The Doctor Care Anywhere Group PLC (ASX: DOC) share price has been a strong performer on Thursday.
In morning trade, the telehealth company's shares are up 10% to 85 cents.
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Why is the Doctor Care Anywhere share price racing higher?
Investors have been bidding the Doctor Care Anywhere share price higher today after it announced a key new acquisition.
According to the release, the company has acquired Australian based telehealth provider GP2U Telehealth.
GP2U Telehealth provides virtual GP services under the brand GP2U and tele-mental health services under the brand Psych2U. The latter is the key contributor of revenue, currently generating 78% of GP2U Telehealth's total revenue of $4.4 million.
The release notes that the $11 million acquisition represents Doctor Care Anywhere's first entry into the Australian telehealth market.
Why acquire GP2U Telehealth?
Doctor Care Anywhere appears to see the acquisition of GP2U Telehealth as a great way to gain exposure to the increased spending on mental health by the government.
It highlights that in response to the mental health consequences of the COVID-19 pandemic, the Australian government has increased spending on mental health to $6.3 billion for 2021-22. This includes a significant expansion of telehealth services to respond to high levels of mental distress in communities across the country.
Management believes GP2U Telehealth is well placed to meet this demand through its mental health service provision.
Doctor Care Anywhere's CEO, Dr Bayju Thakar, said: "This acquisition represents another important milestone for Doctor Care Anywhere; giving us a platform on which to build our presence in the Australian market and further expand our international business. It will give GP2U the support it needs to make a real difference in helping patients, particularly those in rural and remote regions, access high quality virtual GP care and, in particular, support existing GP practices in the provision of tele-mental health."
"Both service lines are ideally suited to the innovative and responsive applications provided by a telehealth approach, especially where the geographical distance between clinician and patient is prohibitive. Building on our significant organic growth, we believe that this is the right time to be expanding our telehealth activity internationally to serve and care for more patients through the strategic acquisition of GP2U Telehealth and we are very excited to be entering the Australian market," he concluded.
The Doctor Care Anywhere share price is down 31% in 2021.
