After yesterday’s move into the UK car repair business (see Quindell moves down market into car repairs), today we learn Quindell Portfolio is going into the Canadian rehabilitation market, taking a 26% stake in PT Healthcare Solutions Corp (PT Health), which operates over 100 physiotherapy and rehabilitation clinics across Canada.
Quindell is paying the equivalent of £5.3m in shares for the stake, with the option to buy out the remaining 74% by next April, if PT Health is on track to meet profitability targets. The total purchase price is effectively 1x PT Health’s revenue of C$77m for the year ended 31 March 2013, when it also made an EBITDA margin of 10%. Quindell said was despite having more than one-third spare capacity available within the business to support additional volume.
Quindell wants to use PT Health as a base for delivering outsourcing services in Canada, and then eventually into the USA. It wants to use existing customer relationships with the Insurance Brokers Association of Ontario (IBAO) and others to exploit the cost advantage of selling volumes of insurance claims through the rehab business. It also said 'consumers will benefit from the best customer care and service experience based upon a multi-disciplinary approach to rehabilitation' - whatever that means.
This is Quindell’s second spell in rehab, having made its entrée here with the acquisition of UK-based Overland Health and its rehab centre LBHealthcare last April (see Quindell makes another curious move). You can probably tell we aren’t convinced by this move either, not least because Quindell seems to be re-igniting its voracious appetite for M&A. Even more worrying is Quindell's intention to build an outsourcing business in North America. We know how many more established players have tried and failed on that front. BPS is all about the service, which requires significant investment. It is unclear what Quindell wants to do beyond simply reducing costs.