OUE and OUE Lippo Healthcare form joint venture with medical specialist groups in Singapore

3 medical specialist groups and Echo Healthcare Management, a joint venture by OUE : LJ3 0%and OUE Lippo Healthcare : 5WA 0% (OUELH), have formed a partnership called Echo Healthcare Services.

The new joint venture will have Echo Healthcare Management holding a 60 per cent stake while the founders of the medical specialists groups will hold the remaining 40 per cent stake collectively.

Echo Healthcare Services will hold a 60 per cent stake in each of the medical specialists group as well.

The partners, Respiratory Medical Associates (RMA) and The Respiratory Practice (TRP) are respiratory specialists providing treatment for lung, sleep and allergy disorders, while Thoracic & Cardiovascular Surgery Specialists (TCSS) are thoracic specialists providing cardiac and thoracic surgery.

RMA has three clinics in Gleneagles Medical Centre, Mount Elizabeth Novena Specialist Centre and Mount Elizabeth Medical Centre and employs five consultants. TRP has six clinics in Gleneagles Medical Centre, Parkway East Medical Centre, Farrer Park Medical Centre, Mount Alvernia Medical Centre D, Mount Elizabeth Medical Centre and Vision Exchange, and employs five consultants.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

TCSS operates a clinic in Gleneagles Medical Centre and employs a cardiothoracic surgeon.

The total aggregate purchase price for all three specialist medical groups is S$31 million, paying S$6.5 million for RMA’s shares, S$8.3 million for TRP’s shares and S$16.2 million for TCSS’ shares. The purchase price will be paid with a mix of shares and cash, with 40 per cent of the aggregate purchase price paid with new shares in the joint venture.

RMA will receive 841 new ordinary shares in Echo Healthcare Services and S$3.9 million in cash, TRP will receive 1,072 new ordinary shares in Echo Healthcare Services and S$5 million in cash and TCSS will receive 2,087 new ordinary shares in Echo Healthcare services and S$9.7 million in cash. RMA will hold an 8.4 per cent, TRP a 10.7 per cent Stake and TCSS a 20.9 per cent stake in the new joint venture post transaction.

There is also an earn-out clause in which the founders of the medical groups will receive a one-off aggregate earn-out of S$9.3 million in cash should Echo Heatlhcare Services reach its growth target within 8 years from the close of the transaction. The transaction is expected to close by the end of Q3 2022.

“The partnership is an important milestone in our journey to build a regional healthcare ecosystem, comprising the full spectrum of tiered healthcare services anchored on Singapore’s medical best practices,” said Dr Stephen Riady, executive chairman and group chief executive officer, OUE.

The board of directors believe that the specialists can be tapped to elevate the overall healthcare standards and quality in OUE’s regional healthcare network. The rationale for the transaction is to integrate the medical partners into the healthcare network while retaining their clinical independence in their own practices, aligning objectives for sustainable growth.

The medical partners are also earnings accretive with a stable and growing stream of recurring income and cash flow based on the results of their past 3 financial years.

The transaction will not have a material effect on OUE’s net tangible asset or earnings per share for FY2022. OUELH will see net tangible asset per share drop from S$0.0723 to S$0.0698 while earnings per share rises from S$0.0251 to S$0.253 based on FY2021.

“We believe that the integration of the Medical Partners into the OUELH healthcare network will bring us one step closer to realising our vision in becoming a leading healthcare group in the region.” said Riady.