Given the impressive portfolio growth that Healthia (ASX: HLA) has delivered over the past three years, institutional investors have been keen for more of the allied health company with many missing out on their latest capital raise which was heavily oversubscribed.
Making Healthia attractive has been the continued growth of their allied health network which was just 104 businesses when they listed on the ASX in 2018. That figure, however, is set to reach 281 following their latest acquisition of Back In Motion Health Group which would represent 170% growth in their portfolio over just 3 years.
Interest from clinicians to join Healthia has been driven by their allied health network that achieved 9.1% organic growth through FY21, highlighting the business growth they unlock for incoming clinics by alleviating vendors of their back office operations.
The acquisition of Back in Motion and its 64 clinics is the single largest acquisition for Healthia, eclipsing the 41 they picked up when acquiring The Optical Company (TOC) in October 2020 for $43 million.
“In line with our stated growth strategy, the acquisition of BIM marks an exciting chapter for Healthia, adding significant scale to our Bodies & Minds division and expanding our geographical reach into other states and the New Zealand market,” said Healthia CEO, Wesley Coote.
“Together, we will be the leading provider of physiotherapy services in the country, giving our patients more choice and better service while continuing to focus on exceptional patient outcomes.”
To be acquired for $88.4 million, the BIM acquisition will be partially funded from the $44.5m raised last week from institutional investors which included $22.3m from a heavily oversubscribed placement. The other $22.2m was the institutional component of their 1 for 4.3 Entitlement Offer to existing shareholders with a retail component to follow.
Based on the enormous success Healthia has achieved after acquiring The Optical Company, it was no surprise to see institutional support for the rapidly growing healthcare company. Within just three months of acquiring TOC, Healthia’s shares more than doubled, increasing from $0.95 in October 2020 to $1.95 in February 2021.
Such growth was attributed to Healthia’s national support network which manages back office operations and product supply chain, enabling clinicians to focus on patient outcomes. Other business growth initiatives include the addition of new allied health services into the clinics, including their recent entry into audiology services which are being rolled out into their optometry clinics.
With the addition of 64 physiotherapy clinics, including 13 in New Zealand which marks Healthia’s first entry into the NZ market, there will be opportunities to introduce new clinicians into the clinics could offer services not already available in the clinic such as podiatry or hydrotherapy.
Commenting on the acquisition, BIM Founder and Director, Jason Smith said, “I am delighted Back In Motion is joining Healthia. Together, we make an exceptional cultural fit – both being clinician-led, committed to clinical excellence, focused on outcomes and improving quality of care, and concerned for the well-being of our team members.
“Healthia also has an experienced leadership team with a strong track record of growth and delivering shareholder returns.”
Upon settlement of the acquisition, Healthia will become the largest physiotherapy service provider in Australia and further unlock opportunities to cross-refer patients between healthcare services within their network.
Post-acquisition, Healthia’s underlying EPS will increase 12.7% from 11.13 cents to 12.54 cents while the Company is in a very healthy position to continue growing the network. This includes $33 million of headroom in their finance facility for further acquisitions that are not purchased from existing cash reserves.
For the Year ended 30 June 2021, Healthia reported a 52% increase in revenue to $140.4 million and 91% increase in underlying net profit after tax to $8.9 million.
*Owners of this website are shareholders in a company mentioned in this article and have been engaged by them to assist in investor communications
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, a bloodstock enthusiast and former equities analyst.
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