Outsourced Pharmacy Services Leader HPS Generates Strong Returns with Sale to EBOS.
HPS is an Australian leader in outsourced pharmacy services for private hospitals and the oncology market. In May 2015, Fortitude invested in HPS to create an exit strategy for retiring shareholders and partially facilitating a sell-down by other stakeholders.
Our results
After successfully expanding operations into IVF, day surgery, and 'hospital in the home' sectors, as well as introducing automation into four major pharmacies via robotic dispensing machines, HPS was sold to EBOS in June 2017, generating an internal rate of return (IRR) of 46.2% p.a.
43%
OF MARKET SHARE AT EXIT, UP FROM 35%
30%
COMPOUND ANNUAL GROWTH RATE ON EBITDA
2.2X
MULTIPLE OF MONEY
CHALLENGES OVERCAME
Balance expansion into new sectors while maintaining a focus on the core private hospital market.
Leveraging HPS's robust national coverage model and superior service through proprietary IT solutions.
Overcome initial resistance and logistical challenges to enhance services and reduce operating costs through the delivery of automation in four major pharmacies.
Investment reaso
ning
Our investment was grounded in a clear vision of expanding HPS's market share in its core market and moving into adjacent sectors, including day surgeries, vet hospitals, and 'hospital in the home' services. We saw an opportunity for growth via automation and operational efficiency improvements, paving the way for a strategic exit via a trade sale to a pharmaceutical wholesaler or via an IPO. Our approach paid off when the business was successfully sold to EBOS in June 2017.
Securing market dominance
Through strategic investment and a keen focus on the core market, we successfully increased HPS's share in the private hospital market from 35% at entry to 43% at exit.
EXPANSION OF SERVICE OFFERINGS
Recognising the potential in related market segments, HPS moved into new sectors, including IVF, day surgery, and 'hospital in the home’ services. Such diversification not only broadened HPS's service scope but amplified its reputation as a versatile provider of outsourced pharmacy services.
BUILDING GREATER TEAMS
Our commitment to talent acquisition and development resulted in the creation of a formidable team across HPS departments. Staff grew at 18% CAGR from 385 at the entry to 532 at the exit, combined with investment in automation to facilitate further service growth and market dominance.
IMPRESSIVE GROWTH RATE
During our investment, HPS experienced a remarkable growth trajectory, culminating in an impressive IRR of 46.2% p.a. 2.2x money multiple (MM) realised at exit.