In a major move that will help scale its health division, Wesfarmers (ASX: WES) has agreed to purchase Melbourne-based telehealth service InstantScripts in a $135 million deal via its subsidiary Australian Pharmaceutical Industries (API), the owner of pharmacy chain Priceline..
InstantScripts, founded in 2018 by former merchant banker Dr Asher Freilich and web developer Maxim Shklyar, provides virtual medical consultations and prescriptions to patients, as well as other medical consultation and pathology services. Over the last year, the telehealth service has completed more than 1 million Australian patient interactions.
The acquisition comes three weeks after Wesfarmers’ API lobbed a $169 million bid to acquire SILK Laser Australia (ASX: SLA), which has since been thwarted by a superior proposal from Hong-Based EC Healthcare.
Freilich said the proposed transaction reflected the growing recognition of the important role that digital health services play in Australia’s complex health system.
“This transaction is a strong endorsement of the health care services we have clinically developed over the past five years at InstantScripts and the future of the digital health care sector more broadly,” Freilich said.
“InstantScripts has grown rapidly from a start-up operation focused on making quality health care services more accessible and affordable for Australian patients, to a highly-valued clinical business providing over a million health services each year.
“We are proud of the work our people do, particularly for vulnerable patients in rural and regional communities with poor access to face-to-face primary care, and for those suffering from conditions that make visiting a GP clinic challenging.”
Wesfarmers Health managing director Emily Amos said that InstantScripts was complementary to the group's existing portfolio, and that the acquisition would provide opportunities to leverage its existing pharmacy and Clear Skincare networks.
“Wesfarmers Health plans to invest in the continuing growth of InstantScripts and the expansion of digital health services for patients,” Amos said.
“The InstantScripts clinical governance framework is well structured and we welcome the opportunity to apply Wesfarmers Health’s expertise and relationships to further strengthen and improve clinical outcomes for our patients.”
Bailador Technology to bag $52 million post-acquisition
The deal comes almost three months after venture capital fund Bailador Technology Investments (ASX: BTI) pumped an extra $10 million into InstantScripts, with today’s sale slated to give the VC an all-cash payout of $52 million.
Over the last two years, the Sydney-based firm has invested $30.2 million into InstantScripts, having initially pumped $5.5 million into the telehealth service in late July 2021.
According to Bailador Technology, the sale price of $52 million represents an uplift of 25 per cent to the current carrying value of InstantScripts. The valuation uplift of $10.3 million is an increase of $0.07 in net tangible assets (NTA) per share pre-tax.
InstantScripts continues to grow its revenue by more than 100 per cent year-on-year, which Bailador says reflects the tremendous consumer demand for telehealth and digital healthcare in Australia.
The realisation of Bailador’s investment in InstantScripts represents an internal rate of return (IRR) of 64 per cent for the fund.
“It’s been a privilege to partner with Asher, Richard, Rick, Maxim and the wider InstantScripts team,” Bailador co-founder and managing partner Paul Wilson said.
“InstantScripts’ innovation in the delivery of primary healthcare has been wholeheartedly embraced by the Australian community, and we are proud of what the team has added to the healthcare landscape.”
Dr Freilich added it is business as usual for InstantScripts’ customers with no change to day-to-day operations as a result of the transaction.
“I am also confident the InstantScripts team will make a significant contribution to Wesfarmers Health in their digital health strategy,” he said.
The sale is anticipated to complete in early July 2023.
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