Georgia Healthcare (LON:GHG)
Market Cap £250 million (London Main Market)
Share Price £1.94 (up 1% today on completion of acquisition)
The Company
Georgia Healthcare (LON:GHG) is the single largest market
health care service provider in Georgia, accounting for 26.6% of total hospital
bed capacity in the country. Hopes to move that to 30% this year.
They are also the largest provider of medical insurance in Georgia, with a 38.4% market share. They have approximately 234,000 insurance customers employ 9,700 people including 2,705 physicians. Hospital beds are around 2,600 in 35 hospitals and 45 Health Care Units. The company is in the process of rolling out a nationwide chain of ambulatory clinics. The Company has set a target of doubling hospital healthcare revenue by 2018. Looking for margin of 30% EBITDA.
Georgia Healthcare (LON:GHG) announced on May 5th 2016 the acquisition of JSC GPC one of the largest retail and wholesale pharmacy chains in Georgia. JSC GPC has roughly a 15% market share. That acquisition was finally completed in a RNS released today. The purchase price at $14 million seems to have been an absolute bargain, given that the acquisition will be earnings enhancing in the first year. Georgia expects to make £2 million extra with cuts, closures, and synergy savings within first year. JSC GPC was already profitable at time of acquisition. It bought JSC GPC at 5.7 times earnings and 3.3 times earning post synergies. Georgia Health Care LON:GHG now intends to open pharmacies at its own hospitals.
Georgia Healthcare (LON:GHG) for its purchase with JSC GPC is getting around 96 pharmacies, plus a 30% share in a new modern hospital, as well as a pharmacy wholesale business. Four loss making pharmacies from the 96 chain are to be closed, and six JSC GPC senior executives to go immediately. Bulk purchasing will enable it to get larger discounts on supplies. Previous margins of 4% are to be increased.
This definitely moves Georgia Health Care into a more profitable area of business. There are lots of room for margin expansion and takeover of other similar businesses in a very fragmented segment. I would expect more similar announcements later on.
On the negative side the recent introduction of Free National Health Service has…
