Australia’s largest regional veterinary network continues its expansion with the purchase of two key acquisitions.
Animal health company Apiam (ASX:AHX) has purchased two key veterinary businesses in New South Wales and Queensland for a combined $3.6 million, further expanding its presence in the two eastern states.
Apiam will pay 80% cash and 20% scrip for Fraser Coast Veterinary Services in Queensland. The business comprises three clinics in Maryborough, Howard and Childers within the Fraser Coast region of Queensland, about 250km north of Brisbane.
There are 25 staff including nine veterinarians employed at Fraser Coast Veterinary Services, which has strong financial growth with revenue increasing ~25% over the past two years.
Apiam will pay 70% cash and 30% scrip for North Hill Veterinary Clinic, a single location companion animal practice, located in the regional NSW city of Armidale.
The business employs four veterinarians and has delivered strong financial performance in recent years. It is one of four small independent veterinary clinics in the Armidale region.
Key employees in both businesses will enter new contracts with Apiam, with similar terms and restraint conditions to Apiam’s previous acquisitions.
New shares issued as consideration will be subject to a minimum escrow period of one year, with 50% subject to an escrow period of two years.
Targeting underserviced and high growth corridors
Apiam’s managing director Dr Chris Richards said there continues to be strong growth in animal ownership and regional veterinary services in many locations.
He said the company was strategically targeting market growth corridors and those underserviced.
The Fraser Coast is considered a particularly high growth area, with a population forecast to rise by 36% between 2019 and 2036.
“The acquisitions of Fraser Coast and North Hill have been targeted to capture this growth and have strategic benefits given our growing clinic networks in the QLD and NSW regions,” he said.
“Not only can we share skills and staff across our locations, but we can leverage our infrastructure from adjacent clinics.”
The acquisitions are forecast to add $5.2 million in revenue and $0.6 million in EBITDA to Apiam on a FY21 basis.
Expands regional presence in equine market
Recently Apiam completed the acquisitions of Scenic Rim Veterinary Service and Harbour City Vet Surgery, both in Queensland, Golden Plains Group in Victoria’s Greater Geelong district.
The Company has also announced the acquisition of Horsham Veterinary Hospital in Western Victoria and and Agnes Banks Equine Clinic (ABEC) on the western fringe of Sydney, which with Fraser Coast and North Hill are expected to settle on 1st December 2021.
The acquisition of Scenic Rim Veterinary Service and Agnes Banks Equine Clinic is part of Apiam’s strategic push into the regional equine market.
Like animal ownership, the equine sector has benefitted from strong growth trends in the wake of the COVID-19 pandemic.
Furthermore, there has been major investments in racing industry prizemoney, government support in some states and greater spending across the sector generally.
ABEC and Scenic Rim Veterinary Service feature state-of-the-art facilities and equipment operated by experienced vets, including some with registered specialist qualifications, and are close to large equine studs.
Apiam has other dedicated equine services and centres in Gippsland, Kyabram and Warrnambool in Victoria along with Clermont and the Samford Valley in Queensland.
Apiam plans to continue its equine expansion strategy.
Dairy, mixed animal clinics underpin strong performance
A solid start to the 2022 financial year has been credited to strong revenue growth in Apiam’s dairy and mixed animal clinics.
Preliminary revenue for Q1FY22 of $34.6m was 16.7% higher than previous corresponding period (pcp), increasing from $29.6m. Preliminary gross profit continued to grow, up 26.4% on pcp to $21 million in Q1FY22.
Dairy and mixed animal clinics are expected to be ~70% of Apiam’s total revenue as regional demographics, pet ownership and vet spend in these verticals grow rapidly.
Apiam has more than 60 veterinary clinics nationwide. Shares in the company were up 2.2% today to 93 cents.
This article was developed in collaboration with Apiam, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.