Update 6 October 2020

The mornings and evenings are getting darker and there is only bad news regarding the resurgent spread of COVID-19. Luckily, there are still interesting things happening in the Dutch healthcare sector. For this update we cover:

• Leading commercial mental healthcare provider with innovative financing. Will others follow?
• Dutch chain rebrands clinics under one name. Is it following in the footsteps of Bergman?
• Specialist in organ transplantations sold. Are there other hi-tech pearls at Dutch universities?
• Leading maternity care company saved from bankruptcy (again). Will it survive this time around?

BuurtzorgT finances growth through steward ownership

BuurtzorgT is a sister-company to Buurtzorg (very successful provider of innovative homecare services with self-managing teams). BuurtzorgT follows the same principle by providing outpatient mental healthcare by forty self-managing local teams typically consisting of a psychiatrist, a psychologist and 5-6 psychiatric nurses. Services are typically provided in the homes of the client.

The company had revenues of €13 million in 2019 and is growing by 50% per year. In the current system for mental healthcare financing payments are made at the end of the care-cycles. Therefore, the working capital requirements for BuurtzorgT have exploded. The banks are positive to financing BuurtzorgT but felt that the balance sheet needed to be strengthened with more equity. In an innovative deal BuurtzorgT will be financed by Purpose Evergreen Capital, a specialist in steward ownership. In the deal, Purpose Evergreen get equity shares that do not have voting rights. Voting shares are owned by the stewards (currently Jos de Blok- founder of Buurtzorg and Nico Moleman – co-founder of BuurtzorgT) and a golden share by an independent foundation. Purpose Evergreen will receive limited dividends and is committed to selling its shares back to the company after a number of years.

BuurtzorgT is an interesting company that is doing well in the outpatient mental healthcare sector and the financing deal certainly sounds innovative. In principal BuurtzorgT becomes a type of foundation but with help in quickly building up equity in a period of strong growth. This can certainly be attractive to other healthcare companies as well and it will be interesting to see if other operators follow-up.

Equipe bundles specialist clinics under one name

Equipe Zorgbedrijven is a holding company for healthcare companies ranging from companies offering cosmetic surgery to very focused specialist clinics. The most well-known of the specialist clinics is Xpert Clinic that focuses on orthopedic hand and wrist issues.

Equipe has now decided to rebrand all its specialist clinics as Xpert. New additions to the brand include Xpert Orthopedic (general orthopedic surgery), Helder Kliniek (specializing in anal issues), Reva Clinic and Kinos Revalidatie (specializing in revalidation after hand, wrist and arm surgery), and two organizations bundled into Xpert Handtherapie providing physio- and ergotherapy for problems in hands, arms and shoulders.

Equipe also owns Velthuis Kliniek and Cosmedic (both specialized in cosmetic surgery and Eva Kliniek (specialized in vaginal issues). Treatments in these clinics are typically not covered by Dutch healthcare insurance and the clinics will keep their current branding. It appears that Equipe is following in the footsteps of Bergman Clinics. It has reserved the Bergman brand for activities covered by healthcare insurance and has put other activities under the Memira brand (for ophthalmology) and Bey (for cosmetic surgery).

Will Equipe also look for new financing for its specialized clinics? Will investors potentially find Xpert a more attractive pure-play investment than the more disparate Bergman Clinics with its investments in Germany and Scandinavia?

Specialist in organ transplantation sold

Organ Assist is a company resulting from research carried out at University of Groningen. The company has developed an innovative technology for improving the transportation of donor liver, kidney, hearts, and lungs between hospitals. The company has eighteen employees, revenues of €3.5 million and positive results of €0.1 million. The company was financed by a mixture of local and regional development funds and has recently been acquired by Xvivo Perfusion. Xvivo is a Swedish stock-exchange listed company also specialized in the treatment and transport of donor organs.

The Netherlands has an excellent high-tech culture and is also a leader in the provision of high-quality healthcare. However, to my knowledge, there has been limited cross-over between the two sectors. Are there other “pearls” to be found?

Leading maternity care company saved from bankruptcy (again)

The February update covered the ongoing crisis in the Dutch maternity care sector and described how Zorg in Nederland (ZIN) had narrowly escaped bankruptcy. Last week it was announced that ZIN (again) has been saved from bankruptcy by the four leading healthcare insurance companies. They are doing this by providing a temporary 10% increase in tariffs (to cover extra corona-related costs) and providing pre-payments to cover salary costs.

Apparently the insurance companies believe that a combination of costs being reduced by structurally reducing the extremely high level of sick leave that ZIN employees have and the announced increase in maternity care tariffs by 6.5% as of January 2021 will be enough to turn the company around. We shall see, but I do not think that I would recommend an investment in ZIN to any of my clients!