HBI Deals+Insights / News

Too big to fail?

Can a business ever be too big to fail? Sometimes, an operator deals with so many patients and is fundamentally so interwoven into the fabric of a country’s healthcare system that it seems integral to it.

Sadly (for the operators) recent evidence suggests this maxim is very far from the case. Most recently, scandal-hit NMC Health has been grabbing all the headlines as it faces liquidation. But a mere matter of months ago, it was being promoted as the largest private healthcare company in the UAE, ranking “among the leading fertility service providers in the world”.

NMC was the first company from Abu Dhabi to list on the London Stock Exchange and was, until recently, part of the premium FTSE 100 Index. But when the creditors came to call, seeing 8.5m patients a year and assets in 19 countries from MENA to Europe and LATAM ultimately afforded it scant protection against allegations of financial irregularities and mismanagement.

It is going to take time to untangle – potentially years according to the administrators – but all attempts to prop it up failed and any attempt to try to sell the whole looks doomed to failure.

Elsewhere, there are similar examples. Spain’s biggest dental chain by revenue, Dentix, has been selling off assets following a move towards voluntary administration. Like NMC, it had a growing international presence with a network of clinics spread across Spain, Italy, Mexico, Colombia, UK, and a small presence in Chile. That didn’t protect it either.

Multiple sources told HBI Alvarez and Marsal (currently administrating NMC) had tried to put together a rescue deal with Advent, to no avail, while KKR (which might yet buy NMC’s fertility offering in Spain) told HBI exclusively it was not pursuing its interest.

And over in the UK, the UK’s largest nursing home provider Four Seasons has been picked over by its rivals after running low on cash at the end of last year. Post COVID-19, it looks like the whole sector will need bailing out but the writing was on the wall for Four Seasons well ahead of the pandemic.

Too big to fail? Not in healthcare services. Widespread disruption (and risk) to patients is acceptable. Were we talking big banks or insurance companies on the other hand, the argument – and the evidence – might be more convincing. Governments, it seems, are willing to act there where they predict possible catastrophic damage to the economy (that costs jobs.. and more importantly, votes).

But catastrophic damage to part of a healthcare system will not, apparently, meet the relevant standard for intervention (unless and until, cynics might add, it protects the ruling party members’ financial self interests or garners substantial votes..).

We would welcome your thoughts on this story. Email your views to David Farbrother or call 0207 183 3779.