Australia’s largest regional veterinary network records a strong start to the 2022 financial year with revenue and profit growth up, along with completing key acquisitions.

Strong revenue growth in its dairy and mixed animal clinics have underpinned a solid start to the 2022 financial year for animal health company Apiam (ASX:AHX).

Apiam’s preliminary revenue for Q1 FY22 of $34.6m was 16.7% higher than previous corresponding period (pcp), increasing from $29.6m.

Apiam managing director Dr Chris Richards noted it was a promising start to FY2022 with the first quarter generally the lowest seasonal contributor to the company’s full year performance.

Preliminary gross profit continued its growth momentum, up 26.4% on pcp to $21 million in Q1 FY22.

That growing contribution dairy and mixed or companion animal clinics are making to the group has been credited to Apiam’s sustained gross profit uplift, which Apiam continues to deliver period-on-period.

Dairy and mixed animal clinics are expected to trend towards 70% of Apiam’s total revenue as regional demographics, pet ownership and vet spend in these verticals grow rapidly.

Apiam completes key clinic acquisitions

To continue expanding its presence in targeted market growth corridors, Apiam completed the acquisitions of Scenic Rim Vet Service and Harbour City Vet Surgery, both in Queensland and Golden Plains Group in Victoria’s Greater Geelong district.

The acquisitions take Apiam in Q1FY22 into markets and regions it has identified as rapidly growing and under-serviced.

“We continue to identify these types of opportunities and expect similar acquisitions to be a key feature of our growth strategy in the year ahead,” Richards said.

He said the Greater Geelong region was of particular focus to the company.

“Attractive, fast-growth regional locations are also the focus of our greenfield clinic program, and this quarter we opened a new state-of-the- art clinic in Highton, Geelong,” he said.

“Apiam now has a growing presence in this peri-urban region with the ability to share staff and leverage our cost base across our growing clinic network in Greater Geelong, the Surf Coast and surrounds.”

Expansion in time for breeding season

Apiam’s acquisition of Scenic Rim Veterinary Service significantly boosts its presence in the Queensland equine market.

With Scenic Rim Vets being a leader in Queensland equine services, other clinics within Apiam’s network have also gained access to its leading equine reproduction and surgical veterinarian team.

Apiam has long operated in the mixed-animal veterinary services market but is now also strategically increasing its specialist exposure to the buoyant equine sector.

The move leverages major investments in racing industry prize money, increased government support to the sector in some states and greater spending across the sector generally.

As an example, the average sale price for yearlings at the 2021 Inglis Easter Yearlings Sale was 20% greater than in 2020.

An ability of the racing industry to continue operations safely, despite COVID-19 lockdowns and increasing ownership of horses as companion and leisure animals, is further supporting the sector’s growth.

Apiam has other dedicated equine services and centres in Gippsland, Kyabram and Warrnambool in Victoria and specialist equine veterinarians in other Queensland clinics including in Clermont and Samford Valley.

Scenic Rim Vets will act as a cornerstone equine clinic and key referral centre for Apiam’s other clinics in the region.

Richards said Apiam has plans to continue its equine expansion strategy in the year ahead.

Pigs and beef feedlot business expected to rebound

Apiam’s pigs and beef feedlot business continued to be challenged by the market cycles that have affected the segments during FY21.

A reduction in the number of cattle on feed during the year because of the rebuilding of the national cattle herd has been impacting the performance of Apiam’s beef feedlot segments.

Furthermore, Apiam’s strategic transition to new and innovative antimicrobial and vaccine products in intensive animals has led to reduced sales of lower-margin traditional antibiotic products during the transition period in both beef feedlot and pig segments.

However, Richards said he expected to see improved performance in the second half of FY22.  To reduce these impacts, Apiam has also invested in product and service development to commercialise and have implemented initiatives to capture market share as these sectors rebound.

A thorough understanding of these market cycles, along with the needs of regional communities has been credited with Apiam’s success, which now has 46 clinics and more than 63 business locations.

Net Profit After Tax (NPAT) was up 24% to $5.1 million in FY21, while Apiam’s revenue in FY21 increased 6.6% to $126.2 million.

The Apiam share price was up 1.6% today to 94 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.