The company has the resources and market footprint to attract the best vets as it builds out a dominant market footprint in Australia’s animal health sector.
Investors in animal health company Apiam (ASX:AHX) have reaped the benefits of its multi-year regional expansion strategy.
And accompanying the 40% increase in AHX shares year-to-date, the company is now capitalising on a step-change in its addressable markets, revenues and EBITDA over the medium to long-term.
Along with its successful expansion drive into south-east Queensland, Apiam is also growing rapidly in Victoria’s expanding regional growth corridors such as Geelong and nearby surf coast.
High-growth corridors
On that front, Apiam MD Dr Chris Richards spoke with Stockhead this week to highlight the strength of the market opportunity the company now has in front of it as Australia’s largest regional vet network.
He said the company expects to remain active in Victoria, expanding its network via both acquisition and the rollout of new greenfield clinics that are bringing a new level of veterinary services to regional areas.
“It goes back to what we’ve said before, that the pandemic has given rise to this change in population demographics, with people moving from capital cities to regional areas,” Richards said.
“Geelong is one of the three fastest-growing regions in Australia, and it’s an area where we could have up to six clinics by the end of next year.”
This morning, the company announced its latest acquisition – the Golden Plains Animal Hospital at Bannockburn.
Located 20km from the Geelong CBD. Bannockburn is a perfect example of the fast-growing satellite towns that are emerging in regional areas.
Bannockburn had just over 5000 people at the last ABS Census in 2016, but its population is expected to reach more than 13,000 people by 2036.
Each new clinic provides a material boost to Apiam’s long-term EBITDA. Apiam recently added to its network by extensively refurbishing a recently vacated clinic in Geelong which had a a long-term local client base.
As an example of the value it generates from such deals, Apiam acquired Golden Plains for a cash consideration of just $2.1m, which will be comfortably funded from its existing reserves.
And in its first year of operation, the group is expected to contribute $2.85 million of revenue on a FY21 proforma basis.
The Golden Plains acquisition is the latest deal in a busy period of expansion for Apiam, having opened another new clinic three weeks ago at Highton to complement its existing facility in Torquay North.
All three clinics are located near expanding residential developments in the greater Geelong area.
“That Highton clinic is now a state-of-the-art facility with an experienced local team and 30-odd years of location goodwill,” Richards said.
“So we’re building a strong presence in these fast-growing regions and we think there’s room for a lot more growth to come.”
People power
While the demographic shifts taking place in Australia are providing Apiam with a major market opportunity, Richards said it still takes a detailed understanding of the market to make it work.
And any veterinary clinic is only as good as the quality of vets and support staff it can attract.
Previously, attracting experienced vets often posed a problem in regional areas where smaller practices didn’t have the resources to provide the career progression opportunities that could be offered in specialist centres in the capital cities.
But with its larger resources, national network and investment in diagnostic and treatment technologies Apiam is starting to change the game.
“The big question has always been – how are you going to get the vets? And we’re attracting really experienced vets in these regions now because of the professional development programs we run and the ability for vets to build their career,” Richards said.
“The Geelong area is a good example because we’ve got highly-skilled vets choosing to work for us over other clinics for those same reasons.”
“So there’s no doubt that having that corporate structure is becoming a far more attractive proposition for vets who want to develop quickly,” he said.
“Now, they’ve got the resources to develop. And we’ve had the ability as a larger group to provide advanced training programs and add value across the whole operation.”
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.
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