Just days after successfully raising $20m from investors keen for a slice of Apiam Animal Health (ASX: AHX) and their rapidly growing business, the vet clinic operator has secured a prized asset in one of Victoria’s fastest growing regions located just 40km north of the CBD.
The Vet Practice is a full-service companion animal clinic located in Whittlesea which is a fast-growth peri-urban region popular amongst Victorians that want regional lifestyles but still just a 40 minute drive into Melbourne. In recent years the City of Whittlesea has been one of the fastest growing municipalities in Australia and it is forecast to continue to grow rapidly – by 55.9% between 2022 and 2041.
So quickly have Melbournians been moving towards the outer northern suburbs, The Vet Practice employs 48 staff which includes 12 veterinarians and 20 vet nurses to deal with the burgeoning growth in local animal numbers – key criteria to Apiam’s growth strategy where they target these growth metrics.
“The acquisition of The Vet Practice aligns with our strategy to enter regional veterinary markets where rapid population growth is driving strong increases in local animal numbers,” said Apiam Managing Director, Dr Chris Richards.
“The fact that The Vet Practice is also a leading companion animal clinic with a full-service offering means its services can be leveraged across our adjacent clinic network.
“Apiam continues to deliver strong organic growth across our companion animal services and it is acquisitions such as The Vet Practice that are expected to contribute to our accelerated growth strategy to achieve $300 million in revenue by FY24 and deliver increased operating margins.”
Further evidence of the rising demand amongst Victorians to relocate to Whittlesea is the increased house prices within the suburb. According to the Real Estate Institute of Victoria, the median sale price for houses over the March quarter in Whittlesea was $805k, an 11.8% QoQ increase. In comparison, the median sale price for houses in Metropolitan Melbourne decreased 0.3% to $1.12m over the same period.
In many cases, residents moving into regional Victoria are either bringing pets with them, or adopting them for the first time as evidenced by a 15% increase in pet ownership during the pandemic according to Animal Medicines Australia. This increase has contributed significantly to Apiam’s companion animal services which has become Apiam’s fastest-growing division where margins improve upon integrating Apiam’s centralised support services.
The Vet Practice is expected to add $7.9m in revenue and $1.3m in normalised EBITDA to Apiam on a FY22 pro forma basis. It will also take Apiam’s proforma FY22 revenue to approximately $178 million, and on track towards their $300m target by FY24.
Total consideration for the Acquisition is $8.3 million, to be paid as $7.1m in cash and $1.2m in Apiam shares which will be subject to a minimum escrow period of 12 months, with 50% subject to an escrow period of 24 months. It also represents an implied EBITDA acquisition multiple of 6.2x which is attractive for Apiam shareholders with the expected organic growth synergies expected to be delivered post integration.
Upon settlement of the acquisition expected on 1 July 2022, Apiam will commence rolling out its organic growth initiatives at The Vet Practice which will eventually include marketing, supply chain and human resources support. Separately, Apiam already operates several clinics within Victoria’s north which will provide cross-referral opportunities between clinics to gain access to specialist animal services.
Being a full-service companion animal veterinary clinic, The Vet Practice operates an animal hospital and canine rehabilitation centre from its Whittlesea premises. Services offered include regenerative medicine, hyperbaric medicine, arthroscopy, hydrotherapy and endoscopy as well as general pet healthcare.
The acquisition of The Vet Practice continues a strong run of acquisitions where Apiam is capitalising on the animal healthcare market which has proven resilient during COVID-19 and with current market forces. Just last month, Apiam acquired Victorian Equine Group and Romsey Veterinary Surgery to form their newest Equine Hub in Victoria.
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