australian financial review - street talk 9.6.

Pulse moves up in health sector waiting room

Private hospital operator Pulse Health is the latest takeover play in the fast consolidating hospital sector, following Archer Capital's $230 million purchase of HealthE care.
Macquarie Health founder, Pulse shareholder and Independent Private Hospitals of Australia member, Tom Wenkart, is widely thought to be the behind the highly conditional expression of interest.
Healthscope and Archer - which now own HealthE - denied speculation they had lobbed a bid for Pulse, which is advised by Melbourne-based SLM corporate.
Some suggested other private equity groups could be interested in the small hospital operator, given speculation of further consolidation in the healthcare sector has been rife since TPG and The Carlyle Group outbid private equity group Kohlberg Kravis Roberts for private hospital operator Healthscope last year.
As flagged by Street Talk yesterday, Archer outbid Pacific Equity Partners in the race for healthE on a multiple of about 13 times earnings before interest, tax, depreciation and amortisation for 2011.
Although small in scale with a $10.6 million market value, sources said Pulse could be attractive to potential buyers as part of a broader amalgamation of several hospitals.
It operates four hospitals in NSW and Queensland, as well as a community care organisation and recruitment centre. The share register is tightly held by its directors and a handful of large investors, including the Wylie Group, which has 13.7%.
Former Pulse Health chief executive Ian Kadish - who was poached by Primary Health Care late last year - made headway turning the emerging private hospital operator around, and the thinking is that the operator could be attractive to a suitor loooking to take advantage of an industry in the midst of rampant consolidation.
Kadish - touted by many as the company's saving grace - announced a capital restructure of the company early last year, which saved Pulse from breaching its debt covenants. Sources were quick to hose down the idea that Kadish's appointment at Primary was part of a bigger play for Pulse.