As a consequence of the pandemic, growth in regional Victoria has blossomed over the past three years with thousands of Melbournians that sought sea and tree changes along the Bellarine Peninsula which allied health group Healthia (ASX: HLA) has capitalised on by acquiring 9 new clinics in the region.
The clinics comprise 9 allied health businesses that operate under the Corio Bay Health Group between south-west Melbourne and Geelong – widely regarded as the State’s most popular growth corridor. With quick access to pristine beaches while only being a 60 minute drive from Melbourne, the region has become particularly attractive to young families, as evidenced by the sprawling developments underway between Melbourne and Geelong.
For Healthia, which operates more than 300 allied health businesses around Australia, it expands their presence in Victoria where they now have 72 clinics covering podiatry, physiotherapy and optometry services.
Corio Bay Health Group is expected to contribute $6.5 million revenue and $1.2 million underlying EBITDA on an annualised basis to Healthia, following their modus operandi of only acquiring earning-accretive clinics that they can extract further value through integration into their network.
The earnings will be added to the $40m of underlying EBITDA previously forecasted by Healthia in FY23 having been adversely affected by the pandemic over the past three years due to abnormally high staff absenteeism and sick leave across the healthcare industry.
With the 9 clinics now settled, Healthia will commence their vertical integration process across the clinics by introducing their support services which span marketing, accounting, human resources and supply chain.
Highlighting the rising population growth and need for more allied health services in Victoria’s west, house prices have soared over the past five years. Domain data showed that in December 2021, the median house price for the Surf Coast was $1.4 million which represented a 100.3% increase from 2016.
Similarly, median house prices in Greater Geelong increased 70.1% in the past five years to $740k as population growth reached a point in recent years where the market was barely able to handle rising demand to move into the area.
Comparatively, Metropolitan Melbourne only increased 25% in that same time.
Healthia CEO Wesley Coote indicated that Healthia’s expansion in recent years is just a signal of things to come as the Company sets its sights on becoming Australia and New Zealand’s largest and most diversified allied health provider.
“Having grown the network from 104 clinics at listing in September of 2018 to over 300 clinics 4 years later, we as a management team have proven that we can source acquisitions, at sensible valuations, and successfully integrate them into our systems,” said Coote.
“We have previously discussed the fact that we will continue to deploy the $20m of capital per year on accretive acquisitions and continue to build on the less than 3.0% market share in the industries we operate in.
“The only key update to this strategy is that our big hairy audacious goal is to have an extensive enough coverage that 50% of Australians and New Zealanders can easily access our product and services if they choose to.”
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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