Primary Health Care Ltd. is acquiring Montserrat Day Hospitals, an operator of day hospitals and clinics across Australia.
Montserrat is in the advanced stages of developing three new development facilities in South East Queensland and Western Australia and is also acquiring a private hospital in Western Australia.
Primary will pay A$75 million up-front on a cash and debt-free basis upon completion of the deal. Montserrat can receive up to an additional A$20 million after July 1, 2019, once it successfully commissions the three development facilities and completes the acquisition of the private hospital in Western Australia.
Montserrat is also eligible for additional earn-out payments subject to certain financial milestones. The deal's total consideration is capped at A$138.5 million.
Primary said Australia's Montserrat will form the "nucleus" of its new day hospital division.
The acquisition is expected to be completed in November, subject to standard conditions.
"Montserrat is strategically aligned to Primary’s core business of providing frontline community healthcare. Moreover, the growth in day hospital admissions has outpaced overnight hospital admissions over the last ten years and this trend is expected to continue. In combination with Primary's five existing day hospital facilities, Montserrat provides a scale platform for us to grow non-Medicare revenues," Primary's managing director and CEO, Malcolm Parmenter, said in a statement.