AFR article today
Struggling Healius backs former PE suitor’s bid for board seatThe pathology and radiology group will back a shock new director in a move that shows its big investors are moving in on the company.Oct 26, 2023 – 10.42pmSaveShareListen to this article3 minHealius is set to roll out the red carpet for a private equity dealmaker whom it kept at bay only a few years ago as part of an unsolicited buyout bid.In a strange turn of events, the pathology and radiology group will ask shareholders to approve former Partners Group dealmaker Ravi Jeyaraj’s appointment to its board as a non-executive director, and highlight his ability to bring an investor’s mindset to its decisions.Healius shares are at their lowest level in more than 20 years. Jeyaraj was nominated by Melbourne-based fund manager Tanarra Group, his now employer and Healius’ second-largest shareholder with about an 8 per cent stake.Healius’ other major shareholders are not expected to get in the way. They have their sights set on the current board and management team, reeling with the company financial performance, capital allocation and financial position, and wan to see a sharp turnaround.Jeyaraj’s board nomination comes less than a year after he joined Tanarra to run its private equity strategy. He formerly worked at Swiss-based private markets investor Partners Group, where he spearheaded that group’s local private equity team and its run at Healius in early 2020.RELATED QUOTESHLSPrimary Health Care$1.835 -4.92%1 year1 dayOct 22Feb 23May 23Aug 23Oct 231.8002.7003.600Updated: Oct 27, 2023 – 4.35pm. Data is 20 mins delayed.View HLS related articles At that time, Partners Group gained control of a 15.9 per cent stake in the company and lobbed an unsolicited $3.40-a-share bid. The bid was rejected in March 2020, as the COVID-19 pandemic wreaked havoc in markets. Healius instead sold its medical centres business to another private equity bidder. The stock last traded at $1.93.Jeyaraj’s appointment to Healius’ board is not connected to any private equity-style move by Tanarra, said two sources involved in the talks.Instead, it will be pitched as an effort to try to turn around the group’s financial performance and work on ways to ease investor concerns about its balance sheet and capital allocation.John Wylie’s Tanarra spoke out against a bid from Healius’ smaller rival Australian Clinical Labs in March. David RoweIt is interesting to see John Wylie’s Tanarra offer up one of their own investors to the board. The stake is held in the firm’s Long Term Value Fund, a high-conviction strategy that is also invested in companies including Lendlease and Insignia, and has at-times taken activist positions against its companies.Healius is ripe for a shake-up. The group’s pathology earnings have been hit as COVID-19 testing volumes unwound and not replaced by a pick-up in doctor-referred tests, which is an industry issue.However, Healius hasn’t been able to shrink its fixed cost base fast enough and also stretched its balance sheet to buy lab-testing business Agilex Biolabs, which has underperformed since acquisition in February last year.The poor performance led to Healius reporting a $368 million net loss for the year ended June 30, including impairments. Its shares are trading at their lowest level in more than 20 years, while its market capitalisation has slipped to only $1.1 billion.It also comes as Healius also fends off smaller pathology player Australian Clinical Labs, which lobbed an opportunistic bid in March. That bid has gone nowhere. However, it is subject to an extended review by the Australian Competition and Consumer Commission.Tanarra spoke out against the bid at the time.Healius’ other non-executive directors include chairwoman Jenny Macdonald, a former REA Group chief financial officer, former AWB managing director Gordon Davis, Rest director Sally Evans and ex-Telstra executive Kate McKenzie.
Expand
(20min delay)