Primary Health Care chief executive Peter Gregg has stripped the conglomerate back to its three core businesses of medical centres, pathology and radiology after selling insurer Transport Health for $27 million.
The divestment, announced to the market on Tuesday, is the fourth Mr Gregg has completed since beginning at Primary in March 2014 and launching an asset review.
Peter Gregg has made four divestments since taking over Primary Health Care in March 2015. Photo: Jessica Hromas
The former Qantas and Leighton Holdings executive took over from founding CEO the late Ed Bateman.
Dr Bateman, who began Primary at Sydney’s northern beaches in the 1980s with one medical centre, pushed the company to invest in adjacent healthcare businesses.
But the purchase of Transport Health in September 2014 was one of his final attempts at pursuing the strategy of diversification. He became ill that month and died in September 2015, aged 73.
Mr Gregg has since sold Primary’s stake in laser clinic network Vision Eye Institute to Jangho Group for $34 million in July 2015; a property development site in the Barangaroo precinct in Sydney for $40 million in November 2015; and Primary’s struggling software provider Medical Director for $155 million to Affinity Equity Partners in March this year.
“Following the recent divestments of our Barangaroo property and Medical Director, the sale of Transport Health is further evidence that we are delivering on our capital recycling initiatives and strengthening our balance sheet,” Mr Gregg said.
The $2 billion company is now a leaner operation, but Mr Gregg is left running mature businesses that are growing slowly. Primary’s revenue, much of which comes from government payments through Medicare, is under pressure as the government looks to rein in its health expenditure.
Primary shares fell 3.5 per cent to $3.82 at midday, in an otherwise tough day on the market. The stock is down 22 per cent in the past year, but is trading 66 per cent higher in the year to date.
After snapping up Primary’s stake in Vision, and then the whole company, Chinese company Jangho has since grabbed 10 per cent of Primary and is considered a potential predator.
Transport Health was bought by Railway and Transport Health Fund, a members-owned fund serving transport and energy employees and their families.