The healthcare industry has been one of the most heavily impacted by the COVID-19 pandemic. Not just because of its strain on the healthcare system, but also because of sharp spikes in staff absenteeism and the widespread delaying of appointments among patients.
A survey from the Continuity of Care Collaboration, which is an Australian group of healthcare organisations found that during COVID;
- 55% felt it was safe to delay regular appointments if nothing has changed and they are feeling ok.
- 36% were worried health services were too busy.
- 51% said they would only seek medical help face to face in an emergency.
As a result, non-emergency healthcare businesses have had a tough time over the last two years. With the uncertainty over lockdowns and isolation taking more time than expected for normalcy to return in the industry.
Australia’s fastest growing allied health portfolio – Healthia (ASX: HLA), has not been immune to the adverse effects of operating through a pandemic where lockdowns and abnormally high staff absenteeism resulted in expenses being incurred without the corresponding revenue. The charts below outline the impact on the Company’s clinic operations.
However from this difficult period, opportunities have presented as the backlog of delayed appointments during COVID are now being redeemed. In the 4 months ended 31 August 2021, Healthia reported its clinic operations are back on track towards their pre-COVID levels which was confirmed through their guidance of at least $40 million in underlying EBITDA in FY23.
Since their IPO in September 2018 when Healthia listed on the ASX with 104 allied health businesses, they have since expanded to 309 which includes entry into international markets in New Zealand and the United States.
Healthia have the benefit of the large-scale strength of their network, and thus are experiencing significant interest from smaller clinics (who experienced the same difficulties during COVID) wishing to be acquired. This ongoing interest has now advanced to the point where Healthia is in discussions to acquire 110 different allied health businesses.
Subsequently, any acquisitions they make in the next year will provide additional EBITDA that isn’t included in the $40m EBITDA already expected in FY23, which will be comfortably higher than the $24.5m reported in FY22. As discussions continue with those 110 potential acquisitions where Healthia has a strong record of only acquiring businesses that can be organically improved with integration into their network, those additional earnings will be added on top of their $40m guidance, including the 12 clinic acquisitions announced in September 2022.