Singapore Healthcare

Singapore Healthcare: In SGX CIMB’s Healthcare conference, discussions centered around expansion strategies, 1) M&As (Q&M), 2) JVs (ISEC), and 3) recruiting new doctors into existing practices (SOG)

In short, the house concludes that M&A is the preferred strategy, as it is akin to acquiring top doctors with existing profitable clinics.

The positives of the strategy are 1) no gestation period and startup costs, 2) inclusion of profit guarantees, and 3) a ~50/50 cash/share purchase is immediately accretive, given, e.g. in the case of Q&M, it uses a ~40x P/E stock to acquire targets at 10-15x.

Other routes like JV (as with ISEC) could be more risky with no guaranteed income, while the traditional route of hiring new doctors is a longer gestation period, and the difficulty in retaining star doctors.
However, the M&A route is not without its risks, which include the risk of overpaying, and succession plans for the acquired clinics after the key doctor/dentist retires.