Medicare is an acute 117-bed independent private hospital conveniently positioned in Rustenburg; there is further opportunity to expand the 4th floor by an additional 30 to 60 beds. It was officially established in 2009 and began as a 36-bed sub-acute hospital and has subsequently grown incrementally, with the founders having successfully applied to the DoH for an increase in beds over the years, resulting in Medicare becoming an established acute facility in the North West Province.
Medicare currently offers the following services (including the number of beds):
- 24/7 casualty unit;
- On-site laboratories and pharmacy;
- Chronic and renal dialysis unit;
- Major theatres: 3;
- Delivery rooms: 2;
- Emergency room;
- General medical and surgical unit: 65 beds;
- Paediatric Unit: 7 beds;
- Paediatric Hi-care Unit: 1 bed;
- Paediatric ICU Unit: 3 beds;
- Neonatal intensive care unit: 6 beds;
- Maternity unit: 10 beds;
- Intensive care unit: 11 beds; and
- High care unit: 7 beds.
Deal Rationale
The acquisition represents a strategic opportunity for RH Bophelo to acquire a controlling stake in an acute urban hospital, servicing a strategic region in the North West Province and further expand the reach of the RH Bophelo network of hospitals. Furthermore, the acquisition provides RH Bophelo with, inter alia, the following:
- Quick access into an established facility with doctors who are trusted in the community, ensuring a loyal patient base;
- The investment will improve the hospital’s quality, capacity and service offering, and in so doing the residents’ ability to access quality healthcare as set out in RH Bophelo’s mandate;
- Entry into a growing market at an attractive price per bed;
- Medicare is well positioned to cater to a wide array of income groups and their main source of revenue comes from medically insured patients;
- Medicare will serve as a further reach into the greater North West community;
- Opportunity to invest alongside doctors who have a strong patient base in the Rustenburg area and are incentivised to grow the hospital; and
- Combined with RH Bophelo’s previous acquisitions, RH Bophelo believes that it will be able to extract efficiencies from the operation, leading to additional cost savings and earnings growth.
Deal Metrics
- RH Bophelo acquired 51% of the operating entity for R57.0 million (purchase settled through cash and issue of 2.5million RH Bophelo shares at 30-day VWAP), which equates to a P/E of 7.8x (FY19 forward).
- Acquired 50.1% of the property entity for R92.7 million (purchase settled through cash and debt), which equates to a yield of 10.5%.
