The Healthia Ltd (ASX: HLA) share price is on watch after announcing an $88.4 million physiotherapy acquisition.
Healthia buys Back in Motion (BIM)
Founded over 20 years ago, Back in Motion is one of the largest and fastest growing physiotherapy businesses in Australia and New Zealand, with a portfolio of 64 physiotherapy clinics supported by their associated physiotherapy clinics across ANZ.
Victoria is the location of 27 of these clinics, whilst New Zealand has another 13 clinics.
Historically, this business operated under a franchise model (though immediately transitioning to Healthia’s ownership after completing the the deal).
Healthia is buying this business for a total of $88.4 million, comprising $64.6 million of cash, $16.1 million of Clinic class shares, $5.8 million of new shares payable on completion and $1.9 million of cash payable on completion. In addition, a consideration (estimated at $4.2 million) may be payable between six months to 36 months after the acquisition if the business hits its future earnings targets.
Financial numbers
BIM made $62.9 million of ‘underlying’ revenue and $12.3 million of underlying EBITDA (EBITDA explained) in FY21.
Healthia expects this acquisition will add 12.7% to its underlying profit / earnings per share (EPS).
The ASX healthcare share said that Back in Motion has a track record of organic growth, with around 8% organic growth in FY21.
BIM also apparently has good customer growth and customer retention. As part of the acquisition, Healthia will also get purpose-built, industry specific systems and technology, which is branded Evo Suite – Healthia will get a 33% interest in the company that operates and develops Evo Suite.
Sonic Healthcare Ltd (ASX: SHL) is one of the other ASX healthcare shares that is growing through organic growth and acquisitions.
Capital raising
Approximately $53 million of the $60 million will be raised by Healthia through a fully underwritten placement and entitlement offer.
The fully underwritten institutional placement will raise approximately $22.3 million. There will also be a fully underwritten 1 for 4.3 pro rata accelerated non-renounceable entitlement to raise approximately $37.7 million.
The offer price of $1.80 represents a discount of 18.2% to the last closing price.
Thoughts on Healthia and the share price
Healthia seems like a pretty good business. It’s delivering organic revenue growth, profit margin increases and a steady stream of useful acquisitions. Like BIM. It seems like a good deal, though the capital raising is being done at a pretty deep discount to the last share price.
I’d be happy to take part in the capital raising, though I’m not sure about buying new shares on the market right now. A price under $2 could be compelling. I’ve also got my eyes on other ASX growth shares.
