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| Specialist medical business |
Context / Scope of project
Our client, a leading Australian private equity firm (over $400m), had done significant work in this sector but wanted a different view. Based on our knowledge and experience in this sector, PIP was asked to develop a one-week answer on the business and its outlook.
Key Insights:
- Forecast good volume growth going forward
- Forecast good pricing opportunities – inelastic & poor transparency
- Identified that brand was not as important to customers as suggested – GP & customer interviews
- Real challenge to lock doctors in BUT identified how to manage this risk
- Entry of national player would be detrimental to the target
- Possibility of changing government funding through Medicare that could be detrimental to the business
Outcome:
- Client did not pursue deal
- Able to reach decision in less than 1 week of PIP due diligence.
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What we did:
- Reviewed the defensibility of target’s position in its home State
- Reviewed the opportunity in other States
- Analysed underlying demographics of the target’s home State and the impact on growth:
- Analysed predicted population shifts by age group including impact on target’s volume
- Analysed relative penetration of the target’s services in their home State versus other States (normalised for State-based gender and age differences)
- Understand impact of proposed price rises on sustainable EBITDA
- Analysed service mix, waiting times, direct marketing spend and impact of these
- Analysed and summarised impact of potential Medicare Benefits changes and Safetynet changes on out-of-pocket expenses
- Understand the medical referral path and impact on the sustainability of the business model.
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