Australians may have been cutting costs through FY24 as evidenced by discretionary spending behaviour but this has played right into the hands of Apiam Animal Health (ASX: AHX) which has seen a surge in customers to its all-inclusive Best Mates membership program which is up 32% to 11,300 members.
Rather than paying for each visit to see a vet, the Best Mates program is just one annual fee that provides pets with unlimited vet or nurse consultations. The program has been particularly popular through Australia’s cost-of-living crisis by giving pet owners peace-of-mind, offered throughout Apiam’s 80 clinics across Australia that employ more than 330 veterinarians.
The growth of the Best Mates program is reflective of the nature of Apiam which grew from being a rural regional vet clinic operator to now have presence in the peri-urban regions and suburbs of Melbourne, Brisbane and the Sunshine Coast.
It’s also why Apiam’s Clinical Vet Services division, which services pets and companion animals, accounted for 78% of the $204.8 million revenue Apiam reported for FY24.
The remaining 22% came from vet services provided to their Intensive Animal Vet services division which consists of their Beef feedlot and Pigs segments.
The Clinical Vet Services division is best known to consumers through Apiam’s Fur Life Vet brand and locally named clinics which offer companion animals (pets) and horses with checkups, medicines, surgery, diagnostics, dental care and products. Having all vet services available at one location has also been popular with Apiam customers, contributing to the division reporting 7.4% revenue growth for FY24.
The rise of Apiam’s companion animal and equine services clinics has taken place amid a transformation in Apiam’s flagship B2B (farms) Intensive Animal Vet Services. While a 2.3% YoY revenue increase was not as high as their clinic service, gross profit was up 10.1% from the division to reflect a transition to higher value services. This was supported by increased use of data analytics to enhance and grow Apiam’s consulting services while new vaccines and other products were also developed and deployed.
Across all Apiam businesses, which include support and supply chain services, Apiam Animal Health reported $204.8 million revenue for FY24 which was a 6.2% increase on the previous year. This flowed down to $20.3 million in underlying EBITDA (up 22.3%) and $7.2M underlying NPAT (up 12.3%). AHX shareholders have been rewarded through a 1.0 cents per share fully franked final dividend declared.
Having streamlined a variety of different animal businesses down to their core B2C and B2B vet services, Dr Richards flagged FY25 as a year of growth, with expectations that animal health services will remain resilient despite general pullbacks in discretionary spending.
“This year we delivered improved financial results through a strategic plan that focussed on extracting synergies, achieving more effective outcomes from our existing business portfolio and pursuing organic growth opportunities,” he said.
“Looking ahead to FY25, we expect demand for veterinary services in regional and rural locations to remain resilient. We have a business model diversified across various industry sectors, servicing companion animal pet and livestock owners all the way through to large commercial pig and beef feedlot operators.
“Many of the strategic changes we made in FY24 will have a greater annualised impact in FY25 and we expect this to further improve our earnings position.”
Many of the companion animals that became pets during COVID are set to enter their mid-life phase which is expected to see an increase in veterinary needs in the coming years. To service this likely demand increase, Apiam will continue to drive efficiencies, as well as ramp up its presence in its new locations that include Caboolture, Tarneit, and Geelong – all locales with high population growth in recent years.
Alfred Chan is a Business Reporter at The Sentiment specialising in ASX-listed small cap companies, bloodstock enthusiast and former Analyst.
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