Life Healthcare to sell stake in pharmaceutical business for $75mn

Life Healthcare, South Africa's second-largest private hospital group, is set to cash in on a $350 million deal for its stake in Life Molecular Imaging (LMI), a diagnostics business. The CEO, Peter Wharton-Hood, recently discussed the details of the deal in an interview with CNBC Africa, leading to a surge in the company's stock price. Shares of Life Healthcare jumped nearly 9% following the announcement, reflecting investor excitement over the potential returns from the transaction. Wharton-Hood highlighted the strategic importance of the deal and outlined the conditions that still need to be met for its completion. He mentioned regulatory hurdles in the US, Germany, and the UK, as well as the need for shareholder consents, but expressed confidence in navigating these challenges. The expected shareholder return from the deal includes an upfront payment of $350 million, with the possibility of an additional $400 million in earnouts. Furthermore, Life Healthcare retains the rights for manufacturing and distributing LMI products in Africa, underscoring the company's long-term growth strategy. Wharton-Hood emphasized the significance of retaining the African market's potential for healthcare expansion, citing it as a strategic move for the company's future. In the local healthcare market, Life Healthcare is focusing on a Southern African expansion, with investments in complementary services like renal dialysis, nuclear medicine, diagnostics, imaging, mental health, rehabilitation, and oncology. The company also has plans for a new hospital build in the Western Cape, signaling its commitment to growth and development. Regarding future acquisitions, Wharton-Hood stated that while the company has no immediate targets, it remains focused on consolidating its position in the Southern African region. As for universal health coverage and the National Health Insurance (NHI) in South Africa, he sees it as an opportunity for collaborative efforts between the public and private sectors. Life Healthcare is open to engaging in public-private partnerships to enhance healthcare delivery and support the country's healthcare objectives. Overall, the $350 million diagnostics deal represents a significant milestone for Life Healthcare, underlining its strategic vision and financial strength in navigating evolving healthcare landscapes and opportunities.