The JSE healthcare sector has been dominated by Mediclinic and Netcare but RH Bophelo are doing some interesting things and might be worth watching.
As a reminder, RH Bophelo listed on the JSE in July 2017 as a Special Purpose Acquisition Company (SPAC) raising in excess of R500m. The company is driven by the highly regarded team of John Oliphant (Non-Executive Chairman), Quinton Zunga (CEO), Vuyokazi Nomvalo (Transaction Executive) and Dion Mhlaba (Chief Financial Officer).
The company aims to be a credible player in the private healthcare sector and looks to take strategic stakes in existing healthcare operators.
Some of its assets include:
Rondebosch Medical Centre
RMC is an acute 123 bed facility (with the capacity and potential to reach above 200 beds) independent private hospital conveniently located on Klipfontein Road, opposite the Red Cross Children’s Hospital, in Rondebosch, Cape Town. RMC was officially established in 2011 after converting an existing 27 bed and 4 theatre day hospital licence into an acute licence and moving the longstanding practice, which was originally established and has been operating since the late 1980s, to Rondebosch. RMC has grown incrementally with limited capital and the founders have successfully applied to the Department of Health (DoH) for an increase in beds over the years.
Vryburg Private Hospital
On 20 November 2017, RH Bophelo announced the acquisition of VPH. The acquisition entailed a 76% equity holding in a newly formed holding company (VPH HoldCo) that enabled RH Bophelo to acquire three entities that together operate as a unity referred to as Vryburg Private Hospital: VPH Equipment Trust, VPH Property Trust and VPH Hospital Trust.
On 20 November 2017, RH Bophelo also announced a 60% equity holding in AHC. AHC is a majority Black and Women-owned company established in 2014 as a medical operating, management, services and facilities entity. AHC is a new entrant in the hospital management sector, however, it is strategically underpinned by management with extensive hospital operating expertise.
Medicare Private Hospital
On 5 February 2019, the company announced it had acquired a 51% stake in the Medicare Private Hospital as well as a 50.1% stake in the property management company which owns the Medicare Private Hospital property portfolio.
MPH is an acute 110 bed independent private hospital conveniently located in Rustenberg, North West Province. MPH was officially established in 2009 and began as a 36 bed sub-acute hospital and has subsequently grown incrementally, with the founders having successfully applied to the Department of Health for an increase in beds over the years resulting in MPH becoming an established acute facility in the North West Province.
RH Bophelo Key Metrics
RH Bophelo trades on an historic multiple of 18 times earnings although this is not a fair accounting of the underlying operations which will be accounted for more fully in the current financial year.
The February financial results will be announced around 24 May 2019.
The company has a market capitalization of R461m with the share down 12.71% over the last 12 months.
It should however be remembered that the share is highly illiquid with an average daily volume of just 543 shares changing hands.
With the stock being illiquid, the opportunity for directors dealings is limited.
However this February, CFO Mhlaba purchased 2000 shares at R9/share while John Oliphant acquired R90635 in shares.
It is always a positive sign when the group CFO is seeing value in the counter.