Abano agrees to sell orthotics business, taking 'small loss' against 2015 results
Abano Healthcare Group [NZX: ABA]. the medical investor, agreed to sell its orthotics business, The Orthotic Centre, to private investors, and will take a small loss on the sale against its 2015 results.
The Orthotic Centre was sold at book value, in line with a recent Grant Samuel valuation "and, after normal settlement adjustments and sale costs, will result in a small loss which will be reported in Abano's FY15 full year results, the Auckland-based company said in a statement. The proceeds will be used to reduce debt and then reinvested into Abano's growth businesses, in particular dental, it said. It didn't detail the sale price.
Most of the revenue of the orthotics business, New Zealand's biggest provider of such clinical services, comes from District Health Board contracts
Abano managing director Alan Clarke said the unit's exposure to government contracts "is not compatible with Abano's investment criteria where we prefer healthcare businesses that are funded by private payment and operate on a fee for service basis."
The company said the sale will mark Abano's exit from the rehabilitation sector, after the sale of its brain injury rehabilitation business in June 2012 which was also heavily reliant on DHB and ACC funding. The Orthotic Centre generated about 4 percent of Abano's gross revenues last year.
Abano shares last traded at $7.29 and have climbed 14 percent this year.