Ramsay Health Care : Acquisition of Elysium Healthcare

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ASX ANNOUNCEMENT

13th December 2021

ACQUISITION OF LEADING UK MENTAL HEATHCARE PROVIDER ELYSIUM HEALTHCARE

• Agreement to acquire 100% of UK based mental healthcare provider Elysium Healthcare (Elysium) for a pre-IFRS 161 enterprise value of £775m (A$1.4bn) from private equity firm BC Partners
• The acquisition will be funded through Ramsay's existing debt facilities
• Elysium is a leading independent operator of long-term medium and low secure hospitals and complex care homes for individuals with mental health conditions and has a strong partnership with the National Health Service (NHS)
• Elysium offers a platform for growth through full utilisation of recently developed capacity, and delivering on its development pipeline, combined with potential bolt-on opportunities
• The acquisition values the business on a pre-IFRS 16¹ FY21 EV/EBITDA of 13.5x, is expected to deliver mid-single digit EPS accretion in FY23 and meets Ramsay's internal return targets including a post-tax cash ROIC target of greater than 10% by year five and a post-tax IRR of greater than 10%
• The acquisition provides Ramsay:

1. A unique opportunity to enter the growing UK mental health hospital market at scale with opportunities for both organic and inorganic growth;

1. Expands Ramsay's platform of healthcare services in the UK healthcare market and strengthens relationships with key stakeholders including the National Health Service (NHS);

1. An opportunity to deliver outcome-focused integrated care pathways leveraging Ramsay's expertise in mental health;

1. Entry into a growth market with favourable demographics including increasing awareness and improving diagnostics;

1. The opportunity for cross collaboration across mental health and acute care propositions and innovation between Ramsay's businesses in Australia, France, Sweden and the UK; and

• 1. Is expected to deliver synergies of at least £5m per annum.
• The transaction is expected to complete during Q1 2022. Elysium is expected to be operated as a complementary business to Ramsay's existing UK hospital operations.

CRAIG MCNALLY, MANAGING DIRECTOR & CEO:

"This is an excellent opportunity for Ramsay to expand its successful health care services platform in the UK through the acquisition of an established and reputable business, with a strong track record of growth and a robust pipeline of development opportunities. It will build on the Ramsay brand and quality reputation with doctors, payors and patients in the UK market.

"The acquisition of Elysium will expand Ramsay's patient pathways into the £15bn UK mental health market at a time when more and more people are seeking support for mental health, learning difficulties and neurological issues.

1. Post IFRS 16 multiple of 14.9x. Includes IFRS 16 lease liability of £185.9m (A$347.1m) as at June 30 2021.. Excludes one-off items of £11.7m (A$21.8m) including corporate activity costs of £6.7m (A$12.5m)

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"It will provide opportunities to leverage the expertise of Elysium and Ramsay's existing mental health facilities and clinicians in Australia, France, and Sweden to drive improved patient outcomes across our mental health activities globally.

"Ramsay and Elysium share a strong commitment to clinical excellence, high-quality care and patient safety, with a matching focus on caring for our people and partners. We look forward to strengthening our important partnership with the NHS."

Ramsay Health Care (Ramsay) (ASX: RHC) today announces it has entered into an agreement to acquire the entire issued capital of Elysium Healthcare (Elysium), a leading provider of mental health care services in the UK. The acquisition is expected to complete during Q1 2022.

The transaction values Elysium at a pre-IFRS 16 enterprise value of £775m (A$1.4bn)2 representing an FY21² EV/EBITDA multiple of 13.5x. The acquisition is expected to deliver mid-single digit EPS accretion in FY23 and meets Ramsay's internal investment return criteria including a post-tax cash ROIC target of greater than 10% by Year 5 and a post-tax IRR of greater than 10%.

About Elysium

Elysium is a leading independent operator of long-term medium and low secure hospitals and complex care homes for individuals with mental health conditions and has a strong partnership with the NHS. The CEO of Elysium, Joy Chamberlain, has led the business since it was formed in 2016 and will remain as CEO of the business following completion of the acquisition.

The business was originally formed with 22 hospitals and has grown organically and through acquisitions to 72 operational sites and approximately 2,000 beds. Elysium is now a leading provider in the independent mental health services market in the UK. The business employs approximately 6,000 people.

Following five years of rapid growth, Elysium reported unaudited revenue of £349m and EBITDAR3 of £65m for the 12 months ended June 2021.This result does not reflect a full year run rate of the recent investment in capacity, with an additional c.190 beds created in the 12 months to the end of December 2021 representing an approximately 9.5% increase in capacity over that period.

Elysium operates across the acuity spectrum of the UK mental health market with a particular focus on high acuity care. The business is divided into three segments:

• Mental Health:
  o Secure - medium and low secure services with mandatory specifications related to physical security, care and treatment, with admissions, transfers and discharges subject to gatekeeping agreements through NHS England
  o Specialist Services - services for specific patient groups, particularly children and young adults. Conditions treated include mental health, personality disorders and eating disorders
  o Acute/Psychiatric Intensive Care Units - often short-stay, funded by local commissioning group with patients who have often been detained under the UK Government's Mental Health Act, with overspill from NHS trusts
  o Rehabilitation and Recovery - non secure rehab services for adults with mental illness or learning disabilities, with community resettlement often a primary objective
  The Mental health segment is the core of the business contributing 79% of both revenue and EBITDAR for the 12 months to 30th June 2021
• Complex Care:
  o Rehabilitation and Recovery, Autism and Epilepsy Services - non-hospitaland hospital based, residential rehabilitation and recovery services for a wide range of conditions, including learning disabilities, autism and other mental health issues. Elysium specialises in

1. FY21 12 months to 30 June 2021. Post IFRS16 EV/EBITDA multiple of 14.9x.
2. Unaudited 12 months EBITDA to Jun-21 excludes one-off items of £11.7m (A$21.8m) including corporate activity costs of £6.7m (A$12.5m)

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treating patients with complex conditions, often presenting with multiple mental health diagnoses and sometimes physical health issues

Complex Care contributed 10% of revenue and 13% of EBITDAR for the 12 months to 30th June 2021

• Neurological & Acquired Brain Injury ('Neuro'):
  o Provider of Neuro-RehabilitationServices - typically in a nursing care home environment for service users with a variety of neuro conditions
  o Acquired Brain Injury - brain injury or damage caused by events after or at birth, instead of being part of a genetic or congenital disorder

Neuro contributed 11% of revenue and 8% of site EBITDAR for the 12 months to 30th June 2021

Elysium maintains 78% good or outstanding Care Quality Commission (CQC) scores across its portfolio. It works collaboratively with Commissioners to aim to meet the UK Government's objectives of treating patients as close to home as possible in the lowest level of security required.

The business revenue base is funded approximately 99% by public system payors. Patients and service users are referred via a payor universe including NHS England, NHS Provider Collaboratives, Clinical Commissioning Groups and Local Authorities.

The mental health and learning disability market is estimated to be worth £15.2bn3 per annum and the private sector has been steadily increasing its share. The UK Government has committed to increase its funding for mental health services by £2.3bn pa by 2023-2024 as a key part of its long-term plan for the NHS4.

Strategic Rationale

The acquisition delivers a number of strategic benefits to Ramsay including:

• A unique opportunity to enter the UK mental health market as a leading player with scale and strong growth opportunities through demand driven occupancy, brownfield developments and potential bolts-on opportunities;
• The mental health market is a growth market with favourable demographics including increasing awareness and improving diagnostics. There is strong strategic alignment with Ramsay's leading positions in mental health care in Australia, France, Sweden and the Nordics;
• Elysium will be complementary to Ramsay's acute care business in the UK and will diversify the existing business mix, strengthen Ramsay's partnership with the NHS from a stakeholder perspective and deliver improved scale to the UK business;
• Annual benefits of at least £5m p.a. across procurement, leveraging systems and network scale with an opportunity for further growth synergies;
• The acquisition is aligned with Ramsay's strategic vision to deliver outcome focused integrated care pathways; and
• The transaction will deliver attractive value to shareholders. It is expected to deliver mid-single digit EPS accretion in FY23 and meets Ramsay's internal return hurdles including a post-tax cash ROIC target of greater than 10% by year five and a post-tax IRR of greater than 10%.

Presentation

Ramsay Managing Director and CEO Craig McNally, Ramsay Group CFO Martyn Roberts and Ramsay UK CEO Dr Andy Jones will host a webcast presentation and conference call at 9.30am AEDT this morning in relation to this announcement. The presentation is attached to this announcement. To

1. Mental Health Hospitals, UK Market Report, Fourth Edition, 2019; LaingBuisson
2. NHS Long Term Plan

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register to access the webcast please click Ramsay Health Care webcastto access the conference call please click on the following link https://s1.c-conf.com/diamondpass/10018527-kt87q1.html

The release of this announcement has been authorised by the Ramsay Health Care Disclosure Committee

For Further Information Contact:

Kelly Hibbins

Group Head of Investor Relations Ramsay Health Care

[phone] [e-mail]

Ramsay Health Care

Acquisition of

onlyElysium Healthcare

A leading UK Mental Health provider

use13th December 2021 nal