Ramsay Health Care buys Elysium Healthcare
Global Australia-based hospital operator Ramsay Health Care has agreed to pay £775 million for UK’s mental healthcare group Elysium Healthcare. HealthInvestor UK speaks to Adam Scott, partner at Mansfield Advisors which advised Ramsay.
Scott says: “It is a fantastic opportunity for Ramsay. The independent sector is growing and Elysium has successfully demonstrated that it can grow and take share. It has a great reputation, high aspiration, fantastic assets, and the prospects are good.”
He describes the deal as a fantastic boost of confidence after Ramsay’s disappointment with Spire Healthcare: “Ramsay has a lot of capabilities around mental health globally. This is an opportunity for them to enter the market in the UK. It is certainly a substantial investment.”
Earlier this year, Ramsay had made a £1 billion offer to acquire listed UK hospital chain Spire Healthcare but failed to get sufficient shareholder support for the deal.
Scott declined to provide us with a forecast of revenue growth following the acquisition.
But Reuters says the acquisition is expected to add to Ramsay’s 2023 earnings in the mid-single digits and provide savings of £5 million a year.
Elysium was formed in 2016 following BC Partners’ acquisition of 22 Priory and Partnerships in Care hospitals from Acadia Healthcare. It currently operates about 2,000 beds across 72 sites. Account filings have Elysium’s revenue at £336 million and EBITAR at £57.4 million for 2020. The transaction price represents an EV/EBITDA multiple of around 13.5x.
In October 2020, BC Partners appointed bankers at JP Morgan to run an auction of Elysium, seeking a valuation above the 2016 price (£320 million). HealthInvestor understands that the process was not completed then, and there was a second process more recently in October-November 2021.
Ramsay says that the deal is expected to create significant value for its shareholders, as Elysium’s strong business plan and clear strategy position it for significant growth in the next five-plus years.
Ramsay chief executive Craig McNally said in a press release: “Ramsay already operates more than 70 mental health facilities alongside our acute care operations in Australia, France, and Sweden. This is an attractive and compatible opportunity for Ramsay to expand into the UK mental health market and grow our integrated patient pathways.
“As strong partners to the NHS, Ramsay UK and Elysium are a natural fit. Our shared focus on operational excellence and employing industry-leading talent will support exceptional patient care across the UK’s acute and mental health sectors.”
Andy Jones, former Ramsay UK chief executive, has changed position to global chief growth officer. The recruitment process for the successor for UK CEO is still ongoing and no announcement has been made, a Ramsay spokesperson tells HealthInvestor UK.
Elysium chief executive Joy Chamberlain said: “Increasing awareness and diagnosis means there is strong demand for high quality mental health care across the UK.
“Being part of the Ramsay group will improve our patient pathways, providing care when and where people need it most, and strengthen our partnership with the NHS. Our priority is to continue offering a range of personalised, high-quality care that’s focused on the best outcomes for each patient.”
Consultancy Candesic advised Elysium in this deal.
Michelle Tempest, partner at Candesic, tells HealthInvestor UK: “Elysium is a popular provider in a popular sector. Deals like this are very meaningful. It touched my heart… The impact of Covid-19 showed investment companies the importance of the health and care sector.
“With the UK’s largest mental health providers’ – Priory and Elysium – transactions completed, 2021 was clearly a good year,” she adds.
Deutsche Bank were financial advisors and Mansfield Advisors were commercial advisors to Ramsay Health Care. JP Morgan was financial advisor to BC Partners.
Date published: December 13, 2021