The Telstra Corporation Ltd (ASX: TLS) share price is on watch after announcing that it’s making an acquisition.
Telstra’s new acquisition
Telstra said that its Telstra Health division has signed a binding agreement to acquire MedicalDirector for an enterprise value of $350 million.
The transaction is expected to be completed in the first quarter of FY22.
What is MedicalDirector?
MedicalDirector is a software company that provides GP clinic and practice management solutions. It reduces time spent on paperwork and administration and supports medical practitioners with patient medical records, electronic scripts virtual consultations, patient care plans and more.
It has been used by the medical industry for over 25 years and is currently used by around 23,000 medical practitioners.
Why Telstra thinks this is a good deal
Telstra said that this acquisition supports Telstra Health’s vision to be a leading partner for the health and aged care sectors.
Telstra plans to “significantly increase” investment in MedicalDirector to provide medical practitioners with the best digital solutions.
Management said it is “excited” to have the opportunity to grow MedicalDirector and combine its solutions with Telstra Health’s clinical and health system capabilities.
Telstra Health Board Chair Brendon Riley said: “GPs play a central role in connecting to every part of the health and aged care systems, and practice management is an incredibly important addition for Telstra Health in providing quality solutions and supporting them to deliver care.
“Telstra Health has transformed substantially over the past five years and this announcement reflects its continuing maturity as a business and its importance as part of Telstra’s long term growth strategy. It also reflects its continued growth into a global business, including strengthening our existing presence in the UK where MedicalDirector has been establishing itself in recent years.”
Telstra share price
Source: Rask Media TLS 5-year share price
Summary thoughts on Telstra and the share price
It’s good to see that Telstra is focusing on growth and branching out globally into other sectors that compliment its telco business. Telstra might finally be turning things around, with its health division appearing to be a key part of its global growth strategy.
The acquisition of MedicalDirector for $350 million is not very large for a large business like Telstra, however Telstra also recently announced that it will buy a majority stake in global healthcare and hospital software provider PowerHealth.
Telstra has turned out to be a turbulent choice for investors and there might be a hearty dose of scepticism in the air about whether this finally is Telstra turn around story. However sentiment has been turning positive with the Telstra share price growing by 27% since the beginning of 2021.
At the time of writing the share price is up under 1% at $3.82.
There are many other ASX dividend shares I would be excited to buy before Telstra. I do hope this is the start of something good for Telstra shareholders and I’m watching along.
