The Medibank Private Ltd (ASX: MPL) share price is up more than 1% after announcing a $151 million acquisition of GP and medical clinics.
Acquisition of GP and medical clinics
Medibank has entered into an agreement to acquire Better Medical, a network of 61 GP and medical clinics in Victoria, Queensland, South Australia and Tasmania.
Better Medical has operated over the past decade, with around 800 doctors, nurses and allied health practitioners delivering care to patients.
The private health insurer will pay $159 million for this business, which builds on its involvement in primary care through its Amplar Health network. Medibank said this would focus on “improving access, choice and control for both patients and clinicians”.
Medibank also has a majority interest in Myhealth Medical Group, which has a network of 105 primary care clinics across eastern Australia.
The transaction will be funded from existing unallocated capital. Better Medical is expected to deliver EBITDA of approximately $6 million for the six months to 30 June 2026.
Medibank said the acquisition “aligns with Medibank’s strategy to expand its health and supports the aspirations to achieve at least $200 million in Medibank Health segment profit and to grow capital employed” to around $700 million by FY30.
This takes the total amount Medibank has invested in acquisitions between FY24 and FY26 to $218 million, which is towards the top end of its target range of between $150 million to $250 million.
Management comments
Amplar Health Chief Executive Robert Read said:
Primary care is the cornerstone of the health system, with GPs, nurses and other health professionals vital to early intervention and prevention in their communities.
Investing in GPs and their teams to enable them to deliver more proactive and preventative care is good for patients, good for doctors and good for the health system.
The need for more investment in prevention is clear. The rate of Australians living with chronic conditions continues to grow even though around one third of these conditions are preventable. Recent data from the Royal Australian College of General Practitioners shows that more than 4 in 5 practising GPs want to provide more preventive care to their patients, with time being one of the biggest barriers.
As a health company, we see the impact of an under-investment in prevention every day. It’s why we are taking steps to address this through our investments in wellbeing, primary care and community and acute care.
We know GPs are under pressure and that we can help to remove some of the barriers. Part of this will be investing in Better Medical’s digital capabilities to free up clinicians’ time and improve patient access and experience. Another is giving GPs the tools they need to provide more proactive, comprehensive and connected care to their patients.
Final thoughts on the Medibank share price
I can see why Medibank is putting money towards this initiative and it’s useful for shareholders it can deploy capital into the wider healthcare sector. Time will tell how profitable it is for the business in the coming years.
However, there could be other areas that could be an even better investment for investors looking for ASX dividend shares.
