ABA
02/02/2015 09:01
GENERAL
PRICE SENSITIVE
REL: 0901 HRS Abano Healthcare Group Limited
GENERAL: ABA: Abano Advises of Withdrawal of Aotea Pathology RFP Bid
Abano Healthcare Group Limited (NZX:ABA) has today advised that its
subsidiary, Aotea Pathology Limited (Aotea), has withdrawn its bid in the
current RFP process to provide pathology services for the lower North Island,
encompassing the three District Health Boards (DHBs) of Capital & Coast, Hutt
Valley and Wairarapa.
The decision comes after extensive discussions in recent months between the
three DHBs and Aotea, to try and establish a constructive and commercially
sound partnership for the provision of pathology services to these regions.
Richard Keys, Abano's Chief Operating Officer and a director of Aotea said;
"While we wish to work constructively with the DHBs, with the current
process, timeframes and timetable changes, our conclusion was that the
proposed terms of contract in its current form would not be in the interests
of our clinicians and staff at Aotea or Abano's shareholders and it could
well place the existing pathology services and the region's communities at
considerable risk.
"Our decision to withdraw was not taken lightly. We believe that the current
process would result in an outcome that was clinically unsound and
financially unsustainable, and with all risk being transferred to the
provider."
The current contract for community pathology services ends on 31 October
2015.
This decision means Abano is now reviewing the likely impairment charge that
it would be required to make. Abano has previously indicated that if the new
contract was not awarded to Aotea and the existing contract ended, Abano
would need to write off the book value of this business, which is currently
$11 million.
Abano has a 55 percent shareholding in Aotea Pathology, with Sonic
Healthcare, one of the world's largest pathology business and listed on the
ASX, holding the remaining 45 percent. The business is part of Abano's
diagnostics sector which also includes Insight+Ascot Radiology in Auckland.
This sector provided 16 percent of Abano's Group gross revenue in FY14.
ENDS
End CA:00260210 For:ABA Type:GENERAL Time:2015-02-02 09:02:00
