Regis Healthcare to acquire residential aged care provider CPSM

Regis Healthcare Limited (ASX: REG), a prominent player in the Australian healthcare sector, has announced its acquisition of CPSM Pty Ltd, a private residential aged care provider, for a net consideration of $74.2 million. The transaction, which is expected to complete on December 1, 2023, also includes the assumption of a RAD liability of approximately A$151 million at completion.

Expansion into the Queensland Aged Care Market

Founded in 2010, CPSM owns five premium residential aged care facilities in Queensland, boasting 644 operational beds. Four of these facilities are located in Brisbane and one on the Gold Coast, with over 80% of the beds built or refurbished since 2018. This acquisition represents a strategic expansion for Regis Healthcare into high-demand metropolitan locations in Queensland.

Regis Healthcare announces major purchase of residential aged care provider CPSM

Financial Performance and Operational Excellence

CPSM has a stellar reputation as a high-quality aged care provider, demonstrated by its excellent accreditation history and financial performance. In FY23, the company generated operating revenue of $67 million and underlying EBITDA of $13 million. The acquisition, valued at 5.7x FY23 underlying EBITDA, or approximately $115,000 per bed, will be funded through Regis Healthcare’s existing debt facilities.

Comments from Regis Healthcare’s CEO

Dr. Linda Mellors, CEO of Regis Healthcare, expressed enthusiasm about the acquisition, highlighting the alignment with Regis’ strategy to broaden its residential aged care footprint. She commended the founders of CPSM for their high-quality business and looked forward to integrating CPSM’s residents, families, employees, and communities into Regis Healthcare.

Key Benefits of the Acquisition

The acquisition promises several benefits, including the addition of a premium portfolio in sought-after locations, expansion of Regis’ aged care portfolio to 68 homes, or 7,604 beds, and the potential for procurement savings. Furthermore, it is expected to be earnings per share (EPS) accretive in FY24, with further growth anticipated in future years.

Conclusion

Regis Healthcare’s acquisition of CPSM Pty Ltd marks a significant step in enhancing its footprint in the Australian residential aged care sector. This strategic move is set to bolster Regis’ position in the market, bringing promising growth and expansion opportunities.