Fullerton Health IPO faces delay after complaints

Trading had been slated to start next Monday; company has answered regulatory queries

Fullerton Health, co-founded by Dr Michael Tan (above), had planned to open its IPO to individuals this week. The base offer will consist of 140.3 million shares, according to the preliminary prospectus.
Fullerton Health, co-founded by Dr Michael Tan (above), had planned to open its IPO to individuals this week. The base offer will consist of 140.3 million shares, according to the preliminary prospectus.PHOTO: FULLERTON HEALTHCARE GROUP

The healthcare administration services firm that took orders for its initial public offering (IPO) last week is facing delays to the share sale following complaints about its business practices.

Fullerton Health declined to disclose the nature of the complaints made to regulators.

But previous complaints from some doctors on Fullerton's panel of 8,000 healthcare providers alleged a lack of transparency in billing practices, and disputes over claims and late payments.

Fullerton was slated to finish taking orders from institutional investors last Friday. It had planned to open the IPO to individuals from Monday to Thursday this week, before starting trading next Monday, according to Bloomberg.

The Straits Times understands that Fullerton has answered the regulatory queries, but it is up to the Monetary Authority of Singapore to register the IPO prospectus.

Fullerton Health, formerly known as Fullerton Healthcare, is a managed care provider that aims to control healthcare costs for insurers and corporates by weeding out inefficient practices.

This involves processing claims from healthcare providers and handling claims appeals, as well as adjudicating claims on behalf of insurers, which can be a thorny issue if Fullerton disagrees with the doctors over the sums payable for their services.

Although Fullerton has stated in its prospectus that doctors who join its network must follow a fee schedule that it determines to be a "reasonable range" and that is agreed upon in its contracts with healthcare providers, some doctors have voiced concerns before over what they feel is a large number of disputed claims that resulted in delayed payments.

Fullerton declined to comment yesterday.

Another possible tripping point noted by the company in the preliminary prospectus lodged online on Sept 28 was the "negative publicity" regarding its administrative fee policies, "with calls for the business of managed care companies such as ourselves to be regulated".

Fullerton Health, which has a 15 per cent levy on panel doctors, was reportedly among managed care firms here that recently fell under scrutiny for aggressive fee practices. The Ministry of Health said it was studying the issues.

Fullerton was founded by Drs Michael Tan and Daniel Chan, and started operating in 2011, with the acquisitions of medical groups Gethin-Jones and THD. It has expanded quickly over the years through acquisitions.

Last year, Fullerton bought radiology scan provider RadLink for $111.2 million and an 80 per cent stake in Hong Kong's HMMP chain of clinics for $33 million.

The company made two more purchases this year for a sum of $25.5 million, and launched a $100 million bond offering in June.

Earlier this week, its IPO was said to be priced at $1.52 a share, compared with an indicative range of $1.52 to $1.93.

JPMorgan is the issue manager, and a joint underwriter together with UBS, Credit Suisse and DBS.

According to the preliminary prospectus, the IPO will be made up of a base offer of 140.3 million shares - about two-thirds of which are new and about a third of which are shares sold by existing shareholders. Based on a post-offering share capital of 742.6 million shares and assuming each share is valued at $1.52, Fullerton is valued at $1.13 billion.

Fullerton is backed by private investment firm SIN Capital Group. It recorded revenue of $240.6 million last year and a full-year loss of $12.4 million. It did not provide a breakdown of which revenues were derived from third-party administration services and which came from its own facilities.

Correction note: This story has been edited to correct the value of the Fullerton as $1.13 billion

A version of this article appeared in the print edition of The Straits Times on October 14, 2016, with the headline 'Fullerton Health IPO faces delay after complaints'. Print Edition | Subscribe