Austco Healthcare Extends Direct Sales Presence with Acquisition of Nurse Call Platform Reseller

Austco Healthcare (ASX: AHC) subsidiary Austco Communication Systems has entered into a share purchase agreement to acquire Medical Communications Systems (MCS).

MCS has been Austco’s certified nurse call platform reseller to South Australia’s aged care market since 2011.

The acquisition continues Austco’s strategy of acquiring established resellers to strengthen its direct sales capability in the domestic healthcare market, and follows its recent buy-out of Australian companies Teknocorp and Amentco, along with New Zealand’s G&S Technologies.

It will bring MCS in-house, boosting Austco’s direct customer relationships and service delivery in the South Australian healthcare and aged care markets.

Consideration and Integration

Under the terms of the deal, Austco will pay MCS a total consideration of $2.88 millon, representing a multiple of 3.5 times its normalised EBITDA.

This payment will comprise upfront cash of approximately $2.24m plus a performance-based cash earnout of $640,000.

The cash component will be funded from Austco’s existing reserves, with the acquisition forecast to add $1.88m of net incremental revenue and $820,000 of incremental EBITDA to Austco on a full-year basis.

On completion of the acquisition, MCS will be integrated into Austco’s Australian operations and Austco will prioritise customer and employee continuity, alignment of financial and reporting systems, and continuity of service to the South Australian market.

Austco expects the acquisition to be immediately earnings accretive, excluding transaction and integration costs.

‘Natural Next Step’

Austco chief executive officer Clayton Astles welcomed the mutually beneficial transaction.

“MCS has been a trusted Austco reseller in South Australia for many years, and bringing that business in-house is a natural next step,” he said.

“This acquisition follows the same disciplined model as our last three: strengthening our direct sales capability, deepening our customer relationships and retaining experienced local people.”

“The transaction structure links part of the consideration to MCS’ future performance, consistent with our approach to mergers and acquisitions and our focus on earnings-accretive growth.”

Singapore Maintenance Contract

Austco was also recently awarded a $4.2m maintenance contract for its Tacera clinical care communications solution at the Jurong Health Complex in Singapore, which includes the Ng Teng Fong General Hospital and the Jurong Community Hospital.

The 10-year deal extends Austco’s relationship with Jurong Health Complex and converts part of the company’s installed base into long-term, recurring service and maintenance revenue.

Mr Astles said the contract demonstrates the customer’s continued confidence in Austco’s Tacera platform and its Singapore team.

“This ten-year agreement provides long-term revenue visibility from an established installed base and supports our strategy to grow recurring service and maintenance revenue alongside project sales,” he added.