Banking on the good health of the primary care sector
Central to these expansion plans has been the investment from Metric Capital Partners. The London-based private equity fund specialises in small to medium-sized companies, typically in service sectors. The Centric investment is the fund’s biggest to date. Metric is putting in € 20 million and will take a minority stake in the company.
Current shareholders Johnnie Walker, the founder of Global Diagnostics, and Lar Bradshaw are being bought out as part of the deal. Former Independent News Media chairman James Osborne will remain as chairman of the company.
Cox describes the private equity investment as transformative for the company. Though Centric turned a profit of just under €90,000 in its 2010 financial year, on turnover of €32.5 million, in 2011 it faced a number of exceptional items that put pressure on the balance sheet despite a 10 per cent increase in revenue.
Performance has improved this year, Cox says, with revenue now more than €40 million for the financial year.
“Look, it’s been tough for the last few years,” says Cox. “For the first three or four years in business, it was a lot easier to raise finance but over the last few years things have tightened completely. It’s the same situation the length and breadth of the country for small and medium-sized businesses.
“Like any business we have our challenges, but the business has been a relatively successful business. Trying to get the right funding structure in place was difficult.”
Centric started to look at new funding and restructuring options about 18 months ago, appointing NCB Corporate Finance.
“I would have initially been sceptical about hiring advisers, but it was the best thing we ever did,” Cox says.
“They asked tough questions about our own business and where we wanted to go. I would definitely advise small and medium-sized businesses to get that advice and support.”
Centric talked to a number of potential funding partners, particularly in the UK. Was it difficult to sell the Irish story to would-be investors?
“There were some who were, shall we say, tuned in to the Sky News version of Ireland, but then there was a group, including Metric, who thought Ireland was undersold and saw it as an opportunity.”
The decision to invest in primary care centres at a time of economic uncertainty may seem curious to some. Cox disagrees.
“Primary care centres, the idea that you have a range of services available in one site, are a central plank of Government policy,” says Cox.
“Over the last decade or so, there hasn’t been any political party which has thought it’s not a good idea. It’s just that the implementation of it has been painfully slow.
“Now there is some debate about how it should happen, but there is a belief that these centres need to happen, and probably in excess of 200 of them.”
Currently 41 primary care centres have been built around the State, 10 of which have been built solely by the HSE, others through lease mechanisms with other operators including GPs.
Centric’s plan is to develop each site about 30,000sq ft in size. It will take a lease for about 20 per cent of the site, where it will locate GP, physiotherapy and other health services, with the HSE occupying the remaining 80 per cent.
Centric has already got buy-in from the HSE on five of the sites, and has a shortlist for the remaining five drawn up. Ultimately, explains Cox, the aim is to have dialogue between the two strands, which will involve integrated IT systems between the two parts of the business.
Cox is something of an evangelist when it comes to primary healthcare. “There is widespread research internationally that shows the better the primary care structures in a country, the better the patient outcome, and the lower the cost on the exchequer,” he says.