Sources close to Falck, the international ambulance, fire service, homecare and healthcare group, say it is talking to interested parties about selling off parts of the business. But, as we hear a big deal is on the cards, what is it likely to sell – and for what kinds of multiples?
One part of the business definitely up for sale, we hear, is EMI, the leading ambulance and homecare company in Latin America. Our source tells us: “Falck has around 60% of the company and at the beginning of 2018 I think they need to settle the earnout with the sellers and buying them out as agreed will cost roughly £100m. Of course they could ask the owners [for the money] but I think the owners are very concerned about all the money leaking out of the company right now.”
The source suggests selling EMI, which has a mostly subscription-based model and around 1m subscribers, would be “madness” however, as it is “one of the most profitable parts of the company”.
At a glance, what Falck operates:
Falck operates medical services and clinics in Denmark, Sweden, Norway, Poland, Russia, Slovakia, UK, Australia, Papua New Guinea, India, Malaysia, Colombia, Uruguay and Venezuela. In addition Falck delivers doctors-on-call services in Colombia, Ecuador, El Salvador, Panama, Uruguay and Venezuela.
It operates emergency medical services (ambulances) in 22 countries, Australia, Colombia, Czechia, Denmark, Ecuador, El Salvador, Finland, France, Germany, India, Malaysia, Panama, Papua New Guinea, Poland, Slovakia, Spain, Sweden, Switzerland, UK, Uruguay, USA and Venezuela.
He adds that he understands a US-based JV company has made enquiries about the Global Assistance business. He adds: “I was extremely surprised that they had put Global Assistance (international medical assistance and insurance) for sale because that’s also a good part of the group. And that company also discussed the healthcare business in Scandanavia (where Falck has Previa which offers rehabilitation and occupational health services). What I think could be tricky selling off the healthcare business is that Falck is not 100% the owner of that.”
At a glance, Falck financials:
H1 revenue was up by less than 0.5% to DKK 8,058m (€1,083m). EBITDA dropped by 54% to DKK 309m (€42m) with the EBITDA margin more than halving to 3.8 per cent, and pre-tax losses plummeted from DKK 8m to DKK 366m (€49m). There were write downs relating to receivables from the “more challenging” US emergency market and from a new customer management system, totalling DKK 382m (€51m).
As for healthcare generally, our source is less convinced we will see deals here. He explains: “I hear it’s probably Global Assistance they are selling off, and EMI, and it could be the ambulance operations in the US – because they are losing money there.
“I’ve also heard they will keep the core business – roadside assistance and ambulance.”
And the price? Our source explains: “Price wise, a very rough estimate is that the multiple in these areas is generally three to four times the EBITDA.
“But since some of these the companies are not performing it could be different. Some of the businesses in Falck I’d only see as asset deals personally, for instance if I were going to acquire Falck’s German business (emergency medical services, patient transport, firefighting training and more) I would only acquire the assets.
The source suggests keeping the core business would be a good way to proceed: “Not the core in Denmark, but emergency service. I’d keep Global Assistance personally – emergency service from a global perspective to travellers and so on. That’s a big business to have synergies with the emergency side.
“I would keep safety services – like training for the oil industry. With the right resources that could turn around with a focus on the maritime industry.
“But I’d sell roadside assistance. They kept it because that’s where it started and it’s only in Denmark, Sweden and Norway, but there’s no synergies there.”
Falck has been approached for comment but has yet to respond. You can read more about Falck’s history and how CEO Jacob Riis is systematically examining the business here.
Our Analysis: We’ve heard from multiple sources EMI is for sale – but can only speculate at the moment about what deals will be done there and with other parts of the business. We’re in no doubt that serious enquiries are being made and have been told a “big deal” will likely be announced next week.
On the one hand, Falck is not under huge pressure to sell – its owners are wealthy and can afford to bide their time. But on the other, even a small bleed can kill a patient if nothing is done. We expect to see some deals sooner rather than later.We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.