley and UBS, had secured some large cornerstone investors in recent weeks. Estia’s team has met with fund managers in Singapore, Hong Kong, Boston, New York, London, Sydney and Melbourne over the past fortnight.

Estia is the fifth company Quadrant has listed in the past 18 months. The others – Virtus Health, Burson Auto Parts, iSentia and APN Outdoor – have all traded higher in the secondary market.

sarah.thompson@afr.com.au

a.macdonald@afr.com.au

j.mitchell@afr.com.au

Estia set for $1.2bn float

AGED-CARE provider Estia is set to list as a company worth as much as $1.2 billion, according to Morgan Stanley analysts.

They believe Estia is worth $1.05bn-$1.19bn. The estimated range equates to between 21.3 and 24.2 times its earnings for the 2015 financial year. Rivals Japara Healthcare and Regis both successfully listed earlier this year and have been used as benchmarks for the pricing of the float.

Owned by Quadrant private equity, founder Peter Arvantis and fund manager Mercury, Estia has 3613 beds at 44 aged-care facilities spread across Australia’s east coast and in South Australia. The company is positioned for growth at a time the country is in growing need of accommo­dation facilities with an ageing population.

Estia is scheduled to list on the Australian Securities Exchange on December 8, ahead of a bookbuild to take place next month.

Its advisers are UBS, Deutsche and Morgan Stanley. Its international roadshow is currently under way.

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Heart to beat faster

Jessica Gardner and Sarah Thompson
561 words
17 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

GenesisCare will draw on its success in providing cancer therapies to build up its smaller business in cardiac care, as the fast-growing healthcare network firms up as an initial public offering candidate for 2015.
In just a decade, managing director Dan Collins has established about 100 clinics, staffed by 1500 employees, to provide cancer and coronary care. About two-thirds of the business, which is backed by American private equity firm KKR, comes from providing radiation therapy to cancer sufferers.
The remaining third is the coronary segment that covers cardiac pro¬cedures – such as inserting stents or pacemakers – and sleep therapy – which includes diagnosis of problems in an overnight sleep clinic. "GenesisCare is really a hotbed of innovation," he said. "We're combining a whole lot of that innovation right now in our coronary care side to come up with better-quality, efficient care that can scale."
Mr Collins said the company is also close to signing a number of contracts with state governments to provide ¬targeted access to cancer care in areas where supply is limited. GenesisCare previously entered into a deal with the Western Australian government to upgrade the state's oncology services. "[In WA] we were able to very quickly almost double supply to West Australian cancer patients over about two years, which cut a significant waiting list," he said. "We expect to announce some smaller versions of that in the coming months."
US private equity firm KKR bought about 45 per cent of the company in June 2012, which valued the business at about $600 million. The re¬maining shares are held by management and doctors.Strong growth results
In the 2013 financial year – the latest data available from the corporate ¬regulator – GenesisCare reported a 12 per cent rise in revenue to $203 million. Earnings before interest, tax, depreciation and amortisation was down 7 per cent to $43.8 million. Mr Collins said the business had grown in the "mid-teens" since then.
Mr Collins would not discuss KKR's exit plans. Asked if he will soon be the chief executive of a listed company he said: "Not imminently". But as revealed in Street Talk, investment banks expect to be asked to pitch to run the float soon. It would follow a raft of healthcare floats in 2014 such as private hospital operator Healthscope, fertility network Monash IVF and Medibank Private, which will hit the boards before the end of the month.
Like Healthscope, GenesisCare has entered an agreement with Bupa, the country's second-largest insurer, to link the cost of medical care with quality. For example, doctors performing ¬angioplasty, which is a procedure used to remove artery-blocking fatty plaques, must perform in line with a set of agreed outcomes. "It is to better inform the patient, but also the payer, so they know they're not paying for -volume, they're paying for specific ¬outcomes," Mr Collins said.
The 40-year-old father of three, who is a BRW Young Rich lister with an estimated fortune of $26 million, began considering ways to improve the delivery of healthcare in his late 20s after watching his father navigate the system while suffering from a complex illness called amyloidosis.
"It really drew my attention to what the problems in healthcare were," he said.

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GenesisCare $700m float pegged for first quarter 2015

Edited by Sarah Thompson, Anthony Macdonald and Jake Mitchell
304 words
4 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

One of the more interesting float candidates of 2015 is likely to be GenesisCare.
The provider of radiation oncology, cardiology and sleep treatments has been tipped to hit the market as early as the first quarter of the new year.
Sources told Street Talk the company, which is backed by private equity outfit KKR, could deliver an enterprise value of about $700 million.
It would follow a raft of healthcare floats, which started with the $452 million float of fertility network Virtus Health in June 2013. Themes making the sector attractive, such as a growing, ageing population and skyrocketing medical expenditure, have boosted the initial public offerings of a handful of aged care operators, a second fertility operator, Monash IVF, and $3.6 billion private hospital operator Healthscope.
The $4.5 billion-plus Medibank Private float offers similar qualities.
In the 2013 financial year, from the latest data available from the corporate regulator, GenesisCare reported a 12 per cent rise in revenue to $203 million. Earnings before interest, tax, depreciation and amortisation was down 7 per cent to $43.8 million.
The company is expected to tell investors that it has refined its radiation treatment technology and will benefit as governments increasingly outsource public healthcare to the private sector.
This pitch proved a winner for Healthscope, which recently snagged the bid to build a new public and private hospital facility in Sydney. KKR first snapped up a half share in GenesisCare in June 2012. In October 2013 KKR tapped eight institutions to refinance $300 million of its debt, allowing it to take a dividend.
Company filings show 18 per cent of GenesisCare shares on offer are held on a restricted basis by practitioners.

Fairfax Media Management Pty Limited

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Quadrant to reap Estia

QUADRANT has locked in several cornerstone investors for the float of its aged-care business, Estia, in a deal that is once again set to see the private equity firm reap a major windfall.

The group lodged its prospectus yesterday, which described Estia as one of Australia’s largest aged-care providers, with 3200 places.

Quadrant has contracts in place to secure a further 410 beds at five residences for Estia, creating the country’s fourth-largest provider with 44 residences.

The group was established through the merger of three separate aged-care providers earlier this year and has aspirations to expand via development and acquisition. Only last week, Quadrant reaped almost double the price it paid for billboard company APN Outdoor through its float on the sharemarket.

However, another big winner from the Estia float is likely to be Quadrant’s advisers, UBS, Morgan Stanley and Deutsche Bank.

For UBS, the deal will be more lucrative than what it will achieve for its co-lead manager role on the $4.3 billion-plus Medibank float.

However, a win for being on the Medibank ticket for UBS is that it will help to propel the firm up the league tables.

UBS, which is joint lead manager and financial adviser, will be paid 2.75 per cent of the total funds raised, while other joint lead managers Morgan Stanley and Deutsche will receive a fee of 2 per cent.

Estia’s managing director Paul Gregersen is also in for a hefty windfall, pocketing $600,000 in annual pay, plus a cash bonus of up to $300,000.

According to the prospectus, Estia’s market value will be between $986 million and $1.13bn, with shares priced at between $5.17 and $6.96 each.

The company is planning to offer between 75.9 million to 146.8 million shares out of the total number of shares at the completion of the offer of between 162.8 million and 190.7 million.

Estia’s indicative price range is 20-23 times forecasted net profit for next year, which compares with 25 and 26 times for recently listed rivals Japara and Regis respectively.

Estia Health seen pricing float from $5.20/share
PUBLISHED: 12 HOURS 1 MINUTES AGO | UPDATE: 9 HOURS 30 MINUTES AGO
EDITED BY SARAH THOMPSON, ANTHONY MACDONALD AND JAKE MITCHELL
Estia Health seen pricing float from $5.20/share
Aged care operator Estia Health is expected to price its float from $5.20 a share, which represents 20 times forecast profit, while the top of the range will be at 23 times.  Photo: Steven Siewert
Aged care operator Estia Health has priced its initial public offering at 20 to 23 times forecast profit and is set to formally launch the offer on Monday.

It’s understood Estia will lodge a prospectus with the Australian Securities and Investments Commission on Monday, signalling the start of a formal marketing roadshow ahead of its institutional bookbuild set for December 5.

Estia is expected to price its float from $5.20 a share, which represents 20 times forecast profit, while the top of the range will be at 23 times. The offer is a discount to listed aged care companies Japara Healthcare and Regis Aged Care, which trade at 25 times and 26 times profit respectively.

The IPO is expected to value Estia at about $1 billion, while the precise amount of funds raised will be determined by how many shares are sold by Estia’s largest investor, Quadrant Private Equity.

It is understood Quadrant has committed to keep at least half of its stake, but its exact holding will not be known until after the float prices at the institutional bookbuild.

Estia, and its bookrunners, Deutsche Bank, Morgan Stanley and UBS, had secured some large cornerstone investors in recent weeks. Estia’s team has met with fund managers in Singapore, Hong Kong, Boston, New York, London, Sydney and Melbourne over the past fortnight.

Estia is the fifth company Quadrant has listed in the past 18 months. The others – Virtus Health, Burson Auto Parts, iSentia and APN Outdoor – have all traded higher in the secondary market.

sarah.thompson@afr.com.au

a.macdonald@afr.com.au

j.mitchell@afr.com.au

Estia set for $1.2bn float

AGED-CARE provider Estia is set to list as a company worth as much as $1.2 billion, according to Morgan Stanley analysts.

They believe Estia is worth $1.05bn-$1.19bn. The estimated range equates to between 21.3 and 24.2 times its earnings for the 2015 financial year. Rivals Japara Healthcare and Regis both successfully listed earlier this year and have been used as benchmarks for the pricing of the float.

Owned by Quadrant private equity, founder Peter Arvantis and fund manager Mercury, Estia has 3613 beds at 44 aged-care facilities spread across Australia’s east coast and in South Australia. The company is positioned for growth at a time the country is in growing need of accommo­dation facilities with an ageing population.

Estia is scheduled to list on the Australian Securities Exchange on December 8, ahead of a bookbuild to take place next month.

Its advisers are UBS, Deutsche and Morgan Stanley. Its international roadshow is currently under way.

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Estia Health locks in $625m from cornerstone investors ahead of IPO
MAGGIE LU YUEYANG BUSINESS SPECTATOR NOVEMBER 21, 2014 5:02PM

THE $1 billion Estia Health has locked in $625 million from cornerstone investors for the aged care provider’s planned IPO, ahead of next week’s official opening of the offer.

Shares were offered at $5.75, or a multiple of 21-times forecast net profit, giving the company a market value of $1.035 billion.

The commitment from cornerstone investors has already exceeded the minimum offer size, flagged in Estia’s prospectus earlier this week, indicating strong demand for the aged care provider.

Estia has said in the prospectus it plans to sell 75.9 million to 146.8 million shares in the IPO, at an indicative price range of $5.17 to $6.96 each. It aims to raise between $528 million to $834m.

Private equity owner Quadrant is believed to be selling 38 per cent of its stake, and will hold about 17 per cent in the company after the float.

The proceeds of the offer will be used to repay Estia’s existing debt, as well as to fund further growth opportunities, the company said.

The aged care provider is well positioned to make more acquisitions after the IPO, taking the opportunity to grow as the number of players in the sector further contracts, Data Room reported earlier.

The stock is expected to start trading on December 5.

Deutsche Bank, UBS, and Morgan Stanley are the joint lead managers on the IPO.

Business Spectator