NMC Health Plc (NMC), the leading United Arab Emirates private healthcare operator with international services across 13 countries, announced two acquisitions and the completion of new Operating and Management (O&M) contracts. These accretive transactions demonstrate further progress in-line with the Company’s strategic priorities to expand capacity, capabilities and geographic reach. NMC has acquired a 70% stake in CosmeSurge, an industry leader in providing quality cosmetic surgery and aesthetic medicine, and related businesses, at an implied Enterprise Value of c. $250mn. The business is expected to deliver 2017 revenues and EBITDA of approximately $67mn and $20.5mn, respectively, representing an attractive 31% EBITDA margin. The consideration will be settled in cash and the transaction is expected to be completed during Q1 2018. Assets being acquired under the transaction include 17 operational clinics. Additionally, a 10-bed hospital and two new clinics are currently under construction in the UAE, which are scheduled for opening during H1 2018. NMC currently provides invasive cosmetic procedures and complex surgeries and the addition of CosmeSurge will substantially enhance the company’s cosmetics and aesthetics offering. Having managed CosmeSurge and related businesses since September 2017 under an O&M contract, NMC has already identified a wide number of revenue and cost synergy opportunities. These include cross-referral of patients, reduced capex requirement from leveraging NMC’s existing capacity and cost sharing of support services related to HR, IT and procurement. CosmeSurge and related business have been acquired from Emirates Healthcare Group. Emirates Healthcare Group is majority controlled by KBBO Group, a consortium of private investors in Abu Dhabi with a portfolio of interests across a variety of sectors. NMC has acquired an 80% stake in Al Salam Medical Group, a healthcare company in Riyadh, the largest healthcare market in KSA. The transaction is expected to be completed in H1 2018 and includes the 100-bed Al Salam Medical Hospital (commissioned in Q4 2016), the Al Salam Medical Center (established in 1985) and the Ishbilia Medical Center (established in 2003). Al Salam Medical Group’s hospital and clinics focus on a number of key specialties, including cardiology and pediatrics. NMC also sees an opportunity to add substantial value to the acquired assets by introducing further specialties and sharing best practices. As such, NMC plans to add long-term care, cosmetics and IVF services, post the completion of the acquisition. NMC has also signed new Operations & Management (O&M) contracts with Emirates Healthcare Group to manage its Egyptian hospitals, Dar El Fouad and As Salam International, which have a combined capacity of 860 beds. The contract will generate revenues of $2mn for NMC in the first year of operation. Previous guidance for 2018E revenues for the O&M vertical is therefore maintained at $19mn as the new contract replaces the anticipated reduction in O&M revenues due to acquisition of CosmeSurge and related businesses. Prasanth Manghat, chief executive officer, commented, “These value accretive and earnings enhancing transactions fit well with our growth strategy. CosmeSurge represents a continuation of building NMC’s capabilities and Al Salam further extends our geographic footprint in the KSA, cementing our leading position as a non-domiciled provider. “We see substantial opportunities for revenue and cost synergies across both acquisitions, and the Cosmetics business in particular has the potential to be further developed into an independent business vertical at a later stage. “Moreover, KSA remains a key focus market for us and despite already reaching 800 beds across existing and under-construction assets in the country, we continue to see strong growth opportunities in the Kingdom.” — SG