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The deal in briefMedicover today announced that it has agreed to divest its Indian business Medicover Hospitals India (MHI) to KKR for an enterprise value of EUR 1.2bn. There have been discussions of a potential sale since 17 June, and Medicover was planning an IPO of the Indian business for some time prior, so the announced deal is not a surprise. Medicover owns 66.1% of MHI and will receive EUR 0.74bn in gross cash. This includes EUR 0.1bn related to loans. On an LTM basis (Q2 2026), Medicover Hospitals India generated revenues of EUR 221m with EBITDA margins of 11.8%, for an EBITDA of EUR 26.1m. The suggested LTM EV/EBITDA multiple from the communicated EUR 1.2bn EV paid is thus ~46x. The deal is expected by management to close in Q4'26, conditional on regulatory approval. Pro-forma implicationsMHI comprises 24 hospitals, ~4,800 beds, and ~11,400 employees, with revenue of EUR 220.5m (LTM Q2'26) and indicative margins well below the group average (11.8% EBITDA margin vs the group's 16.1% and 2.4% EBIT margin vs the group's 7.1%). Because MHI is lower-margin than the rest of the business, removing it lifts the remaining group's profitability on an illustrative pro forma basis. The EBITDA margin rises from 16.1% to 16.5%, and the EBIT margin rises from 7.1% to 7.6%. The divestment is thus margin-accretive for Medicover's continuing European operations. Compared to the reported 2.9x ND/EBITDA ex-IFRS 16 in Q2'26, we expect the pro-forma ND/EBITDA to drop to a level around 0x. Strategy aheadIn February, Medicover hosted an Investor Update, in which it expanded on the near-term strategy. Comments by Medicover's management during today's deal presentation make us believe that this strategy remains intact, and the now-stronger balance sheet gives more operational flexibility. It is furthermore possible for Medicover to increase the cash distribution to shareholders - its leverage will be ~0x, and it is trading at a FCF yield of ~5.4% for '26e. |