Australia's Pulse Health signals job cuts in $20 mln purchase of Boulcott Hospital

Monday 7th December 2015

Pulse Health, the Australian private hospital operator, has signalled job cuts at Lower Hutt's Boulcott Hospital, which it has bought for up to $20 million as it seeks to build a foothold in New Zealand's health sector.

The Sydney-based company is spending A$48.3 million on five surgeries across Australia and the New Zealand hospital to expand its existing business, and also give it a beachhead on this side of the Tasman where it's eyeing up other opportunities, Pulse said in a statement. The Boulcott acquisition is the biggest of the purchases, with a payment of $16 million up front and up to $4 million further if it hits earnings targets. The deal remains subject to regulatory approval.

Boulcott Hospital is anticipated to generate annual earnings of A$2.6 million, including up to A$700,000 of savings. Pulse will keep "the majority of the existing workforce", and sees the opportunity to extract more savings over the medium term by using its shared services platform, it said. Boulcott employed more than 100 people, according to current owner Evolution Healthcare's website.

"Pulse has identified a number of other very attractive acquisition opportunities in New Zealand that are consistent with Pulse's growth strategy," it said. "Boulcott provides Pulse with a high-quality, low risk platform to expand into the attractive New Zealand healthcare market."

Boulcott Hospital was put on the market by Evolution Healthcare as a condition for the Australian private healthcare investor getting regulatory approval to buy out its partners in local private hospital operator Acurity Healthcare. New Zealand's Commerce Commission was satisfied that Evolution wouldn't be able to exert too much control over the Wellington market if it divested Boulcott when taking over the operator of the city's Bowen and Wakefield hospitals.

Pulse said the New Zealand hospital offers significant brownfield opportunities and gives the company geographic diversification by entering the New Zealand market.

It plans to raise about A$42.5 million in an underwritten placement and rights issue at 47 Australian cents to fund the transactions.

After the acquisitions, Pulse expects to generate pro-forma earnings of at least A$18.1 million in the 2017 financial year, including a A$6.4 million contribution from the new sites.

The ASX listed shares last traded at 48.5 Australian cents, and have gained 13 percent this year.

BusinessDesk.co.nz

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