HMi meets… David Sin

In only eight years, Fullerton Health has become the largest primary care provider in Asia Pacific. Group president David Sin explains how he has done it and what he plans to do next.

Fullerton Health is the most exciting healthcare company to watch in Asia right now. I say, Asia rather than Southeast Asia, because in only a few short years – it was founded in 2011 – it has become the largest primary care provider in Asia Pacific.

From 12 primary care facilities in one country – Singapore – it has grown to more than 500 primary care facilities across nine markets.

I first met David Sin, group president of Fullerton Health, a couple of years ago. I was waiting in the Fullerton corporate lobby to talk to another senior executive who had been delayed on a conference call.

With no idea who I was, Sin saw me waiting and offered to get me a coffee. It is the kind of attention to detail that sticks with you.

A Goldman Sachs alumnus, Sin admits that by the age of 29 he knew that he wanted to be an entrepreneur. ‘By 2009 I had distilled down the areas I wanted to spend my time and capital on in Asia down to four. First on the list was healthcare, the second was education, third was agri, and fourth was robotics – the fourth industrial revolution.’

It was a football game that brought him into healthcare. As he describes it: ‘I play on a Sunday football team. It is an unsightly bunch of 20 to 40-somethings; lawyers, bankers and doctors from my high school. All trying to play football’.

One teammate was Michael Tan who left his position at one of the larger hospital groups in the island state with his deputy to found Fullerton Health in 2011. ‘At the time I remained in the background as a friend, but not as an investor as I hadn’t finished my thesis on investing in healthcare,’ says Sin.

Sin finished his thesis and in December 2012 became Fullerton’s largest controlling shareholder.

Fullerton’s approach has been different from the beginning. Much private sector healthcare investment in Asia has been into assets like hospitals, labs, imaging and dialysis centres. ‘We discovered early on that there was a chronic misalignment and disconnect between the supply and demand of care,’ says Sin.

FORGET THE
PAINFUL
LUMBERING
AROUND WITH
ARCHAIC LEGACY
IT SYSTEMS …
FULLERTON HAS
FULLY EMBRACED
THE DIGITAL AGE

He has driven Fullerton’s growth strategy over the last seven years by focusing on the demand side. ‘What patients and payors really need is high quality healthcare at an affordable and acceptable price’.

But over the course of a long conversation, it becomes clear that Fullerton has been successful for two reasons. First of all, the way in which IT is embedded naturally into almost everything the company does, and second, the way in which it has raised money.

With IT, Fullerton is as different as it gets. Forget the painful lumbering around with archaic legacy IT systems that characterise so many healthcare groups, Fullerton has fully embraced the digital age as Sin says, to improve operational efficiency, and to drive better clinical outcomes.

It makes sense given the age of the founders. ‘The DNA of Fullerton is very tech-friendly, very tech-savvy and very tech-enabled,’ Sin says.

All of the founders of the company were in their 30s or early 40s when the company was established and had been brought up and educated with technology.

‘In 2014 we were the first Singapore private sector healthcare company to digitise all of our X-rays,’ Sin says. ‘If you had an MRI scan in 2012, you generally carried the film around from doctor’s office to doctor’s office’.

He tells the story as a humorous anecdote, but there is a serious angle to it. ‘Not only do people not have to carry film with them, more importantly, our scans can be read anywhere by our radiographers. That increases throughput, efficiency, and more importantly, allows those scans to be sent to the doctors for them to develop more quickly and to provide more efficient patient service.’

It is in that light that should be seen the deal that the company struck last summer with Microsoft to drive digital transformation and a deal inked in April with US-based analytics firm Health Catalyst to develop a strategic plan to use its data more efficiently.

‘We have been extremely successful in driving innovation through technology,’ says Sin simply.

The other area where Fullerton has consistently stood out is in the smart way that it has raised money. Take the bond market, often ignored by healthcare companies, especially unrated ones. In June 2016, it sold a S$100m (US$72.9m) Singapore dollar bond. That deal put the company on the map. The tightest priced Singapore corporate paper for five years, the book was covered three times. And even though the pricing can be explained by the fact that it was wrapped by the Credit Guarantee and Investment Facility, a trust of the Asian Development Bank, it still came in well inside comps.

More to the point, although much of the book came from Singapore, there was also significant demand from Hong Kong. Fullerton was being recognised internationally.

A year later, in March 2017, Fullerton sold a US$175m perpetual bond. ‘That was the first-ever perpetual US dollar bond raised in the public markets that an Asian healthcare unrated, unlisted company had issued,’ says Sin.

Then in November that same year, Chinese financial behemoth Ping An invested more than Rmb800m (US$121.2m) in Fullerton, making it the group’s second-largest shareholder.

Another canny move by the group it has enabled Fullerton’s China platform to grow with the backing of the country’s largest corporate insurer.

And in September last year, International Finance Corporation granted it a US$40m long term loan facility to support acquisitions in the Philippines. In mid-December 2017, Fullerton had announced the acquisition of a 60% stake in the Intellicare Group, one of the leading managed care providers in the Philippines.

But while a war chest is clearly not much of an issue, it is notable that there has been little mention of equity raising.

Fullerton had, in fact, planned a S$213m flotation on the SGX in October 2016, indeed had priced the IPO, but called it off subsequently.

It is worth mentioning that I have covered Fullerton since the beginning and writing about it at the time, I recall the absolute frustration from the management team at the anonymous jibes made by its detractors in the IPO process.

WE DON’T SEE
OURSELVES AS A
CLOSED-LOOP, WE
SEE OURSELVES
AS A LINUX
EQUIVALENT, AN
OPEN-SOURCE
PLATFORM

Fullerton’s success in capital raising since then has made the question of an IPO not quite the burning issue that it was a couple of years ago and Sin laughs loudly when I ask the question. ‘You can never say no. Frankly, an IPO is never out of consideration for us, we talk about it, we mull it, we consider it, we talk to exchanges all of the time’. Sin also says that he gets approached by private equity sponsors ‘on a fairly frequent basis’.

But Fullerton has changed and matured in the last few years and has a much more considered approach to what type of capital it wants. ‘We want long term capital to grow,’ Sin says meaning capital from sovereign wealth funds, pension funds, and insurers. ‘The founding shareholders [of Fullerton] have absolutely no requirement or desire to exit,’ and he makes clear that he intends to be an investor for the next ‘20, 30, 40, 50 years’.

FRANKLY, AN IPO
IS NEVER OUT OF
CONSIDERATION
FOR US, WE TALK
ABOUT IT, WE MULL
IT, WE CONSIDER
IT, WE TALK TO
EXCHANGES ALL
THE TIME

A couple of weeks after we talk, the group finally does move into the equity market and successfully too. SC Health, a special purpose acquisition company (SPAC) owned by SIN Capital raised US$150m by offering 15 million shares at US$10 per share on 11 July. The SPAC intends to focus on targets with operations or prospects in the healthcare sector in the Asia Pacific region.

The inevitable question for Sin is what next for Fullerton. ‘We don’t see ourselves as a closed-loop, we see ourselves as a Linux equivalent, as an open-source platform,’ he says. ‘We are never going to be in insurance or hospitals, though we work with most of the key insurance companies, as well as a large number of hospital groups across Asia Pacific. We work with various MNC corporate clients. We see ourselves as a platform. We may not be able to offer you everything in the value chain, but can certainly help you triage and direct your needs in the most affordable and accessible manner.’

There is no doubt that this opens up a wealth of opportunities for the group.

Over the past 18 months, Sin says that he has ‘received quite a few’ requests from governments in Asia looking to build the best-in-case primary care system under a public-private partnership model. Given ongoing negotiations, Sin is understandably coy on details, but this could be both a significant shift for the company and for healthcare in Asia.

Although the PPP model for healthcare has been used sometimes to great success in some parts of the world, it remains a largely untested model in Asia. If it works, there is the tantalising prospect that however rapid the growth of Fullerton has seemed to-date, it could rocket in the next few years.