CareTech Holdings PLC has agreed to acquire Oakleaf Care
CareTech Holdings PLC, a pioneering provider of specialist social care services in the UK, is pleased to announce that it has agreed to acquire the entire issued share capital of Oakleaf Care Limited and all of the residential properties from which it operates. Oakleaf is a Northampton-based specialist in the care and rehabilitation of men with acquired brain injury. The total consideration for Oakleaf is £20.3 million in cash, comprising an initial payment of £18.3 million (including £11.4 million for the properties) and an earn-out of £2.0 million.
Oakleaf was founded in 2004 and provides a range of pathways from rehabilitation through to long term and end of life care. It currently operates 102 residential beds across nine freehold sites in the Northampton area. The sites include a new, purpose-built facility comprising 22 beds, which opened this month. Oakleaf offers both highly specialised rehabilitation beds as well as community based step down provision and employs approximately 225 people including strong clinical and therapeutic teams.
In the year ended 31 December 2014, the trading company Oakleaf Care (Hartwell) Limited reported sales of £7.3 million, EBITDA of £2.3 million, profit before tax of £0.7 million and had net assets at 31 December 2014 of £1.2 million. The freehold properties were held separately.
Oakleaf's senior management team, including co-founder, shareholder and chief executive Ian Mosley, will remain with Oakleaf following its acquisition by CareTech.
The acquisition, which is expected to be immediately earnings enhancing, builds on CareTech's existing neurological services, represents a further regional growth platform for the Company in the ABI sector and further increases our penetration into health provision provided by Clinical Commissioning Groups.
The two most common forms of ABI are traumatic brain injury and stroke. Other causes include brain tumour, meningitis, aneurysm, haemorrhage, encephalitis, anoxia and other conditions. The treatment, care and support of people with ABI represents a growing market. In 2013-2014, there were 350,000 hospital admissions as a result of ABI of which 163,000 were cases of traumatic brain injury. Pressure on hospital beds means that, following acute treatment in hospital, patients tend to be moved to specialist accommodation where the rehabilitative pathway can be delivered.
The acquisition of Oakleaf will be financed from the £30 million that the Company raised last month through an innovative ground rent transaction announced on 19 February 2016. The consideration payable under the earn-out of up to £2.0 million will be determined with reference to Oakleaf's EBITDA performance over the 2 years to 31 March 2018.
Ian Mosley, Oakleaf's chief executive and co-founder, said: "We founded Oakleaf 12 years ago to provide care and rehabilitation to men with acquired brain injury, a serious and challenging condition that requires highly specialised care. We have successfully built up the business to a capacity of 102 beds and believe that now is the ideal time to become part of a larger company that shares our commitment to the highest standards of care."
Farouq Sheikh, CareTech's Executive Chairman, commented: "We are delighted to announce the acquisition of Oakleaf, a high quality business with first class, purpose-built facilities and a strong clinical reputation that provides specialist care to people with acquired brain injury. The acquisition is immediately earnings enhancing and comes with an experienced and motivated management team and good growth prospects. I would like to welcome Ian Mosley and the whole Oakleaf team to CareTech.
"The acquisition is in line with our strategy of consolidating the fragmented and growing market in which we operate. Funding for the acquisition has come from the £30 million of cash we raised last month through our innovative ground rent agreement. We continue to explore further acquisition opportunities."