Been there, done that: A blast from the past for Healthscope's bidders
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There is a particular aspect of the NBH investment that adds a bonus to that as a broad strategy.
Healthscope is carrying the full weight of the investment, including the cost of the $650 million of debt taken on for its funding, until October. Once the hospital is operational, however, it will receive about $400 million from the NSW Government as payment for the public hospital element of the project.
So, at that point the hospital starts generating revenue rather than just costs and Healthscope gets $400 million to reduce debt and interest costs, or invest elsewhere.
NBH is expected to generate about $300 million a year of revenue once it has ramped up, which, at Healthscope’s normal EBITDA (earnings before interest tax, depreciation and amortisation) margin, amounts to more than $50 million of EBITDA a year. It will be the group’s flagship asset, generating more than 13 per cent of revenue and earnings.
So, more broadly, the consortium would acquire Healthscope at a moment in which its earnings are depressed by its heavy investment program and, even if it did nothing else, probably collect more than $100 million a year in incremental EBITDA from that program by the time it is planning to cash out.
Article source: http://watoday.com.au/queensland/a-woman-has-died-in-a-gold-coast-car-crash-20171002-p4yw8m.html
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