Healius (ASX:HLS) share price falls despite $300m acquisition

Healius is making an acquisition…

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The Healius Ltd (ASX: HLS) share price is on course to end the week in the red.

At the time of writing, the healthcare company’s shares are down 2% to $5.17.

Why is the Healius share price falling?

Investors have been selling down the Healius share price today after it announced an agreement to acquire the entire issued capital of Agilex. It is one of Australia’s leading bioanalytical laboratories.

According to the release, the transaction values Agilex at an enterprise value of $301.3 million.

The release explains that Agilex has a high margin and capital-light business model with immediate and long-term growth potential. This will be enhanced by Healius’ experience operating laboratory businesses and by increased financial capacity to support the delivery of the growth strategy.

Management sees Agilex as a long-term strategic acquisition that provides the company with a platform for growth into the global clinical trials sector and a structurally attractive, higher growth, higher margin adjacency.

Agilex is expected to generate revenue and EBITDA in the range of $36-40 million and $14-16 million, respectively, in calendar year 2022, with strong future earnings growth anticipated. Judging by the Healius share price reaction, investors may believe this makes the transaction value a little on the rich side.

Nevertheless, the acquisition is expected to deliver low single digit earnings per share accretion in the first full year of ownership.

Healius’ Managing Director and CEO, Dr Malcolm Parmenter, said: “The acquisition of Agilex is an exciting opportunity for Healius. Agilex has a talented scientific team with state-of-the-art laboratories and culturally complements Healius. It’s a logical entry point for Healius into the attractive global bioanalytical laboratory services market, and one in which Australia and Agilex, in particular, is wellplaced to service.”

“We see Agilex as a long-term strategic acquisition that adds a global orientation to the Healius network. A business that is growing fast, in a fast-growing market. Agilex is well placed to realise a material step-change in earnings growth over the near to medium-term,” he added.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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