Medicover will focus M&A on dentistry, speciality outpatient clinics and diagnostics – CEO

26 November 2019

Healthcare services group Medicover, present across central and eastern Europe and India, will examine acquisitions in dentistry, speciality outpatient clinics and advanced diagnostics providers, CEO Fredrik Rågmark told Mergermarket.


One key target area for M&A is Polish dentistry, of which market EUR 672m-turnover Medicover only has around 2%, Rågmark said. He believes there is an opportunity to grow the company’s fee-for-service (FFS) business in Poland, both organically and through acquisitions, he said.


The total FFS healthcare market in Poland is worth around EUR 5bn and growing at around 10% a year, he told the audience at the Jefferies Healthcare Conference in London last week.


Medicover acquired three dental clinics in Poland in July for a total estimated consideration of EUR 3.2m, according to its 3Q19 results presentation, and runs 70 dental clinics in the country, according to its website. Further acquisitions are likely in this space, but Medicover will focus on smaller groups and individual practices, Rågmark said.


The company could also target speciality outpatient clinics in countries including Poland or Germany, with clinical areas such as endocrinology attractive, he said.


In October 2019, the company raised EUR 120m from investors to acquire clinics in Poland and Romania, as reported. In May 2019, Medicover acquired Neomedic, a neonatology and obstetrics hospital group in southern Poland, for EUR 70.5m.


Medicover will also examine opportunities to expand its diagnostic expertise, Rågmark said. The challenge is that diagnostics assets of the right quality and size rarely come on to the market, and they tend to draw high multiples from private equity firms, he said.


In September 2018, Medicover acquired the Center for Human Genetics and Laboratory Diagnostics (AHC). In October 2018, it acquired Ukrainian laboratory operations of Invitro Holding Limited, including 61 blood drawing points and one laboratory, for EUR 6m.


In India, Rågmark told the audience at Jefferies that it would own more than 50% of the Maxcure hospital group before the end of the year. However, that will not lead to a substantial change in its capital allocation to the region, according to its 3Q19 results presentation.


Medicover’s healthcare services business is focussed on 17 hospitals, including 11 in India, and more than 100 clinics providing around six million visits each year. In diagnostics, the company ran 95 clinical labs and 570 blood drawing points as of 2018.


In 2018, Medicover generated EUR 63m EBITDA on EUR 672m revenue. EBITDA is up 31% to EUR 87m for the first nine months of 2019, year-on-year, and revenue is up 25% to EUR 615m, including 15% organic growth, according to interim results.


Medicover runs healthcare services via ambulatory clinics, hospitals, speciality-care facilities and laboratories through two divisions – Healthcare Services and Diagnostic Services – centering on Germany, Poland, Romania and Ukraine. Founded in 1995, it is headquartered in Stockholm where it launched its IPO in 2017.