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Ann: GENERAL: ABA: Abano Advises of Withdrawal of Aotea Pathology RFP Bid

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    • Release Date: 02/02/15 09:02
    • Summary: GENERAL: ABA: Abano Advises of Withdrawal of Aotea Pathology RFP Bid
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    					ABA
    02/02/2015 09:01
    GENERAL
    PRICE SENSITIVE
    REL: 0901 HRS Abano Healthcare Group Limited
    
    GENERAL: ABA: Abano Advises of Withdrawal of Aotea Pathology RFP Bid
    
    Abano Healthcare Group Limited (NZX:ABA) has today advised that its
    subsidiary, Aotea Pathology Limited (Aotea), has withdrawn its bid in the
    current RFP process to provide pathology services for the lower North Island,
    encompassing the three District Health Boards (DHBs) of Capital & Coast, Hutt
    Valley and Wairarapa.
    
    The decision comes after extensive discussions in recent months between the
    three DHBs and Aotea, to try and establish a constructive and commercially
    sound partnership for the provision of pathology services to these regions.
    
    Richard Keys, Abano's Chief Operating Officer and a director of Aotea said;
    "While we wish to work constructively with the DHBs, with the current
    process, timeframes and timetable changes, our conclusion was that the
    proposed terms of contract in its current form would not be in the interests
    of our clinicians and staff at Aotea or Abano's shareholders and it could
    well place the existing pathology services and the region's communities at
    considerable risk.
    
    "Our decision to withdraw was not taken lightly. We believe that the current
    process would result in an outcome that was clinically unsound and
    financially unsustainable, and with all risk being transferred to the
    provider."
    
    The current contract for community pathology services ends on 31 October
    2015.
    
    This decision means Abano is now reviewing the likely impairment charge that
    it would be required to make.  Abano has previously indicated that if the new
    contract was not awarded to Aotea and the existing contract ended, Abano
    would need to write off the book value of this business, which is currently
    $11 million.
    
    Abano has a 55 percent shareholding in Aotea Pathology, with Sonic
    Healthcare, one of the world's largest pathology business and listed on the
    ASX, holding the remaining 45 percent. The business is part of Abano's
    diagnostics sector which also includes Insight+Ascot Radiology in Auckland.
    This sector provided 16 percent of Abano's Group gross revenue in FY14.
    
    ENDS
    End CA:00260210 For:ABA    Type:GENERAL    Time:2015-02-02 09:02:00
    				
 
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