Waterland-backed MEDIAN acquires German hospital group

Private hospital group MEDIAN acquired Düsseldorf-based AHG Allgemeine Hospitalgesellschaft AG., an operator of psychosomatic medicine centers. MEDIAN is a portfolio company of European private equity firm Waterland.

PRESS RELEASE

Düsseldorf, 29th of July, 2016 – MEDIAN’s take-over of the Düsseldorf-based AHG Allgemeine Hospitalgesellschaft AG was announced in a joint press release by the companies today. Integrating AHG’s 45 clinics, MEDIAN approaches the landmark of one billion euros of annual turnover and further strengthens its position as the largest private operator of rehabilitation facilities in Germany. The growth story of the company started with a nucleus of € 70m sales five years ago and with the backing of shareholder Waterland has grown into one of the five largest private hospital groups in Germany.

Carsten Rahlfs, Partner of Waterland and head of the Düsseldorf office, commented: “In recent years, MEDIAN emerged as an innovative clinic group that successfully operates in the market. Here again, Waterland as owner and active investor has pursued our distinct buy and build strategy.” This approach relies on the allocation of resources to support organic growth, strengthen innovation and modernization as well as further add-on acquisitions already at the time of initial acquisition of a platform company.

A total of fifteen acquisitions has taken place since initiating Waterland’s platform investment in the rehab market with the takeover of RHM Klinikgruppe in 2011. While the two most prominent cases clearly are the purchase of Median Kliniken in autumn 2014 and now the acquisition of AHG, there have also been several acquisitions of individual clinics and small clinic groups in the past. Lastly, the acquisition of the rehabilitation clinic Bad Colberg was announced just a week ago. Since the completion of the merger of RHM Klinikgruppe and the Median Kliniken last year, the group operates under the name MEDIAN.

Rahlfs stressed the importance of quality in growing medical areas as well as the quality and size of the clinic property as main factors in selecting the right add-on clinics. “It was imperative for us that MEDIAN becomes a quality leader in rehabilitation and hotel offer in its clinics. This is crucial in order to be successful with patients, payors and practitioners. The size of the institutions and the clear, centralized strategy also facilitate the leveraging of medical and operational efficiencies.”

André M. Schmidt, CEO of MEDIAN added: “Size is not a value in itself, but provides clear advantages in the competitive hospital market. On the one hand, MEDIAN can share medical innovations and research results on best practices with many facilities and thus make best use of it medically and commercially. On the other hand, cost benefits can be achieved by centralizing administrative processes and through bundled purchasing.”

“The cooperation of AHG and MEDIAN is a merger of two strong companies with the aim to better face the challenges of the health care market in Germany,” commented Norbert Glahn, son of company founder Wolfgang Glahn and CEO of AHG. “We now benefit from the fact that AHG has optimally positioned itself in the past three years with respect to strategy, organization and therapy by using all possible synergies.” For AHG and the entrepreneurial Glahn family the merger is an important decision for the future of their clinics, therapy centers and reintegration facilities. Norbert Glahn on this: “For us as a family business the long-term responsibility not only for our employees, but also for all the people entrusted to us is a major concern.” The purchase price was not disclosed.

MEDIAN´s advancements in the last five years were based on three fundamental pillars: Firstly, the consolidation and standardization of administrative processes in order not only to save costs, but also to relieve the medical staff of such tasks. Secondly, by creating a Medical Board, MEDIAN has institutionalized the exchange of expertise and experience between individual clinics. Today, this body defines the therapy paths for individual medical indications for the entire group, thus making a great contribution to the improvement of medical quality. This leads to the third pillar of quality measurement, which involves the objective measurement of treatment results to monitor and further improve medical performance providing transparency to both payors and patients.

Schmidt emphasizes the success achieved: “In recent years we have made good progress and noticeably benefited from the strategic measures taken, from a medical as well as entrepreneurial perspective. In addition to the smooth integration of AHG, digitalization will be top priority on our corporate agenda for the upcoming months.”

Merger creates significant growth

The merger of MEDIAN and AHG creates a company with a total of 17,500 beds and treatment units in 123 hospitals and institutions, solely focused on post-acute care and rehabilitation as well as psychiatry. With over 15,500 employees, the group will be able to treat more than 225,000 patients annually being present in 14 of the 16 German federal states.

MEDIAN currently has 78 rehabilitation clinics, acute care hospitals, nursing and rehabilitation facilities in 45 locations. With about 13,000 employees and more than 13,500 beds and treatment places, the company is Germany’s largest private operator of rehabilitation facilities.

The AHG Allgemeine Hospitalgesellschaft AG, headquartered in Düsseldorf, is one of the largest treatment providers in the fields of psychosomatic medicine, addictions and sociotherapy. The company includes 45 hospitals, treatment centers and outpatient clinics with 4,000 beds and has more than 2,500 employees.

About Waterland
Waterland is an independent private equity investment group that supports entrepreneurs in realizing their growth ambitions. With substantial financial resources and committed industry expertise, Waterland enables its portfolio companies to achieve accelerated growth both organically and through acquisitions. Waterland has offices in the Netherlands (Bussum), Belgium (Antwerp), Germany (Munich and Dusseldorf) and Poland (Warsaw), and currently manages € 4 billion of investor commitments.

Since its foundation in 1999 Waterland has consistently achieved top tier investment performance. It ranks as number 2 most consistent performing buyout fund manager worldwide in the 2015 Preqin Consistent Performers in Global Private Equity & Venture Capital Report, September 2015, and as number 3 global private equity firm in the sixth annual HEC/Dow Jones Private Equity Performance Ranking compiled by Prof. Gottschalg of HEC Paris Business School, November 2015.