15 May 2015
Health & Medical
Pricing Multiples
Forward Price Earnings Multiples (monthly to 30.04.15)1 Source: S&P Capital IQ
Multiples in the Health & Medical sector decreased over the period in line with the market. At the end of April, the sector traded on a forward PE of 19.7x,
compared to the ASX200 on 17.0x.
24.0x
22.0x
20.0x
18.0x
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
24.0x
22.0x
20.0x
18.0x
16.0x
14.0x
12.0x
10.0x
8.0x
6.0x
4.0x
2.0x
0.0x
Sector Average Forward PE Multiple
S&P ASX 200 Index Forward PE Multiple
Average Values and Trading Multiples (as at 15.05.15) Source: S&P Capital IQ
Subsector
Biotechnology
Healthcare Distributors
Healthcare Equipment
Healthcare Facilities
Healthcare Services
Healthcare Supplies
Pharmaceuticals
Enterprise Value
EV/EBITDA
FY2015
EV/EBIT FY2015
Price / Earnings
FY2015
44,177
1,808
4,882
17,829
14,010
4,516
1,178
16.7x
10.3x
13.1x
11.1x
14.7x
11.8x
14.7x
18.5x
11.7x
17.5x
14.0x
19.4x
14.6x
8.2x
23.0x
16.3x
24.4x
18.3x
19.6x
17.1x
11.7x
Note: Multiples are based on the forward year of the unreported period, which for the majority of companies in the sector is FY2015.
1
The InterFinancial Health & Medical Index set is an unweighted index comprising Health & Medical sector related companies trading on the
Australian Securities Exchange (ASX). Estimates are sourced from S&P Capital IQ.
Merger & Acquisition News…

Healthscope New Zealand has acquired Aotea Pathology from Abano Healthcare Group and Sonic Healthcare.

Capitol Health has acquired Eastern Radiology Services and Sydney Radiology. The acquisitions have a combined EV of $30m and FY14
Revenue of $13m and EBITDA of $3.75m, representing an 8.0x EBITDA multiple.

Pulse Health has acquired The Hills Clinic, its third major transaction in 10 months. The initial payment of $27.7m represents an 8.5x EBITDA for
the trailing 12 months to March 2015. The vendors are eligible for a capped earn-out of up to $2.3m based on FY15 revenue and up to $3.6m
based on FY16 revenue. The maximum consideration of $33.6m represents an EBITDA multiple below 8.5x FY16 earnings.

The Citadel Group has acquired PJA Solutions, a provider of managed technology services to the Australian health sector, for a total
consideration of up to $60m. The acquisition expands Citadel’s position in the e-health sector and creates a broader platform to continue the growth
of its managed service offerings. Citadel will make an initial payment of $20m at completion, plus two additional payments up to $25m and an
additional earn-out of up to $15m.

Estia Health has acquired four new aged care facilities which brings the number of acquisitions to seven in the previous seven months. Estia
Health now has a total of 49 facilities and 4,127 beds which is on track to reach its target of 10,000 beds by the end of FY2020.

Healthcare Australia, the privately owned healthcare recruiter in Australia, has acquired Randstand Care, Randstad’s Health & Community Care
business listed on the NYSE Euronext Amsterdam Exchange.
Under the Microscope...

Novogen, an Australian cancer therapeutics company, will require additional funds in 2015 to execute its growth strategy, said CEO Professor
Graham Kelly.

Primary Health Care has frequently been reported as a possible takeover target and private equity firms are known to have gone as far as
organising debt packages for possible buyouts. The company is believed to be taking strategic advice from advisors regarding future M&A plans.
Primary is believed to be set to divest Health Communication Network. Primary tried to sell the software business a few years ago for $200m.

Central Data Networks, a privately owned Australia-based developer of radiology imaging software and medical networking platform, is ready to
take investors on board to compete with larger players in the sector, MD and owner Robert Zanier said.

Medlab Clinical, an Australian developer and researcher of nutritional pharmaceutical products, plans to raise $9m in an initial public offering in
Australia.

Cinven, the private equity house, is not planning to sell Amdipharm Mercury in the near future, a person with knowledge of the situation and
AMCo CEO John Beighton said. The London, UK-based pharmaceutical company plans to grow via acquisitions and organically before firming up
exit plans, Beighton said, while several acquisition targets are also being assessed.

AirXpanders, the California-based tissue expansion device company, is planning to raise USD 29.7m in an IPO, including the sale of chess
depository interests listed on the ASX. The company is offering 60.7m CDIs at $0.50 each for $30.3m.

1stAvailable, an Australian company providing a service to book medical appointments, plans to raise $5m-$10m in an initial public offering at
$0.35 per share. A successful listing would give the company a market capitalisation of $26.36-$31.36m. The company plans to use IPO proceeds
to buy three business, believed to be GoBookings, Clinic Connect and DocAppointments.

Medibio, a medical technology company developing a test to diagnose depression, will consider acquisitions once it has inked a deal with a
strategic partner, which is expected by 4Q15, CEO Kris Knauer said.

Generation Healthcare REIT is set to buy up to three aged-care facilities from RSL Care, partially funded through a $50m capital raise.

Imugene, an Australian immune-oncology focused biopharmaceutical company, expects to attract suitor attention once it starts a Phase Ib/II trial
for its formulation targeting gastric cancer in the second half of 2015, said MD Charles Walker.

Fosun, the private Chinese conglomerate, is said to be interested in GenesisCare, the Australian healthcare business. Fosun is believed to have
considered an offer for Healthscope before it listed last year.

Mercury Capital, an Australian private equity firm, will look to make six or seven new investments after closing its second fund with a size of
$300m, said Clark Perkins. Mercury Capital is looking for companies with enterprise values between $50m and $200m each and is currently in
discussion with a few potential targets.

Ramsay Health Care and Healthscope are believed to be interested in buying Healthe Care, the Australian hospital operator. Both buyers are
said to have separately engaged with private equity firms, including Quadrant, Champ and possibly Pacific Equity Partners to consider joint
offers for Healthe Care, which is currently owned by Archer Capital. Healthe Care operates 16 hospitals and could be valued at $650m to $750m.
Ramsay is also believed to be assessing several acquisition opportunities globally. The unconsolidated nature of private hospitals in France is an
ideal market for acquisition opportunities on a regular basis.

FlexiGroup is reportedly eyeing the asset finance business of Fisher & Paykel Healthcare Corporation which has been placed up for sale across
the Tasman.

Icon Cancer Care, the Australian group of cancer clinics backed by Quadrant, is looking to bulk up with more acquisitions across its three segments
with the private equity unlikely to exit the company this year, Quadrant director Marcus Darville said.

Buyers are rumoured to be eyeing Menarock, an Australian aged-care business which operates a 750 bed facility.
If you are interested in specific information regarding mergers and acquisitions in the Health & Medical sector, please contact Paul Keehan, Brett Plant
or Hyun-ju Johnson.
Contact Details
Name
Position
Phone
Email
Paul Keehan
Chairman
(07) 3218 9100
[email protected]
Sharon Doyle
Managing Director
(07) 3218 9122
[email protected]
Brett Plant
Director
(07) 3218 9106
[email protected]
David Hassum
Director
(07) 3218 9108
[email protected]
Ted Marchant
Director
(07) 3218 9113
[email protected]
Andrew Wheeler
Director
(07) 3218 9107
[email protected]
Mark Steinhardt
Associate Director
(07) 3218 9105
[email protected]
Hyun-ju Johnson
Associate Director
(07) 3218 9109
[email protected]
Maree Klemm
Consultant
(07) 3218 9107
[email protected]
Anna Grant
Consultant
(07) 3218 9112
[email protected]
This information has been sourced from the ASX, Mergermarket.com and various other public information sources. Forecasts are consensus forecasts
sourced from S&P Capital IQ.
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