On 20 November 2017, RH Bophelo announced the acquisition of VPH. The acquisition entailed a 76% equity holding in a newly formed holding company (VPH HoldCo) that enabled RH Bophelo to acquire three entities that together operate as a unit referred to as Vryburg Private Hospital: VPH Equipment Trust, VPH Property Trust and VPH Hospital Trust.
Currently, Vryburg Hospital has 18 doctors, 44 licensed beds (application to extend by 11 beds), 2 operating theatres and one baby delivery room.
Deal Rationale
It is the only hospital within a 150km radius in the community. The acquisition presents an opportunity for RH Bophelo to leverage its experience to gain operating efficiencies in a 44-bed hospital. The investment will improve the hospital’s quality, capacity and service offering and, as a result, residents will have access to more affordable, quality healthcare – as set out in RH Bophelo’s mandate.
Deal Metrics
- 18 doctors, 44 licensed beds (application to extend by 5), two operating theatres and one baby delivery room designed around a central nursing station.
- Acquisition is for 76% of the equity in VPH HoldCo for R24.3 million.
- Purchase consideration represents a 8.2x (P/E) historic, a 3.4x P/E forward and a 11.4% discount to the independent medium case valuation performed by EY.
Current Year Performance
- Total revenue increased year on year by 28%.
- The valuation indicated a fair value increase of R2,8 million (12%). The Company reported an increased valuation to R27,1 million (Cost: R24,3 million) in the current year.
- Human resource: Changes in management, culture adjustments for staff and a new operator.
- Operations: Upgrades of billing systems, equipment, computers and materials.
