There are few shares to have come onto the ASX over the last few months with as much likely growth potential as Healthia Ltd (ASX: HLA) due to its acquisition strategy.
Healthia is a healthcare business, it’s Australasia’s leading podiatry group with 56 podiatry clinics and shoe stores. It also provides physiotherapy services and manufactures custom-made & 3D printed foot orthotic devices for podiatrists.
The business contains the former chief financial officer (CFO) and founder & CEO of Greencross Limited (ASX: GXL).
Today, Healthia announced the acquisition of a physiotherapy clinic in Cairns and has also entered into an agreement to acquire a physiotherapy clinic on the Gold Coast.
Together, the two clinics are expected to contribute annualised revenue of $2.7 million and annualised earnings before interest, tax, depreciation and amortisation (EBITDA) of $0.425 million.
The cost for the two acquisitions will be $1.45 million of cash and $0.36 million of non-voting shares, meaning the total consideration is $1.8 million. This seems like a reasonable price for amount of EBITDA it will bring.
After the acquisitions are settled it will bring the total number of physiotherapy clinics under Healthia’s control to 26.
Tony Ganter, the CEO of the Physiotherapy division, said “The acquisition of these two clinics further strengthens our position in the Queensland market and are complementary to our existing physiotherapy clinic network.
Healthia also announced that it has invested in another HP Multi Jet Fusion 3D printer to increase its production capacity of orthotic devices from 40,000 pairs to 60,000 pairs per year. A 50% increase in production capacity is a sizeable upgrade.
Healthia shares are up 1.3% in response to this news, however it’s still down 6% over the past month.
A roll-up strategy isn’t the most compelling investment case, but it could work well in the shorter-term as it increases its number of clinics. It could be one to watch for people interested in small caps.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Greencross Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.