US health giant Acadia today confirmed it is exploring the sale of The Priory Group.
Announcing the results of Acadia’s far-reaching business review, CEO Debbie Osteen said the board had decided now is the right time to explore strategic alternatives for the UK business, including a potential sale.
However, Osteen, who launched the review after taking over from Joey Jacobs at the end of last year, insisted this would be no fire sale. She said the Board would take a ‘very disciplined’ approach to the process and would only proceed with a sale if it can maximise shareholder value.
At the same time as exploring sale options, she said, Acadia would continue to work to improve the UK business by reducing its reliance on agency staffing and positioning to maximise its private pay business.
‘As we conducted our review, it confirmed the strength and attractiveness of the business, which is a clear market leader in an attractive market with strong underlying fundamentals,’ said Osteen.
Acadia acquired The Priory Group for £1.5bn in 2016 with plans to create a major force in the UK mental health market and unleash more than £20m in synergy savings from the integration with its existing Partnerships in Care portfolio.
However, it soon ran into difficulties: first with the Competition and Markets Authority investigation and then with softening NHS referrals. Recruitment issues and high reliance on agency staff have added to the Group’s woes and despite some improvements in occupancy and revenue, the company has continued to prove a drag on Acadia’s balance sheet.
Osteen said a sale would potentially enable Acadia to deleverage but added that the company is expecting further improvement in Priory’s performance including mid-single digit revenue growth, continued increases in occupancy and upward movements in tariffs.
‘Regardless of the outcome of our evaluation of strategic alternatives, we are confident in the opportunity for revenue and margin improvement in this business,’ said Osteen.