Australian hospital operator Healius has received a non-binding $2.02 billion bid from a unit of its largest shareholder, China’s Jangho Group, to buy it out.

Jangho owns nearly 16 per cent of Healius, formerly known as Primary Health Care.

It has made an indicative cash offer of $3.25 per share, Healius said in a statement.

That represents a 33.2 per cent premium to Healius's last closing price. This, however, is well below a peak of about $3.95 in March last year.

healthcare medicine hospital primary healius

Healius, formerly Primary Health Care, was founded 30 years ago

Healius said it was reviewing the offer, and that shareholders should not take any action at this stage.

Healius carries a Morningstar's fair value estimate of $3.50.

Primary Health Care, which was founded 30 years ago by the late Edward Bateman and operates pathology, medical centres, IVF, imaging and day hospitals, changed its name to Healius as part of a rebrand late last year.

In its most recent company update published in October last year, Morningstar said it expected earnings per share growth of about 7 per cent a year on average during the next five years.

The government is increasingly focusing on preventative health, which typically results in superior health outcomes, reducing pressure on public finances, says analyst Daniel Ragonese.

"This benefits around 50 per cent of group earnings which are generated through the diagnostic (radiology and pathology) divisions," he says.

"The group should also benefit from an ageing and growing population, which will drive greater demand for medical services, supporting our mid-single-digit revenue growth expectations on average during the coming years."

Morningstar forecasts group operating margins to expand to about 12 per cent by fiscal 2023, up from its 10.5 per cent fiscal 2019 forecast.

"Given the high level of operating leverage within the firm, general practitioner, or GP, numbers within the medical centres are a crucial component of the expected margin uplift," Ragonese says.

"The medical centres are currently underutilised, and the network operating at below full capacity, which leaves considerable scope to add practices and services for several years."

The hospital operator has appointed UBS as financial adviser and King & Wood Mallesons as legal adviser.