Update 18 July 2019
I hope that you have all been able to enjoy the summer. I will be off for a couple of weeks but will be reachable if you have any urgent questions. Here in the Netherlands there has been a lot of interesting news and publications the last few weeks:
- Korian receives a formal OK for its acquisition of Stepping Stones. Will this mark the start of further growth?
- The Blueprint Group in cash squeeze but has found a new investor. Have they grown too big too quickly?
- Bergman Clinics enters new service area and makes in an acquisition in Scandinavia. Is this the start of a further pan-European growth?
- Level of investments in healthcare real estate grows again. Can further growth be expected?
Korian receives formal OK for its acquisition of Stepping Stones
In the update of 25 April we gave details on the entry of Korian into the Dutch market through its acquisition of Stepping Stones. Last week the Dutch Healthcare Authorities (NZa) announced that they have analyzed the planned acquisition and have concluded that the process has involved all relevant parties (clients, personnel, etc.) and that all parties have carefully considered the associated utility and risks. Based on this, the acquisition can proceed.
At the moment the NZa can only test a potential acquisition / merger on procedure, and not on whether it will have consequences for the quality and/or costs of healthcare. The NZa wants to change this as it believes that it needs to consider the broader picture before making decisions.
The road is now free for Korian to play a more active role in the further development of Stepping Stones in the Dutch market. It will be interesting to see whether there are more acquisitions to come and/or whether the rate of building new locations will be increased.
The Blueprint Group in trouble, but has found new financing
We have written extensively about The Blueprint Group and its acquisitions in earlier updates (Snapshot of SAOW, Snapshot of ECR, Purchase by Aedefica of ECR properties). The Blueprint Group has grown very rapidly with a number of acquisitions. They rescued European Care Residencies (ECR) from a bankruptcy and acquired a wide range of locations and services which has quite a dodgy reputation. They have now rebranded the total company as the Ontzord Wonen Groep and the ECR locations as Ontzorgd Wonen (Unburdened Living).
The overall group was 100% controlled by the three original owners, and it was known on the street that they were looking for additional financing. Apparently, the financial challenges have grown, and the company has had problems in paying salaries and fees for temporary staff. Disgruntles employees also claim that the company has quality issues and “upgrades” healthcare indications to receive more money from the health insurance companies.
Ontzorgd Wonen claim that the payment issues were temporary, and that the company now has a strong financial base as it has two new investors. One of these investors is Value8 who has invested €4 million in a combined share purchase (for 7% of the shares) and a loan. Value8 is listed on the Amsterdam stock exchange and is specialized in acquiring shares in small to mid-size companies. Unfortunately, the investment results have not been stellar, and the company has faced its own financing issues. The other investor is SVE who has apparently invested in some of the real estate of the group.
Many of the international elderly care companies had also looked at ECR but passed as they felt that it had too many issues. Will the Ontzorgd Wonen Group be able to turn it around?
Bergman Clinics becomes international and moves into new area
In our update of 1 June 2017 we gave a snapshot of Bergman Clinics. In the update of 28 September 2017 we described how the company became the largest player in the Dutch elective surgery market by merging with its biggest rival. In recent weeks Bergman Clinics has again been in the news through two moves into the eye care market. Bergman makes its first move outside of the Netherlands by acquiring Memira. Memira has 47 outpatient clinics offering refractive eye care in Norway, Sweden and Denmark. In a related move Bergman has also acquired the nine clinics of Oogziekenhuis Zonnenstraal in the Netherlands.
This move marks a major expansion of Bergman Clinics’ business, and especially the move abroad is interesting, as this is the first time that a Dutch healthcare company expands internationally. Will Bergman become an international group?
Level of investments in healthcare related real estate continues to grow
A recent report from CBRE analyses the investments in healthcare-related real estate in the first half of 2019 and makes predictions about the required number of nursing homes in the Netherlands. Total investments in healthcare -related real estate were €489 million in the first six months of 2019. This is 25% higher than in the same period in 2018. Investments were made by 35 investors compared to 25 in the previous year. The average investment per location was €7 million, and the largest investor was Syntrus Achmea with a total volume of €100 million.
CBRE has also made an analysis of the growing need for nursing homes and locations for assisted living. Their conclusion (based on current waiting lists, current shortages in senior living housing, etc.) is that there is a need for at least 1.000 new locations.
As we have highlighted earlier based on our own analysis, the current incumbent providers will have great difficulties in financing these investments. The growth will therefore need to come from commercial (real estate) investors. What will be the next big moves in this market?