Assura Share Discussion Threads

[fin] 02/10/2009 11:04

Thanks, that's even better. Most REIT's seem to be close to NAV also. Just read latest news on Assura website,

"Work begins on new 8am to 8pm health centre at Sainsbury's".

Interesting step forward for Assura (wish we had one where we live, big opportunity to roll this format out across other Sainsbury's...

[scburbs] 02/10/2009 10:50

fin, PHP trades at a premium to NAV (you need to adjust for the share issue at 230p).

NAV based on June valuation adjusted for share issue is around 260p so they are at around a 10% premium to NAV.

[fin] 02/10/2009 10:43

good opportunity to top up at attractive discount to the NAV of 66p. (Primary Health trading at just below NAV).

IMHO

[explorer88] 02/10/2009 09:02

looks like we may get short term retrace to around 30p, especially given wider market weakness.

[simon gordon] 30/9/2009 11:42

Good month for share turnover.

Looks like being the best share price upside month since 2007.

[explorer88] 29/9/2009 11:32

it wouldn't surprise me if we received an opportunistic bid from PHP for about 50p / share ;-)

[explorer88] 28/9/2009 23:17

scburbs - yes, good to see another centre opening.

it's also nice to be able to invest in a company like AGR which provides direct benefits to people in the form of improved healthcare facilities ...

[explorer88] 24/9/2009 12:14

I sense that we're poised to re-bound to 35p ;-)

[scburbs] 23/9/2009 08:10

Simon Gordon,

A good well balanced note in my view, pretty much in line with my original investment decision. Key question is the value of the medical division. I suspect that Investec have underestimated the bid costs and start up costs that will fall away once the GPCOs start maturing. If this is the case then the GPCOs could become profitable at lower levels.

The value of this division is the main uncertainty but with a downside risk of 35p of value (assuming nil for the Pharmacy business which is harsh) I am happy to take that risk.

[nickcduk] 22/9/2009 17:47

Many thanks.

[explorer88] 22/9/2009 13:44

Thanks Simon

[simon gordon] 22/9/2009 12:04

All sent..

[scburbs] 22/9/2009 11:33

Thanks Simon.

[explorer88] 22/9/2009 10:57

simon gordon - i'd appreciate a copy please.

[simon gordon] 22/9/2009 10:31

Scburbs,

I can email you a copy of the Investec note if you leave an address.

[scburbs] 21/9/2009 20:57

Thanks Simon Gordon.

I don't like the £60m revenue breakeven number! Do you have access to their assumptions and forecasts for the GPCo's?

[simon gordon] 21/9/2009 20:31

Investec - 21/9/09:

We think that there are three important issues that need to be addressed in order to build an investment case for Assura. These are (1) clarity with regard to strategy; (2) reducing forecast risk; and (3) comfort with regard to financing. Only once these issues have been addressed are the shares likely to start accurately reflecting Assura's fair value. This note discusses each of these three points, as well as giving a view on where fair value might stand at the end of each of the next three years.

With regard to strategy, whilst Assura has a clearly stated strategy of focussing its business around its GPCos, the business has only taken tentative steps towards transforming itself. We think this caution is being driven by the need to prove that the GPCos are capable of generating enough revenues to support a sustainable business model before Assura metaphorically puts all its eggs in the GPCo basket.

A degree of caution keeps open the option of returning to its roots as a primary care property company if revenues don't come through as planned.

However, this does it make difficult to build a robust investment case, with investors not sure whether they are buying a healthcare services company or a property company. We suspect that it won't be clear which route Assura will go down for another six to twelve months.

Whilst overall forecast risk has reduced, we still have little in the way of historical or third party evidence to support a large number of the assumptions in our forecasts.

We think forecast risk is relatively low in the Property division, with yields showing signs of firming up and plenty of third party evidence to support our assumptions.

Forecast risk in the Pharmacy division is best described as medium, with some historical evidence to support the assumptions in our model and we are confident that this division will reach profitability in FY2010E.

However, forecast risk in the Medical division remains high, with little evidence to support a large number of our key assumptions and, with this division the mainstay of Assura's strategy, this remains a concern.

We are more relaxed about financing, with the combination of the new equity raised in October 2008, the new facilities and recent property sales, meaning that short funding looks adequate. Longer term, Assura will need to put in place new facilities to meet the second NAB repayment due in March 2011, but with plenty to property to use as security against a new loan, this should achievable in our view.

With regard to covenants, our model suggests that Assura has around 7% minimum headroom against its LTV covenant and minimum headroom of 14.4% against the interest cover covenant.

.....Our model suggests that the GPCos will need to be generating some £60m of revenue before reaching breakeven, a significant uplift from the current £20m run rate and whilst the current momentum suggests that Assura could hit these targets by FY2012E, there is a lot of ground to travel before the model is proven.

[simon gordon] 21/9/2009 18:41

Private sector GP services may pull out, predict analysts

21 Sep 09

By Ian Quinn

City analysts have poured fresh doubt on whether general practice can be profitable for private companies.

A new report claims the unpredictability of the market means even Assura, the most successful firm in bids for Darzi centres, would have to dramatically increase its revenue or consider pulling out of providing GP services.

A report by Investec claims Assura, which boasts 12 contracts to run Lord Darzi's GP-led health centres as part of joint ventures with GP entrepreneurs, suggests the company may end up selling its primary care assets and return to being a property business.

It is almost a year since Assura announced it would focus its business around GP joint ventures, including the bidding for Darzi contracts.

In the first quarter of this year, the GP-arm of the business generated £1.6m in revenue. Investec's report claims the 'GPCos' would need to generate £60m a year before even breaking even.

The report says this figure could be reached by the end of 2012, if forecasts are met, but that the unpredictability of the market, including a potential change of Government, cast doubt on the model.

A spokesperson for Assura said it was 'making good progress' with its GPCos, which also include dermatology and musculoskeletal services.

She said: 'The revenues in Q1 were double that of the whole of last year.'

[simon gordon] 21/9/2009 13:20

Health Investor - 21/9/09:

Shares in GP landlord and primary care provider Assura have risen by almost two per cent after Investec said it "struggled" to see why the company is trading under its 35 pence target price.

The analysts said: "Granted, there is much uncertainty going forwards, but we think the market has lost sight of the value of the property business.

"Our 'worst case' scenario suggests a fair value of 35 pence based on pretty cautious assumptions and we struggle to see why the shares should be trading below this level. Consequently we move from 'hold' to 'buy'."

Assura isn't without risks, said Investec, with legitimate concerns over strategy, funding and forecast risk affecting investors perceptions of the company.

Investec added: "But the valuation is compelling – this uncertainty also means that we think it is unlikely that Assura's shares will reach the c.60 pence implied by our sum of the parts valuation.

"However, we struggle to see why the shares should be trading below our 35 pence 'worst case' scenario valuation, which is based on the assumption that Assura returns to its roots as a property company, sells the pharmacy division for £1 and shuts down the medical division."

[explorer88] 21/9/2009 13:14

nickcduk - i'm sure PHP would love to get their hands on Assura ;-)

[nickcduk] 21/9/2009 12:46

I think Investec upgraded AGR this morning. Probably picked up on the property angle. With PHP raising new equity last week I wonder whether they might fancy a crack at AGR. Could easily team up with others and launch a bid.

[scburbs] 21/9/2009 09:21

Looks like good news for GP's with modern well located facilities, like AGR's GPCO's. The plans seem to have cross party support.

"Patients will be given the right to choose their GPs under government reforms allowing people in deprived areas to sign up with surgeries in more affluent areas.

In a move that will be nervously received by doctors, the health secretary Andy Burnham today announced that fixed "practice boundaries" will be abolished within the next year.

The Tories, who are committed to removing the boundaries, have described them as "a solid wall of defence against real choice".

Under current rules patients can only sign up with a GP within defined boundaries close to their home. This means that less well-off patients are forced to sign up with surgeries in deprived areas, and are barred from using doctors in more affluent areas unless they live in a mixed-income area. It also means that people cannot join GP surgeries near their offices.

In a speech to the King's Fund thinktank, Burnham said: "In this day and age, I can see no reason why patients should not be able to choose the GP practice they want. Many of us lead hectic lives and health services should be there to make things easier."

Laurence Buckman, chairman of the British Medical Association's GPs committee, said: "We are open to discussing ways of improving choice for patients, and most GPs would be comfortable with flexible boundaries. However, major logistical barriers would need to be overcome. Home visits with a GP a long way away could be costly for the NHS to fund.

"Practices in rural and suburban areas could lose significant numbers of young, healthy, patients, destabilising their funding and threatening their viability.

"Meanwhile, city centre practices would be inundated with requests for appointments at lunchtime and [in the] evenings, which would effectively limit patient choice."

In his speech Burnham insisted that Labour is best-placed to champion the next stage of NHS reform, an argument central to the general election drive as ministers challenge the widespread assumption that the government has run out of ideas.

"For our part, we want to do more than bank the progress of recent years," he said.

"I want to see patient satisfaction measured service by service ... Making this information readily available will empower patients and put commissioners on the spot."

The impact of abolishing practice boundaries within the next year will be far-reaching and the change is clearly intended to use competition within the NHS to drive up the quality of service.

The potential cost of patients deserting to rival practices is large, as GPs are paid according to the services they provide."