Aurora Healthcare's plan to secure a sale has suffered a setback after Genesis Capital, a leading private equity firm, reportedly pulled out of discussions. The mental health and rehabilitation provider is seeking a sale to relieve growing debt pressure, though its high price expectations appear to be slowing progress.
Aurora was formed following its split from Healthe Care, a major private hospital group that Pacific Equity Partners acquired in 2021. Following the separation, Aurora’s mental health and rehabilitation operations remained under the ownership of Luye, which bought Healthe Care for $938 million in 2015. The ongoing sale process, managed by Citi, is dividing Aurora into two key units - mental health services and rehabilitation facilities - in an attempt to appeal to different types of buyers.
However, industry sources indicate that potential buyers are hesitant due to the high asking price. The rehabilitation unit alone is reportedly valued at more than 13 times earnings before interest, tax, depreciation and amortisation, suggesting a total company valuation of close to $1 billion. At this level, many in the sector are doubtful about the value proposition, especially as Aurora continues to face notable bank debt.
The broader market for private mental health services in Australia remains uncertain. While demand is strong, rising wages and shortages of psychiatrists are squeezing operating margins. Aurora runs 16 hospitals across the country, with more than 1,500 beds, making it a significant operator, but its size may not be enough to offset ongoing industry challenges and elevated valuation expectations.
