Romanian private healthcare providers on acquisition spree

Romanian private healthcare providers on acquisition spree
MedLife has been aggressively buying up smaller companies in the Romanian healthcare sector since its IPO on the local bourse.
By Carmen Simion in Bucharest May 17, 2018

Romania private healthcare services providers have been expanding rapidly recently, with dozens of new investments and acquisitions being carried out by the three main players in the sector: MedLife, Regina Maria and Medicover.

The newest acquisition was announced by Regina Maria on May 17. Romania's second largest private medical services provider took over the Kinetic Sport & Medicine centres, which provide physiotherapy and kinetotherapy services, Ziarul Financiar reported. This is the 25th acquisition by Regina Maria in the past two years. Kinetic Sport & Medicine posted a turnover of €2mn last year.

Regina Maria is majority owned by investment fund Mid Europa Partners, which took over the Romanian healthcare provider in 2015 in a deal estimated at more than €100mn.

The announcement of Regina Maria's acquisition came just one day after its competitor Medicover said it had signed a deal to acquire an 80% stake in Pelican Hospital in Oradea, northwest Romania, for €23mn. Following the acquisition, Medicover will become the main private healthcare services provider in northwest Romania.

This is the largest acquisition on the Romanian healthcare services market since the acquisition of Regina Maria by Mid Europa Partners in August 2015.

In July 2017, Medicover also bought Iowemed healthcare, a network  active in Romania's Black Sea port of Constanta. Last year, the combined revenues of Medicover and Synevo laboratories in Romania went up 19.6% to 73.8mn. Medicover has a network of 25 clinics and one hospital in Romania.

The largest private healthcare services provider in Romania is MedLife, which has also been very active in increasing its network since its IPO on the local stock exchange. Some of its most recent acquistions include Polisano's medical services division, one of the largest private medical operators in Romania, a 80% stake in Solomed, a group of medical services clinics present in Arges county, and a 90% stake in Ghencea Medical Centre.

MedLife operates the largest network of clinics, one of the largest medical laboratory networks, general and specialised hospitals, and has the largest customer base for health prevention packages in the country. Since 2009, it has opened or acquired 83 medical centres. MedLife is listed on the Bucharest Stock Exchange. It posted a consolidated tunover of RON196.8mn in the first quarter of the year, 34% up y/y.

The expansion of the private healtcare services providers in Romania was supported by robust economic growth and expansion of companies which increased their staff. Subscriptions to private medical services is one of the benefits companies are offering in Romania.

Although a few years ago subscriptions to private medical services were offered to employees mostly by large and profitable companies, in the last few years things have started to change. Employment in Romania has been on an upward trend, with the jobless rate reaching record lows this year. Due to fierce competition and shortages of qualified workforce, companies had to increase wages and offer more benefits in order to retain their employees and attract new ones.

Moreover, the shortcomings and recent scandals related to low quality disinfectants used in hospitals have turned people to private clinics. The disinfectants scandal also revealed the high number of infections contracted by patients in the public hospitals. The Club Colectiv tragedy, a fire in a Bucharest nightclub which ultimately led to the deaths of 64 people threw a spotlight on the shortcomings of the Romanian health service as many of those who died survived the fire but died later of infections in hospitals.