When COVID-19 hit, we saw a flurry of city dwellers move out to regional Victoria where they could live in peace without the constant threat of lockdowns. Despite there being an end in sight to the pandemic however, those same sea-changers are set to remain away from metropolitan areas which is just one of the driving forces behind Apiam Animal Health’s 22.7% surge in revenue.
As Australia’s largest operator of regional vet clinics employing more than 800 staff, Apiam had been well positioned geographically prior to the onset COVID-19 which saw huge population influxes in regions that Apiam had a large presence in. In many instances, those sea and tree-changers brought family pets with them while others used their urban exit to own a pet for the first time without the restrictions applied to most apartments.
Upon arrival in regional Australia, one of the first things new residents have done is sign up to Apiam’s Best Mates program which offers pet owners an unlimited number of consultations throughout the year, as well as vaccinations and other membership goodies. This saw the programs membership increase 45% over the past year to now have 6,338 paying members
For the half year ended 31 December 2021, Apiam reported $75.1 million revenue which represented a 22.7% increase on the previous year.
Operating a vertically integrated model that includes nationwide support services and product supplies, the increased revenue flowed down to the bottom line to deliver $3.2 million in underlying net profit after tax, a 13% increase.
Apiam shareholders were duly rewarded with an interim dividend of 1.2 cents per share.
With rising customer numbers where the clinics acquired over the past six months have all begun delivering improved returns, Apiam is aiming to capitalise on industry tailwinds and accelerate its network growth.
“We are highly confident that our regional expansion strategy puts us on track to double our revenue base by FY24 to more than $300 million,” said Apiam Managing Director, Dr Chris Richards.
“This is based on ongoing organic initiatives, our greenfield clinic roll-out program as well as our future acquisition runway.”
Migration towards regional Victoria has been a boon for many domestic economies which have seen large influxes of spending, not just on family pets.
2021 housing data showed that the median house price skyrocketed in large Apiam regions. This included a 43% increase in the Surf Coast to $1,400,000 over the past 12 months. Similarly, Warrnambool saw an annual increase of 35.8% in their median house price while Greater Bendigo jumped 23.9% and Greater Geelong 22.7%.
Having forecasted these increases, Apiam has opened a new greenfield clinic at Surf Coast in April 2021 and has further acquired 8 regional clinics over the past six months to capitalise on the sustained population growth.
“The pipeline of future acquisition opportunities remains very strong in the current climate and given the attractive veterinary industry fundamentals we will continue to assess opportunities based on their strategic and financial merit,” said Dr Richards.
Given the companion animals market will be sustained for at least the next 7-10 years amid the surge in pet ownership, Apiam is well positioned to further grow its network in the years to come. With the right people in place across their hub-and-spoke model where smaller clinics can cross-refer to Apiam’s larger ones.
At the forefront of changing trends, Apiam has already commenced strategic recruitment drives for highly skilled veterinarians because of industry-wide restructuring, particularly following the COVID-19 pandemic. This has seen Apiam pursue international recruitment opportunities as well as the recruitment of more highly skilled vets to support faster future business growth as they target $300m revenue by 2024.
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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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