• Targets financially stable regional hospitals for sale-and-leaseback deals
• 11 PPPs of interest on radar
• Wants to increase turnover 4x over next five years

Opy Health, a Sao Paulo-based provider of healthcare infrastructure and non-medical services, aims to increase its long-term recurring revenue through acquisitions and public-private partnerships (PPPs), CEO Mateus Renault said.

The IG4 Capital-backed company could acquire hospitals through sale-and-leaseback agreements, he said. Potential targets include regional hospitals with at least 150 beds with strong enough finances to commit to 20-year leases, the CEO said. Brazil’s high cost of capital has shied the company away from eying financially stressed hospitals that would struggle to pay rent, he noted.

Opy Health projects a turnover of BRL 400m (USD 73.8m) and an EBITDA of BRL 200m for 2025, Renault said. It sees room to increase its turnover 4x over the next five years, he said.

In August 2023, IG4 rolled its controlling stake in Opy Health into a continuation vehicle structured by BTG Pactual’s Capital Solutions. Sao Paulo-based IG4 first invested in Opy Health in 2020 through its Private Equity Special Opportunities Fund II.

Opy Health also wants to strike new PPPs, Renault said. It has mapped out 11 PPPs of interest for the next two years, including two that are expected to be offered by year-end: Complexo de Saúde Hospitalar Padre Eustáquio (HoPE) in the state of Minas Gerais and Hospital Regional de Mato Grosso do Sul (HRMS) in the city of Campo Grande, he added.

The bidding process for the HoPE PPP is scheduled for 19 September, Renault said. The PPP encompasses the construction, equipping, operation, maintenance, and provision of non-medical services of a new hospital complex that will feature more than 500 beds and incorporate the epidemiological and sanitary surveillance services of the Minas Gerais Central Public Health Laboratory (Lacen). The PPP will require an investment of about BRL 2bn, Renault said. “It’s the largest-ever PPP for a Brazilian hospital.”

“Hospital PPPs usually demand investments of around BRL 400m, so the Hope PPP has the potential to attract not only local bidders but also large international investors,” the CEO said.

The HRMS PPP encompasses the renovation, expansion, and modernization of the largest public hospital in the state of Mato Grosso do Sul. The PPP will require an investment of around BRL 1bn and will include, for the first time ever in Brazil, the purchase of hospital supplies in addition to the provision of surveillance, laundry, cleaning, and building maintenance, among other support services, Renault said.

“We estimate that around 50% of public hospital supplies are lost due to misplacement, wrong purchase, poor distribution, and other inefficiencies in the supply chain. Handing over the purchase of hospital supplies to a private player will likely help reduce this loss,” the CEO noted.

Opy Health currently operates three PPPs: Hospital Metropolitano Dr. Célio de Castro (HMDCC) in Belo Horizonte, Hospital Delphina Rinaldi Abdel Aziz in Manaus (Amazonas state), and Hospital da Mulher e Maternidade Estadual in Palmas. The first two PPPs have 20-year concessions, and the last one has a 30-year concession.

Earlier this year, Opy Health raised BRL 130m in debt to help finance the construction of Hospital da Mulher e Maternidade Estadual. Bradesco BBI acted as the lead coordinator.

Opy Health also manages the Hospital Municipal de Aparecida de Goiânia (HMAP) and Hospital Estadual de Urgências de Goiânia Dr. Valdemiro Cruz (HUGO) on behalf of the hospital chain Sociedade Beneficente Israelita Albert Einstein, Renault said.

The company could seek an initial public offering (IPO) or a private placement once it reaches BRL 800m in EBITDA, or the equivalent to USD 200m in EBITDA if it were to list in a foreign stock exchange, he said. Opy Health would also need to expand to other Latin American countries before pursuing an IPO outside of Brazil, he added.

In addition to hospital infrastructure management services, Opy Health also provides administrative and operational support in areas like front desk, cleaning, security, food, and internal logistics, among others.