Quarterly Insights: Australian Healthcare Equipment & Services June 2020
PKF Melbourne Corporate Finance is pleased to present the Healthcare Equipment and Services Insights for the June 2020 quarter, including a summary of key merger and acquisition transactions observed in the industry.
Our quarterly release helps demonstrate our knowledge of the sector and our ability to drive business value and achieve a successful outcome for anyone contemplating a transaction.
The Healthcare Index
The Healthcare Index is comprised of companies involved in the manufacturing and distribution of healthcare equipment and supplies, providers of healthcare services and operators of healthcare facilities. The Index provides a broad measure of the performance of the Australian healthcare industry.
The Healthcare Index experienced growth of 25.65% over the 12 month period from July 2019 to June 2020 and a growth of 2.30% for the June 2020 quarter. The Healthcare Index was outperformed by the ASX for the June 2020 quarter.
COVID-19: Impacts on Australian Healthcare Equipment & Services Sector:
Rising demand for healthcare workers(1)
Healthcare and medical job advertisements on SEEK increased by 34% in June. Under the COVID-19 pandemic, there have been increasing demand from healthcare institutions for nurses and other health care professionals.
Pressure on the health system(2)
The Health Department announced a total of 388 Victorian healthcare workers having been infected with coronavirus and hundreds of health staff in precautionary quarantine. This has placed enormous pressure on the healthcare system as a whole.
Demand for telehealth services
There has been a significant increase in the adoption of telehealth services since the Government’s changes to the Medicare Benefits Scheme to allow most Australians with access to telehealth services.
How companies are responding to the pandemic
- Ramsey Health Care has completed a $1,200m institutional placement to strengthen its balance sheet in April 2020. Ramsey has also employed 1,800 additional staff in the June quarter.
- Sonic Healthcare partnered with the Australian Government to provide sample collection and testing for COVID-19 in residential aged care facilities.
- ResMed has ramped up the production of life support ventilators, non-invasive ventilators and ventilation mask systems in response to the current COVID-19 crisis.
- Cochlear has significantly reduced non-essential spending and capital expenditure as well as implemented a hiring freeze. Cochlear has also raised $220 million through Share Purchase Placement in April 2020.
- Paragon Care has announced a solid improvement in May and June 2020 revenue results, mainly due to a higher than expected level of elective surgery cases as a result of the policy changes by the Federal Government.
- Estia Health has deferred several refurbishment and development projects as part of its approach to capital management during the pandemic.
- Japara has advised that it is expected to include a non-cash impairment charge in the range of $270-300 million as a result of a review of the carrying value of its assets in light of the impact of the pandemic as well as variations in other drivers of value which have negatively impacted asset values.
Source: ASX Announcements
Key deal activities in June 2020 quarter
PKF Melbourne Corporate Finance has observed the following key healthcare transactions announced during the June 2020 quarter.
S&P Capital IQ, ASX announcements, MergerMarket, PKF analysis
(1) 51% stake
(2) 75% stake
(3) 34% stake
(4) 40% stake
Download the report for Australian Healthcare Equipment & Services for the June 2020 Quarter as a PDF.