On 20 November 2017, RH Bophelo also announced a 60% equity holding in AHC. AHC is a majority Black and Women-owned company established in 2014 as a medical operating, management, services and facilities entity. AHC is a new entrant in the hospital management sector, however, it is strategically underpinned by management with extensive hospital operating expertise. AHC currently owns and operates two different hospital facilities:
Deal Rationale
The AHC acquisition has enabled RH Bophelo to offer administration, commissioning, management and/or hospital infrastructure assets.
Deal Metrics
- AHC owns and operates 3 hospitals and holds management contracts for 3 hospitals.
- AHC’s primary divisions are:
- Hospitals;
- Pharmacy;
- Complete facilities management;
- Emergency services; and
- Nursing college.
- Acquisition was for 60% of the equity in AHC for R62.5 million. (R50 million in cash and R12.5 million in new shares issued at RH Bophelo’s 30-day VWAP).
- In addition, the shareholders of AHC have received an ‘agterskot’ payment (in new RH Bophelo ‘A’ Ordinary Shares) after 31 March 2019, based on the performance of AHC Nursing College.
- Purchase consideration represents a 6.6x (EV/EBITDA historic), a 3.2x (EV/EBITDA forward) and a 29.7% discount to the independent valuation performed by BDO South Africa Proprietary Limited.
- The AHC acquisition will enable RH Bophelo to address administration, commissioning, management and/or hospital infrastructure assets.
Current Year Performance
- Total revenue effectively (annualised) increased year on year by 6% to R234,9 million
- EBITDA increased year on year by 21% to R21 million
- Earnings increased year on year by 35% to R11,2 million Owned beds increased by 37 to a total of 331 beds
- The valuation indicated a fair value increase of R33 million (53%);
- The Company reported an increased valuation to R95,5 million (Cost: R62,5 million) in the current year.
a) Hospitals owned by Africa Health Care
St Helena Private Hospital in Welkom, Free State (131 beds)
The hospital is licensed for medical and surgical procedures
(including plastic surgery) and has units for infectious diseases, intensive care, high care and 24-hour accident and trauma.
Fountain Private Hospital in Carletonville, Gauteng (163 beds)
This facility offers a comprehensive suite of specialists and diagnostic services, including general surgeons, orthopedic surgeons, physicians, radiologists, pathologists, a psychologist, an audiologist, a dietician and an optometrist. The hospital also offers intensive care and high care units. Fochville Private Hospital in Carletonville, Gauteng (37 beds) This facility includes 24 medical beds, 6 paediatric beds, and 7 maternity beds. The facility also has a frail care unit. Fochville Private Hospital accepts all medical aids and caters to private patients.
b) Hospitals managed by Africa Health Care
Rand Mutual Assurance Care Facility (RMA) in Welkom,
Free State (120 beds)
AHC is appointed to manage the RMA Care Facility in Welkom. Operational since March 2016, the RMA Care Facility operates 120 beds as a custodial and care centre for pensioners and beneficiaries with occupational injuries. AHC manages the care facility on a contract basis. The Company employs all nursing and service-related staff and provides the following services through complete facilities management: custodial care, cleaning, laundry, security, catering, grounds, maintenance, waste, IT and administrative support.
Kiaat Private Hospital in Nelspruit, Mpumalanga (115 beds)
Kiaat offers an array of medical services: radiology, pathology, pharmaceutical, surgical care, medical care, intensive care, paediatric care, orthotic and prosthetic care, mother and child care, neonatal intensive care, 24-hour emergency care, occupational health screening, short stay care and day surgery.
Vryburg Private Hospital in Vryburg, North West (44 beds)
Vryburg Private Hospital has 18 doctors, 44 licensed beds (application to extend by 11 beds), 2 operating theatres and one baby delivery room.
c) Other Services
AHC also owns the Africa Health Care Nursing College, ideally located onsite at the Fountain Private Hospital in Carletonville. The Africa Health Care Nursing College is an institution of higher learning accredited by the Department of Higher Education and Training (DHET) and registered with the South African Nursing Council (SANC). It boasts a heritage of over 60 years of training high-calibre students trained by a team of qualified and experienced educators and facilitators. At present, the college has over 200 students in its system; and this number is growing every year.
AHC furthermore provides pharmaceutical services, emergency services (private ambulances) in Welkom and Carletonville, and complete facilities management services to all other divisions of AHC.
