Australia's Pulse Health signals job cuts at Boulcott Hospital
Australian private hospital operator Pulse Health has signalled job cuts at Lower Hutt's Boulcott Hospital, which it has bought for up to $20 million.
The Sydney-based company is spending $A48.3 million on five surgeries across the Australia and New Zealand hospital sectors to expand its existing business.
It wants to establish a beachhead on this side of the Tasman where it is eyeing up other opportunities.
The Boulcott acquisition is its biggest buy, 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 $A2.6 million, including up to $A700,000 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 says. Boulcott employs more than 100 people, according to current owner Evolution Healthcare's website.
"Pulse has identified a number of other attractive acquisition opportunities in New Zealand that are consistent with Pulse's growth strategy," the company says. "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 says 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 $A42.5 million in an underwritten placement and rights issue at 47Ac to fund the transactions.
After the acquisitions, Pulse expects to generate pro-forma earnings of at least $A18.1 million in the 2017 financial year, including a $A6.4 million contribution from the new sites.
The ASX-listed shares last traded at 48.5Ac, and have gained 13% this year.