GOTHENBURG, Sweden, Sept. 25, 2002 (PRIMEZONE) -- European healthcare company, Capio, today entered into an agreement to acquire France's second largest private healthcare provider, the Clininvest Group. Clininvest runs 16 hospitals in several regions and had a turnover last year of 120 million Euros. The buy is a positive step taken by Capio in line with the ambition to become a pan-European provider of private healthcare, driven by high quality and cost efficiency.
"The fit between the Capio Group and Clininvest is perfect," said Per Batelson, Capio's CEO and President. "Clininvest is focusing on private acute care in regions outside Paris and the group puts emphasis on the same clinical areas as Capio. I'm convinced we will benefit from scale, technical and integration synergies between the two groups once the take-over process has been completed."
Scandinavian medical care is highly regarded in international circles. From this base, Capio has already developed its own competence in providing cost-effective, high-quality care to mainly public-sector purchasers. At the same time, the French healthcare standard is regarded as one of the highest in the world. Into this sophisticated but fragmented market, Capio brings expertise to the management process in order to boost revenue and output through improvement in efficiency, quality and local execution skills.
In the summer of 2001 Capio acquired Community Hospitals Group, renamed to Capio Healthcare UK, in England. The experiences gained in this integration process, will be of major value when integrating Clininvest into the Capio Group.
Through the acquisition of Clininvest, Capio will become an important player in the French market. The private sector in France is fully integrated in the healthcare system and the French government has for several years pushed for a consolidation process to take place in the fragmented market.
"We more than welcome the Capio offer," said Jean-Michel Texier, CEO of the Clininvest Group. "It is our strong belief that with the support given to a member in the Capio Group, we can now take advantage of our market position as the second largest private healthcare provider in France and increase margins and the quality of our services even further in the future."
"Clininvest will provide a platform for Capio's further expansion within southern Europe," said Paul Hokfelt, Head of Business Area Capio Healthcare France. "With a recognised need for high quality care Clininvest also adds immediate medical value to the Capio Group as a whole."
For further information, please contact:
Per Batelson, CEO and President, Capio +46 31 732 4001
Paul Hokfelt, Head of BA Capio Healthcare France +41 22 772 11 27,
+41 76 50 73 333
Ulrika Stenson, Vice President, Corp. +46 705 90 07 23,
Communications Capio +46 31 732 40 04
Jean-Michel Texier, CEO Clininvest +33 1 46 99 40 53,
+33 6 18 43 00 73
This press release is available in French and in Swedish on our website; www.capio.se. Press photos are also available on the website. Key Figures September 2002
Capio acquires the Clininvest Group
The French Healthcare Sector
-- The French healthcare sector has a total value of Euro 141 billion.
-- The private acute healthcare sector has a total value of Euro 7.5 billion.
Clininvest Group
-- Clininvest has a two per cent market share of the private healthcare sector, which makes Clininvest the second largest private healthcare provider.
-- Number of hospitals: 16
-- Number of employees: 1,840, of which 715 are nurses. In addition approximately 600 doctors use the facilities.
-- Number of patients per year: 150,000
-- Annual turnover: EUR130 M (2001 EUR121m)
The transaction in figures
-- Clininvest enterprise value approx. EUR80m
-- Possible earn out after one year up to EUR15m
-- Clininvest net bank debt June 30, 2002 approx: EUR55m
-- Property book value June 30, 2002 approx: EUR77m (Will adjust to fair value at close)
-- On a proforma basis consolidated Group EBITDA 2001 was EUR12m
Background
The Clininvest Group September 2002
The Clininvest Group was founded in 1987 as an investment fund with the initial objective to acquire, operate and develop private hospitals in France. In 1994 Suez Group became the major shareholder with the ambition to create a network of top-ranked hospitals. Clininvest is today 85.7 per cent owned by SI Finance, a division of Suez Industries.
Clininvest today ranks as the second largest health care provider in France, only surpassed by Generale de Sante. The fact that the total market share of the two top players among private health care providers accounts for only 10 percent and 2 percent respectively sheds light on the fragmentation in the French market.
Clininvest has restructured its operations by creating regional hubs and operating the hospitals as a group rather than as stand alone units. As a result of scalability in both size and units, Clininvest offers high-quality health care and in modern facilities.
Due to the need to improve performance, a program was launched year 2000. One of the cornerstones in this action was heavy investment made in buildings and equipment. The result of this program is that Clininvest today has a trimmed organisation for private health care in various regions around the country, and is well positioned to meet competition in a market under consolidation.
Clininvest manages 16 hospitals across France, which receives 150,000 patients annually. The group provides 1,823 beds and has excess in surgery capacity.
Other specialities are psychiatry, medicine, rehabilitation centres, chemotherapy and dialysis. During the last years Clininvest has invested heavily in its properties and in the latest hi tech medical equipment.
Clininvest is headquartered in Paris and has a total of 1,840 full-time employees of which 715 are nurses. In addition more than 600 consultants are working for Clininvest, but due to the French legal system Clininvest does not employ them.
Background
Capio
September 2002
Capio is one of the leading private healthcare providers in Europe. Capio's operations are conducted on behalf of public-sector purchasers, such as county councils and trusts, and on behalf of insurance companies and organisations. The company has built up a unique competence in the supply of cost-efficient, high-quality healthcare and medical care services.
Capio operates in Sweden, Norway, Denmark, Finland, Poland, the United Kingdom and Switzerland. Among other facilities, Capio operates St. Goran's Hospital in Stockholm and more than 20 acute hospitals in UK and provides care services within most medical specialities. Capio has created a unified approach in all markets. There is a competitive price situation in the Swedish market and figures show that St. Gorans hospital in Stockholm, has a lower production cost than its public competitors.
In total, the Capio Group has more than 150 operating units with approximately 11,800 employees, of which 2,000 are doctors. Capio is a knowledge-based company, in which major emphasis is placed on the competence and job satisfaction of its personnel.
The Capio Group has grown rapidly the last three years, mainly through acquisitions. At the end of May 2001, Capio acquired Community Hospitals Group PLC, (renamed to Capio Healthcare UK) the fourth largest private healthcare company in the United Kingdom. The acquisition contributed more than SEK 2,000 M in annual sales to the Capio Group, which thus established itself as one of the largest private players in the UK healthcare market.
Capio has an annual turnover of about SEK 7,500 M and today more than half of Capios operations are conducted outside of Sweden.
Capio's operations are divided into three business sectors:
-- Healthcare Services is the dominant area and services rangefrom general medicine and psychiatry to complex surgery. This businessarea also includes occupational healthcare services. Capio is theleading private healthcare provider in Sweden and Norway, and in the UKamong the largest.
-- Diagnostic Services comprise laboratory medicine and radiologyfor outpatient and inpatient care. Capio is the Scandinavian marketleader within this field.
-- Elderly Care Service is an area that has grown rapidly throughacquisitions and extension projects, resulting in doubled net sales year2001. Capio focuses on care-demanding services for the elderly and hasoperations in Sweden and Norway.
Capio's ambition is to be the most efficient provider of medical care services in Europe and to be the leader in the development of complete care chains for selected areas of therapy. Capio's strategy is to be a full-service provider of health and medical care services, with specialist expertise within diagnostics, radiology, psychiatry and inpatient and outpatient medical care. Capio has the expertise to operate across borders and fields of medical specialities.
Background
Healthcare Markets in France, UK and the Nordic Area September 2002
France
The French healthcare sector is the second largest in Europe with a total public spending of about 9.5 per cent of Gross Domestic Product (GDP). The private sector is integrated in the healthcare system and it is the largest and most mature private healthcare market in Europe. However, the private market is fragmented with few large providers, dominated instead by smaller, regionally strong players.
The healthcare system is characterised by each individual's right to choose the medical treatment best suited to them, whether from the private or from the public sector.
A majority of the healthcare financing comes from the state, while a smaller part comes from mutual and private insurance companies.
The French private hospital sector generates 30 percent of the total hospital activity. But it only corresponds to 16 per cent of the expenditures, due to more effective cost management. In spite of this, the quality of private healthcare is considered very high. A recent report from the magazine Le Figaro, shows that 26 out of the 50 highest ranked hospitals are privately owned.
Current health care providers face on going state regulation and are therefore required to invest in their facilities. As a consequence, many of the smaller independent private hospitals will become part of the consolidation process.
The maturity and the wish of the French population and practitioners to maintain the private healthcare system make it a market for Capio to gain stable profitability.
United Kingdom (UK)
The UK healthcare market is the third biggest in Europe with a total spending of about 7 per cent of GDP
The healthcare system is based on the publicly financed National Health Service system (NHS). Apart from public finances, the healthcare system is funded by insurance companies and by the patients themselves.
The public system is administered by Strategic Health Authorities. The NHS funds these authorities and the amounts they receive are based upon the size of the population and their health profiles.
In July 2000, the UK government published the "Concordat," a plan for the NHS to work in partnership with the private sector. The Concordat extends to patient care, diagnostic services and organisational cooperation. Increased funding of 6.3 per cent over each of the next five years is intended to reduce patient waiting lists, build more hospitals, provide better information to the patients, improve care for the elderly and set tougher standards for NHS organisations and better rewards for the best performers.
The increased number of patients choosing to pay for their own treatment in combination with an insurance system supporting private care and the declaration of the Concordat makes UK a market highly suitable for a private healthcare provider such as Capio The Nordic Area The public total spending on healthcare in Sweden is about 8.5 percent of GDP. Public-sector providers are responding to the private challenge by focusing on improved quality. At the same time, the tendering for and outsourcing of healthcare services trend is continuing. The ongoing implementation during 2002 of a "Care-warranty" that guarantees all citizens adequate healthcare will stimulate the market.
The public total spending on healthcare in Norway is around 9 per cent of GDP. The same care requirements exist as in Sweden and a major reorganisation of the medical sector in the beginning of this year will open the market to new initiatives.
The public total spending on healthcare in Denmark is approximately 8.5 per cent of GDP. It is still too early to see what actions the new government will take to improve the conditions in the healthcare sector. The most urgent issue is to solve the problem of long patient waiting lists.
There has been a tendency towards an increasingly open-minded attitude towards private alternatives at a national as well as at a regional level. However, due to the recent elections in Sweden and Denmark it is still to early to anticipate in what direction the markets will develop.
Conclusion
The healthcare markets in France, the UK and Scandinavia are heading in the same direction. Private healthcare is considered a relevant alternative to the public and there is a focus on allowing the individual decide his/her own medical treatment. Transparency in pricing also increases the possibility for the State to procure private healthcare with public funding.
Pricing models
DRG (Diagnosis Related Groups) is used in Scandinavia. A similar but less comprehensive tariff system OQN (Objectif Quantitatif National) is at work in France. In the UK the pricing models are more diverse but the Government have undertaken a wish to move to HRG's (Health Related Groups) a concept similar to DRGs.
The DRG model is an assessment of the overall healthcare process, based on all diagnosis being assigned a specific "weight." A fixed price is set for a certain weight unit, an index. To calculate the price for a service, the price per unit is multiplied by the specific weight for that service. If the care process is more efficient than what has been stated by the index, there is revenue for the hospital. If not, the hospital has to carry the cost.
The OQN model is based on the DRG methodology. The main difference is that the OQN model only validates the medical process and not the overall healthcare process. Regional hospital authorities called ARH fund the hospitals.
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