Garofalo Health Care, the challenge is on private service revenues
Healthcare. The group is focused on the integration of the newly acquired Aurelia 80. The risks of inflation and high interest rates
6' min read
Key points
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6' min read
On the one hand, the objective is to increase revenues from private services, reaching - in the medium term - at least 30% of total turnover. On the other the integration of the newly acquired Aurelia 80. All this while continuing the M&A business, when the right opportunity arises. They are among the priorities of Garofalo Health Care(GHC) to support the business.
Yes, the business. The company, which Lettera al Risparatore heard from the top management, is an accredited private healthcare company in Italy whose activities are divided into the following areas: the territorial and socio-assistance sector and the hospital sector (acute, post-acute and outpatient services).
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The private
.Well, one priority is to increase turnover from private services. At the end of 2023 this type of revenue is around 21% of the total turnover. In the medium term, the goal is to reach a share of at least 30%. This is an accelerating business - in the first nine months of 2023 this grew by 11.3% compared to the same period in 2022 - which has several reasons. Among others: on the one hand, like it or not, the contraction of public healthcare spending that creates difficulties for the NHS in providing services (think, for example, of the long waiting lists); on the other hand, the increasing growth of phenomena such as corporate welfare or health insurance coverage. In such a context, the demand for private services is - evidently - destined to expand.
L’integrazione
But it is not only a question of revenue type. Another priority is the integration of Aurelia 80. The operation, whose closing took place last November, involves the shopping of four assets: Aurelia hospital, European Hospital, the St. Anthony of Padua Hospice and the Samadi psychiatric residence. The aggregation of the assets represents an important step. This includes the creation of a cardiovascular heart centre at Aurelia Hospital. Here, the construction of a new surgical plate is planned. As of today, the internal building reorganisation of Aurelia Hospital is starting, for which only the Scia is required. It is a move that will also allow the renovation of other departments of the hospital. Then there is the construction of the actual plate. On this front, next February, the presentation of the final project is expected, with respect to which, 3-6 months later, the approval of the Municipality of Rome should arrive - barring unforeseen circumstances. From there, GHC's idea is that, between the end of 2025 and the beginning of 2026, the new cardio-surgical plate should come into operation.
The execution risk
.All smooth as a trickle, then? The reality is more complicated. The saver points out that aggregation implies, for example, execution risk. A possible problem that may impact, among other things, Garofalo health care's margins. The group rejects the concern.First and foremost, it is pointed out, the company in the past has effectively integrated different realities. So - as the track record itself shows - it has the expertise to handle the Aurelia 80 operation. Moreover, says the group, at the time of the presentation of the extraordinary activity on Aurelia 80, GHC itself had estimated an Ebitda of the reality acquired of about 5.5 million for the whole of 2023. The forecast, also and above all in the wake of the first operations carried out by Garofalo health care, has been revised upwards: the EBITDA, the company always indicates, should be at least 30% higher than the first estimate. Consequently, precisely with regard to the Aurelia 80 shopping spree, on the one hand, no specific problems are seen; and, on the other, the forecast is that the operation will be profitability-enhancing.
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