Lifecare acquisition adds scale & services: APM Human Services

Fri 10 Dec 21, 9:45am (AEST)

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Key Points

  • Management has guided to $295m in earnings.
  • Goldman Sachs initiated coverage with a BUY.
  • AMP to rapidly diversify into the Allied Health Services sector.

APM Human Services (ASX: APM), which recently joined the ASX as the only listed employment services provider, has revealed plans to rapidly diversify into the Allied Health Services sector.

Fully funded from existing cash reserves, the company is acquiring physiotherapy and home care group Lifecare for $68m. News of the company’s first acquisition led to a welcome kicker to the share price – which despite being on-track to meet its prospectus forecasts – initially shed up to a third of its $3.55 issue price.

The Lifecare Group, which comprising 47 clinics across four states, operates the following trading brands: Lifecare, Lifecare homecare, Ontrac, Backfocus, Peninsula Sports Medicine Group and Beleura Health Solutions.

The Lifecare Group is expected to be earnings accretive having made $53m in revenue and earnings of $10m.

Commenting on the acquisition APM’s CEO Michael Anghie notes Lifecare adds scale and services within a key growth sector.

“It allows us to expand our Allied Health service offering and reach through a combination of physical clinics, mobile and telehealth services.”

Management has guided to $1.3bn in revenue, $295m in earnings and a $155m net profit (NPAT). While these figures signal a growth of 20%-plus on FY21, the company notes further upside could come via the Lifecare acquisition.

Meantime, across the employment services sector, APM continues to see increased opportunities for clients as markets re-open and the demand for talent increases.

With a market cap of around $2.4bn, APM is well within the S&P ASX-200 and as such will continue to receive the market’s attention. Morningstar puts fair value at $2.71.

Goldman Sachs recently initiated coverage on APM with a BUY recommendation and a target price of $3.60.

The broker sees strong organic growth opportunities, with a $2.5bn-plus p.a. revenue tender pipeline and scaling into the vicinity of $30bn annually.

Written By

Mark Story


Mark is an award-winning investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics, a diploma in journalism and has completed the Institute of Directors course. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content.

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