109% portfolio growth over three years is the stuff of dreams for professional investors but for healthcare company Healthia (ASX: HLA) it’s a reality, with the nationwide operator’s latest acquisition taking their total allied health businesses to 217.
Those 217 businesses which span podiatry, physiotherapy, optometry, audiology, retail and manufacturing is more than double the 104 boasted by Healthia when listing on the ASX in September 2018.
“Healthia’s vision is to build the leading allied health care business in the Australian market. Our key target sectors of Bodies and Minds, Feet and Ankles, and Eyes and Ears have a collective addressable market of $9.8 billion,” said Healthia CEO, Wesley Coote.
Taking their total business count to 217 is the newest addition of multidisciplinary business Anytime Physio which is located in the heart of Brisbane’s business district. Offering services that include physiotherapy, podiatry, remedial massage, clinical pilates and dry needling, the business will commence integration immediately into the Healthia network, unlocking a range of marketing and supply chain support services that drive business growth.
The addition of Anytime Physio follows last month’s acquisitions of AllCare Physiotherapy in Tasmania and John Holme Optometrist’s two optical stores in North Queensland with all four businesses having now reached settlement.
Total upfront consideration for the four businesses was $2.46m comprising $1.74m cash and $0.72m in Clinic Class Shares issued. Between them, the four businesses are expected to contribute annual revenue of $3.95m and EBITDA of $0.64m which is in line with Healthia’s 4.2x EBITDA acquisition targets.
While Healthia is committing $20m annually towards acquisitions, the Company’s 11% organic growth has meant more of the incoming clinics are being funded by existing cash reserves rather than debt. This organic growth is being driven by Healthia’s floorspace optimisation strategy where they are able to increase the allied health services offered by individual clinics, while also keeping customers within the Healthia network via cross-referrals.
Horizontal expansion into more allied health services in the immediate future will also be a driver for Healthia’s portfolio growth. This was first evidenced in October 2020 when the operation expanded into optometry via their $43m acquisition of The Optical Company and then again last month when expanding into audiology services.
Following on from the Half Year results which included a 91% increase in underlying EBITDA to $11m, Healthia is expected to report their Full Year results later in the month which will include integration synergies from the optometry expansion which only settled in November 2020.
In the 10 months since that expansion into optometry, HLA shares have risen from $1 to last close at $1.80, representing a 80% increase (not including dividend payouts) which comfortably eclipsed the wider market’s 23% rise over the same period.
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*Owners of this website are HLA shareholders
Alfred Chan is an Analyst at Emerald Financial, specialising in ASX-listed small cap companies.
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