Constellation Alpha Capital Corp. (NASDAQ: CNAC), a special purpose acquisition company focused on consolidating the healthcare services sector in India, announced that it has executed a definitive agreement to acquire Medall Healthcare Private Limited, a leading integrated pathology and radiology company at an enterprise value of INR 14.5 billion (approximately US$212 million based on an assumed USD/INR exchange rate of US$1.00 to INR 68.4). This will be the largest investment in an Indian diagnostics company to date. As of the date of this announcement, subject to closing, Constellation is expected to be the only India-focused healthcare services company to be publicly listed outside of India.
Medall is among India’s leading integrated pathology and radiology companies, providing over 25 million diagnostic tests to over 9 million customers in its most recent fiscal year. Since its inception, Medall has completed 24 acquisitions propelling its rise into the ranks of the top five Indian diagnostics companies by revenue, all of which predate it by at least 20 years. Between FY2013 and FY2018, Medall grew revenue and adjusted EBITDA at an annual rate of 17% and 27% respectively while adjusted EBITDA margins expanded from 19% in FY2013 to 28% in FY2018.
The Indian economy is the 6th largest and the fastest growing major economy in the world. Driven by fundamental shifts in demographics, rising affluence and supportive government regulations, the Indian healthcare sector is expected to continue growing twice as fast as the Indian economy until 2025. The diagnostics sector in India accounts for nearly $10 billion in annual revenue and is projected to continue growing at 20% compounded annual growth rate until 2025. Unlike the U.S. diagnostics industry where the top two players account for over 40% revenue share of the independent (ex-hospital) laboratory market, the Indian diagnostics industry is highly fragmented with the top two players accounting for only approximately 6% of such revenues. Constellation believes that this presents an opportunity to consolidate the fragmented Indian healthcare diagnostics market.
Rajiv Sarman Shukla, Chairman and Chief Executive Officer of Constellation, said, “We are pleased to begin our consolidation strategy with a market leader like Medall. We look forward to growing the company through serial acquisitions and organic levers.”
Raju Venkataraman, founder of Medall said, “The Medall team is excited to be part of the continued growth of Medall with the vision to become the market leader.”
