LONDON, UK: CareTech Holdings Plc (AIM: CTH) has acquired majority stakes in two businesses in the United Arab Emirates including Dmetco-Bayti and Wellness Group.
Across both transactions, the upfront cash out on completion by CareTech is £11.9m, with deferred cash payable of £5.5m.
Following CareTech’s first international investment in the United Arab Emirates (UAE), the Group is pleased to announce two further acquisitions as part of its strategy to develop a whole person care pathway of services for people with complex needs and disabilities.
This targeted international growth represents a strategic move to take the Group’s expertise to a region with significant unmet population need and attractive policy and payer dynamics.
CareTech began its international expansion in February 2020 by acquiring 51% of the UAE based AS Group. Operating under two brands, the American Centre for Psychiatry and Neurology (ACPN) and Maudsley Health (a partnership with the world-renowned South London and Maudsley NHS Foundation Trust), the AS Group is already the market leader in outpatient mental health services in the UAE and provides inpatient clinical management services to the Al Amal Psychiatric Hospital in Dubai.
Since CareTech’s investment in the AS Group, and in-line with its commitment to support the development of additional services, a Training Academy is being established by the AS Group and education expertise from CareTech’s UK teams seconded to support development of special education needs services in the UAE.
The acquisition of Wellness and Dmetco-Bayti will expand the care pathway to encompass specialist health and social care services in home care environments, and physical healthcare services in specialist clinic settings. CareTech’s long term goal in the Gulf region is to create a world class integrated solutions provider of care and technology for the mental health, social care, special education, and physical healthcare pathway, offering the widest possible access to people with complex needs and disabilities in their local communities.
Dmetco-Bayti is a well-established home healthcare provider managing the daily health and social care needs of its patients across the UAE through two home-grown brands, namely Dmetco Home Healthcare and Bayti Home Healthcare.
Established in 2012, it provides home healthcare and physiotherapy services in the emirate of Abu Dhabi, primarily to UAE nationals, through a team of over 150 registered healthcare professionals. Dmetco-Bayti also caters to patients who require physiotherapy and rehabilitation services. The estimated patient size for in-home health and social care services in the UAE is 10,000, with Dmetco-Bayti currently managing 120 individuals.
CareTech sees a substantial opportunity to scale up Dmetco-Bayti’s operations in the medium term, both in terms of volume and complementary services particularly through the AS Group’s whole person care pathway developments.
Dmetco-Bayti’s revenues are primarily backed by the UAE Government’s mandatory health scheme for UAE nationals, Thiqa. In January 2021, the UAE Government introduced policies into the sector to make access to tenders available to only the larger home healthcare providers, therefore Dmetco-Bayti’s current competitive advantage will be enhanced further.
Dmetco-Bayti generated revenue of c.£9.4m in 2021. It is expected that the acquisition will be immediately earnings enhancing for CareTech.
AS Group has acquired a 70% interest in Dmetco-Bayti paying upfront consideration of £7.3m in cash with a further £3.2m in cash deferred and £1m in cash payable through an earn-out mechanism. The transaction has been funded by the Group’s existing cash resources and debt facility.
Established in 2015 by Shafqat Malik, co-founder and CEO of AS Group, the Abu Dhabi-based Wellness Group provides integrated physical health consultations and surgical services serving c.7000 patients per month. Wellness’s operations are an integral part of the founders’ vision to provide a continuum of care for AS Group’s mental healthcare patients through quality day care, GP and other specialist services. Over 72% of the Groups’ revenues are backed by health insurance schemes.
CareTech anticipates expansion of both capacity and services at Wellness as the care pathway opportunities are developed with both the AS Group’s mental health brands and Dmetco-Bayti’s home healthcare services.
Wellness generated revenue of c.£10.8m in 2021. It is expected that the acquisition will be immediately earnings enhancing for CareTech.
CareTech has acquired a 51% interest in the Wellness Group and is paying upfront consideration of £8.1m in cash with a further £3.9m in cash deferred. The transaction has been funded by the Group’s existing cash resources and debt facility.
Shafqat Malik, the CEO and a shareholder of CareTech’s subsidiary, AS Group, will take on additional responsibilities for Dmetco-Bayti and Wellness.
Farouq Sheikh, Executive Chairman of CareTech commented: “This is an exciting next step development in our investment in the AS Group as CareTech’s platform for growth in the UAE. Dmetco-Bayti and Wellness complement the existing brands of the AS Group and together offer a pathway of specialist health and social care services to an underserved market with favourable growth prospects.
“Dmetco-Bayti and Wellness will be managed through the AS Group led by Shafqat Malik as CEO with the intention of integrating a number of areas. We look forward to supporting the AS Group to realise our collective vision of being the benchmark for specialist services in the UAE serving individuals with complex needs and disabilities.
CareTech has established its regional Managing Office in Dubai, and as we invest in regional platforms, the Managing Office will provide strategic oversight to these investments with governance support from CareTech’s corporate functions – a model that we are further embedding through these investments.”
Shafqat Malik, CEO of AS Group, commented: “I am delighted to build on the already successful business at AS Group by adding these well-regarded homecare and clinic brands to the portfolio. We warmly welcome the management teams of Wellness and Dmetco-Bayti to the AS Group.
“These new partnerships will mean that our whole person care pathways strategy, successfully deployed in the UK, is gaining momentum in the UAE. The Gulf markets are under served with specialist social care services and therefore provides CareTech, through its AS Group, a platform to create an integrated pathway in the UAE that can also act as a template for the wider region in due course.”
Dr Ali A. Hamidaddin, CEO, Dmetco-Bayti commented: “We are excited at the prospect of working with the AS Group and its parent CareTech as it now provides Dmetco-Bayti the ability to complement its existing service provision with the portfolio of specialist expertise and care pathway that the wider AS Group offers.
“The supported living and home healthcare market in the region is growing rapidly and is evidenced by a rapidly changing demographic, a high frequency of lifestyle illnesses and increased longevity of life. There are additional opportunities for growth as the region is now becoming a leader in the digitization of full spectrum healthcare as well as funding and promoting the provision of mental well-being services. We believe that with the scale of expertise that CareTech brings, we can grow this business to a pre-eminent position.”
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