Clalit Health Fund Increases Stake in Herzliya Medical Center

Clalit Health Fund is set to acquire an additional 10% stake in Herzliya Medical Center from Yair Landau for NIS 120 million. This acquisition will raise Clalit's ownership from 40% to 50% in the private hospital. Following the deal, Landau will retain a 40% share, and All Insurance will hold the remaining 10%. The transaction, which involves Clalit exercising its right of first refusal, values Herzliya Medical Center at approximately NIS 1.2 billion, a higher valuation than in previous deals.

Herzliya Medical Center, which has attracted interest from investors like Yitzhak Tshuva, operates with specialist physicians and surgical suites, serving various health maintenance organizations. The hospital performs around 26,000 surgeries annually across specialties including cardiology, orthopedics, neurosurgery, oncology, and fertility treatments. It features nine operating rooms and employs hundreds of medical staff. Its annual revenues have been estimated at NIS 700 million, with EBITDA around NIS 70-80 million, making the current deal's valuation approximately 15-17 times its EBITDA.

This move aligns with Clalit's strategy as the largest HMO in Israel, operating public hospitals while also purchasing services from private entities. Herzliya Medical Center already provides surgical and planned treatment services to Clalit, with a portion of its revenue stemming from this relationship. Clalit directs patients to the hospital and pays for their care, and with this increased stake, it will co-own the facility providing these services.

This model is not unique, as Maccabi Health Services owns Assuta Medical Centers, and United and Leumit Health Services jointly hold a majority in the Medika network. Herzliya Medical Center has also expanded its operations to Tel Aviv through TLV Medical, which includes five operating rooms and offers procedures in surgery, plastic surgery, and gynecology.

In 2021, Clalit attempted to increase its stake to 51% at a lower valuation, but that deal did not materialize. The current agreement brings Clalit to a 50% holding, with Landau remaining a significant shareholder.