Healthscope, the country’s second-largest private hospital operator, is in the middle of a complex sale and restructuring process after collapsing under $1.6 billion in debt, with its receiver inviting offers for parts of the portfolio while also weighing a shift to a not-for-profit model to keep more hospitals trading.
Several operators have secured exclusive access to review individual hospitals in detail, including a major Canberra facility, a large Sydney private hospital and a Gold Coast site. An offer to acquire 12 leased hospitals was knocked back when hedge fund lenders holding more than 30% of the debt pushed for a richer outcome after buying in at around half of face value.
Those lenders appear to be leaning toward a strategy where key hospitals remain within Healthscope under a not-for-profit structure, cutting payroll tax costs that could add roughly $100 million to annual earnings and potentially deliver them a larger windfall later even as other bidders circle assets in Melbourne, Hobart and other locations.
The sale process, supported by an investment bank, is happening against a backdrop of mixed performance across Healthscope’s 37 hospitals, with some sites losing money and top-tier hospitals expected to fetch around $600 million in total. Final bids were lodged recently to determine which assets are sold, which are retained and whether the entire group can return to profitability under a reworked ownership and funding model.
Healthscope’s situation stems from a highly leveraged buyout in 2019 valued at about $4.4 billion, followed by a $2 billion sale of around 22 property sites to real estate owners. This has left a patchwork of owned, leased and government-tenanted locations that now need to be rationalised in a way that keeps essential services open while satisfying financial backers.
Looking ahead, the outcome is likely to hinge on whether lenders see more value in immediate asset sales to established operators or in backing a long-term not-for-profit transition that reduces tax, stabilises earnings and positions the hospital group for a future refinancing once performance improves.
