Healthcare

Apiam acquires two key equine clinics in prime horse country

Thu 19 May 22, 10:45am (AEST)
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Key Points

  • Apiam to acquire two key equine and mixed-animal clinics on East Coast funded by bank loan
  • Apiam Animal Health expects revenue to double to $300m by FY24
  • Move comes as La Nina weather conditions have boosted pasture-based animal growth

Apiam Animal Health (ASX:AHX) has executed binding agreements to acquire two high-value veterinarian clinics targeting the racehorse industry; Victorian Equine Group (VEG) and Romsey Veterinary Surgery. 

VEG operates the Bendigo Equine Hospital and ambulatory reproduction services in the Goulburn Valley, a key breeding region. 

Apiam expects both acquisitions to "double revenue to $300M by FY24." 

The combined cost of both acquisitions will cost the company $13.75M; the consideration broken down reflects $9.8m in cash, and, $4m in scrip. 

Apiam has bank approval to increase its acquisition facility by $20m. Apiam boasts a market cap of $102m, with $9m in free cash flow. Its most recently reported net profit sits at $5m.

(Source: Apiam Animal Health) A rundown of the company's acquisition rationale and financials
(Source: Apiam Animal Health) A rundown of the company's acquisition rationale and financials

Apiam moves to become dominant force across east coast

The acquisition of VEG sees Apiam set up with an equine clinic in each major East Coast state for local clinics to use for expert referral. 

The acquisition of Romsey, meanwhile, adds an "important mixed animal location in the fast growth corridor between Melbourne and Bendigo," the company notes. 

Romsey hires 16 staff including 6 professional vets and is set to make $3.3m revenue in FY22. 

Acquisitions to exploit growth in horse racing sector; dairy market 

The company has highlighted the ongoing La Nina weather cycle, and "post-drought conditions," have led to an increase in pasture-based animal growth, and Apiam also notes in a presentation released today that the regional veterinary industry is itself growing rapidly. 

On top of equine clinical services, Apiam is also seeking to lock-in further dairy market share.

Apiam has conducted twenty acquisitions since listing in 2015.

Apiam Animal Health's six month charts versus the Healthcare index (XHJ)
Apiam Animal Health's six month charts versus the Healthcare index (XHJ)

 

Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication. Email Jon at [email protected].

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