The Medibank Private Ltd (ASX: MPL) share price is edging higher on Friday after the release of an announcement.
At the time of writing, the private health insurance company's shares are up 0.5% to $3.04.
What did Medibank announce?
This morning Medibank announced that is strengthening its focus on preventative health and doctor-led partnerships through the acquisition of a non-controlling 33.4% economic interest in the Myhealth Medical Group.
According to the release, Myhealth is a leading operator of primary care clinics. It was founded in 2007 and delivers more than 2.5 million patient consultations each year.
The release notes that Myhealth is growing very quickly and has tripled its number of clinics over the last five years. As a result, it now has a network of 86 clinics in prime locations across New South Wales, Victoria, and Queensland.
Medibank is acquiring the 33.4% economic interest in Myhealth for a total expected consideration of $63 million. This will be funded entirely from existing cash resources and is expected to complete by 31 March 2021.
Management notes that the transaction is expected to be immediately earnings per share accretive. Myhealth is forecast to deliver operating earnings of approximately $21 million in FY 2021.
Management commentary
Medibank's Chief Executive Officer, Craig Drummond, believes that GPs are the very heart of Australia's health system and expects this investment to support them to enhance the health and quality of life of their patients.
This is turn should help reduce high-cost hospital admissions and alleviate pressure on the health system.
Mr Drummond also notes that this transaction reflects the ongoing transformation that Medibank is undertaking.
He commented: "Medibank's investment in Myhealth also reflects our ongoing transformation into a broader healthcare company and complements our existing partnerships with doctors across the Australian health system."
"We will continue to work within the healthcare system to contribute to a healthier community with a focus on preventative care, which will have a positive impact on avoidable hospitalisation, and contribute to a more sustainable health system that benefits all Australians. The announcement today is a further signal of our commitment to doctor-led and patient-centred partnerships that meet these objectives," he added.
The release stresses that patients will continue to be treated equitably, with no clinical priority given to Medibank or any other private health insurance customer.
