Healthia share price skyrockets 80% amid takeover bid and soaring profits

Investors are seeing very healthy returns today.

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The Healthia Ltd (ASX: HLA) share price has rocketed higher in morning trade, up 80% to $1.75 after the company received a takeover bid.

The ASX healthcare share has also reported its FY23 results for the 12 months to 30 June 2023.

Let's take a look at the results first.

FY23 results snapshot

Healthia advised it had achieved attractive levels of organic revenue growth, but this was impacted by higher levels of absenteeism in the fourth quarter of FY23 (as measured by sick leave as a percentage of wages). This was due to spikes in COVID and other illnesses. In the FY23 third quarter, its organic revenue growth was 12.6%, compared to 6.8% in the fourth quarter.

Healthia has also experienced a sizeable increase in other areas such as finance costs, wages and raw materials and consumables.

Takeover offer for Healthia shares

Healthia also announced today it has entered into a scheme implementation deed with Harold BidCo Pty Ltd — an entity owned by private equity group Pacific Equity Partners. The bid would see Harold BidCo acquire the entirety of the ASX healthcare share.

Under the terms of the offer, Healthia shareholders will have the option to receive either $1.80 cash per share, shares of an unlisted business or a combination of both. It was noted that the unlisted business would give shareholders the chance to participate in the future of the company.

The offer of $1.80 per share represents a premium of 85% compared to the last closing Healthia share price.

Healthia's board has unanimously recommended the takeover offer to shareholders, subject to there not being a stronger takeover offer, and an independent expert concluded the takeover was in the best interest of Healthia shareholders.

What did management say?

Healthia chair Dr Glen Richards said:

The Healthia board has unanimously concluded that the scheme represents a very attractive outcome for our shareholders, clinic partners, patients, clinicians and team members.

In the Healthia board's view, the all-cash price at a significant premium to Healthia's recent share price reflects the inherent value of Healthia's business operations, national platform and growth strategy in Australia and New Zealand.

What's next?

There are a number of steps for this takeover to be completed, including approval by the owners of Healthia shares, approval by the Foreign Investment Review Board (FIRB) and so on. The offer is not subject to financing or a funding condition.

The company expects to hold a shareholder meeting in November 2023 for shareholders to vote. If approved, the takeover is expected to be implemented shortly afterwards.  

Healthia share price snapshot

Thanks to today's sharp rise, Healthia shares are up by 37% in 2023 to date. That compares to a 5% rise for the S&P/ASX 200 Index (ASX: XJO).

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Healthia. The Motley Fool Australia has recommended Healthia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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