Having serviced delivered more than 1.6 million patient appointments over the past year, allied health company Healthia (ASX: HLA) has such a large pipeline of acquisition targets that they have confirmed a new strategic vision of becoming the largest diversified allied healthcare provider in Australia and New Zealand.
The ambitious goal has been set by the Company which operates 307 allied health businesses across its network in Australia and New Zealand. These primarily comprise physiotherapy, podiatry and optometry clinics but are all supported by centralised Healthia services that include marketing, supply chain management, accounting and HR.
By offering the wide breadth of support services that offer clinicians the opportunity to focus on patients rather than business administration, plenty have been knocking on Healthia’s doors with 110 businesses in discussions to join the network. Unlike other healthcare groups, joining Healthia allows clinic owners to become Clinic Class Shareholders of Healthia enabling them to retain ownership in, and share profits generated by, their clinic.
Since listing on the ASX in 2018 with 104 businesses, the model has become hugely popular amongst the healthcare industry where Healthia now has 307 in their network.
While Healthia has its new goals set to become the leading provider in Australia and New Zealand, those clinic operators will be in tight competition against each other with Healthia’s success having tightened their metrics to acquire a clinic.
These metrics primarily rely on Healthia being confident that the clinic operates in the right location where vertical integration and co-location of additional allied health services can deliver an uplift in earnings. As evidenced in their FY22 results, it’s a strategy proving successful.
“As the Healthia network has expanded, we continue to be approached by clinic operators across the hugely fragmented allied health industry keen to join our network,” said Healthia CEO, Wesley Coote.
“We now have a pipeline of more than 110 potential acquisitions ranging from initial discussions to conditional binding sales agreements.
“Assessing each one on a case-by-case basis, we will again deploy at least $20m in FY23 towards acquisition growth targeting earnings-accretive clinics that we can improve once integrated into the Healthia network.”
For the year ended 30 June 2022, Healthia reported $202.8 million in revenue which represented a 44.4% increase on the previous year. This delivered $24.5 million in underlying EBITDA which represented a 14.3% increase and $9.2 million in underlying NPAT, a 3.8% increase.
Those latter two figures would have been higher had it not been for the COVID challenges where Government-enforced lockdowns affected 6,869 trading days across the network amid the Omicon strain outbreak. This was then followed by four months of high staff absenteeism and patient cancellations before business stabilised from May 2022 onwards.
In addition to their vertical integration, Healthia has flagged plans to rollout new initiatives focusing on their people and technology as part of their strategy to become the leading allied healthcare provider.
Many of these people focused initiatives will be introduced at their upcoming Inspired 2022 conference – the first time it will be run since 2019, before the onset of COVID. The conference will be attended by clinicians across the Healthia network while new Business Leadership and Clinical Leadership programs will continue to be ramped up.
Investing further in their own people, including the 154 graduates that entered their Graduate Program over the past 12 months, Healthia will introduce individual career plans for all team members that will provide clear pathways, including towards Clinic Class Shareholder opportunities.
Upgrades to their technology will also play a role in Healthia’s strategic objectives with the Company having formulated an internal roadmap that will see several new tech products rolled out across their networks and patients in the years ahead. Many of these smart-device enabled features are being designed to service patients and customers in an efficient, timely and cost-effective way to drive organic growth across all Healthia clinics and their more than 1.6 million patient appointments per annum.
As they currently stand, Healthia is on track to deliver $40 million of underlying EBITDA in FY23 but that is likely to increase as they deploy their stated target of at least $20m per annum towards new clinics with high potential.
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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