Telus built its health platform through a series of acquisitions that included the $500-million purchase of Workplace Options last May and takeover of LifeWorks Inc. for $2.3-billion in 2022.Graham Hughes/The Canadian Press
Telus Corp. T-T is aiming to have a commitment in place from a prospective partner for its Telus Health division before its incoming chief executive takes over this summer, chief financial officer Doug French said Tuesday.
The company hopes to have “a relationship, a short list, or a letter of intent” for its health business before Victor Dodig officially takes over in July, Mr. French said at a Bank of Nova Scotia conference on Tuesday.
Telus said last year the company could sell a minority stake in the division or spin it off in an initial public offering, but retain majority ownership for the foreseeable future. The company could also seek a strategic investor.
“We’re now well under way, so I’m very confident we’ll have something” this year, Mr. French said. “I’m hoping we’ll have something before Victor starts, at least in a signed or announceable state,” he said.
He added he expects “the pitch books to be out and be ready within the next 30 days.”
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Current CEO Darren Entwistle, who is retiring on June 30 after 26 years at the Vancouver-based telecom, has championed the health division and long planned for its spinout. On May 1, Mr. Dodig will join Telus’s executive team as CEO-designate, and he will become CEO on July 1.
The company could be willing to accommodate the breakup of Telus Health. The telecom is working with financial advisers to determine whether it should work with just one partner, or if it should “prune off a division or two first, then bring in a partner,” Mr. French said.
Seventy-five “very quality” parties have expressed interest, he told analysts in Toronto. These include private equity, strategic investors, other investment banks and pension funds, according to a February statement from the company.
Telus built the health platform through a series of acquisitions that included the $500-million purchase of Workplace Options last May and takeover of LifeWorks Inc. for $2.3-billion in 2022. The company has faced the challenge of cobbling together numerous small and large acquisitions over time and finding efficiencies.
Revenues for the health care division increased 13 per cent to $540-million during the fourth quarter, missing analyst expectations of $565-million.
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In a conference call in February, Mr. Entwistle said Telus had surpassed its target for annualized synergies related to the LifeWorks acquisition, tripling its initial goal.
“The investments we have made historically in this business are going to yield significant multiples over the capital we’ve invested,” Mr. Entwistle said.
Mr. Dodig will be taking the helm of a company with $27.4-billion in long-term debt, a dividend payout that some analysts and credit raters see as too high, and, similar to the telecom’s rivals, slow growth in its core telecom business.
Moreover, valuations of Telus’s digital businesses could be affected by the recent wave of investor concern surrounding artificial intelligence and the competition it could bring.
“Although healthcare would probably be among the last sectors to be disrupted by AI, we wonder if the recent turmoil in software valuations in public markets could affect the timeline of the monetization,” said Desjardins analyst Jérome Dubreuil in a February note to investors.