Buy-out target Community Hospitals posts growth

35 per cent first-half pre-tax profit increase strengthens the healthcare provider’s bargaining power in auction.

Community Hospitals, the private healthcare provider that put itself up for sale in January, has announced strong earnings that should strengthen its hand in the ongoing negotiations with a number of potential buyers.

First-half pre-tax profits of the owner of 21 UK hospitals rose 35 per cent to £9.4m (E14.7m), with turnover up 16 per cent at almost £67m.

The news will whet the appetite of General Healthcare, Britain’s leading private healthcare company. Acquired by buy-out firm BC Partners from fellow private equity house Cinven in September last year, General Healthcare has put in a query with the Office of Fair Trading to see whether anti-trust considerations might block plans to buy Community Hospitals.

Also in the running are Westminster Health Care which is backed by ,Goldman Sachs, and Nuffield, a charity. The sale is managed by Granville.

Each bidder will have given thought to the issue of competition. Last year the UK Department of Trade and Industry blocked a proposal to merge Community with Bupa, the private medical services provider, on the grounds that the deal would create excessive pricing power.

Community, whose share price has dropped since the department’s intervention, remains keen to make itself part of a larger entity – at the right price. “The decision to merge the company is based on shareholder value rather than strategic imperative. If no one matches up to our value then we will remain independent”, Community CEO Alan Pilgrim told Reuters.