- Advent Health Limited, which has entered contracts to acquire 12 multi-disciplinary health practice groups, is set to list on ASX with its offer opened on 25 May 2020 and due to close on 26 June 2020.
- The Company is confident about roll-up strategy with its vendors boasting of high reputation in their respective geographies and areas of expertise.
- The Group revenue performance took a hit with a low point of 30% reduction in weekly revenue around mid-April 2020, following which revenue has been rising, as Australia gradually reopens its economy and eases lockdown restrictions.
Australia-based allied health services provider, Advent Health Limited is all set to debut on the Australian Securities Exchange (ASX) under the ticker AH1. Business model of the Company is focused on identification, acquisition, integration, operation and expansion of a network of multi-disciplinary allied health practices across the country.
In FY19, the Company had pro forma revenue of $40.5 million and pro forma EBITDA of $9.3 million.
The Company has reached contracts to acquire 12 multi-disciplinary health practice groups servicing clients in around 59 locations across Queensland, New South Wales, Victoria, South Australia and Western Australia. The initial portfolio will comprise around 300 clinicians such as occupational therapists, women’s health experts, exercise fitness coaches, podiatrists, dieticians, physiologists, rehabilitation service providers and chiropractors.
In consideration for the sale of their business, practice owners of the initial portfolio will receive a combination of cash and shares in Advent Health, with the total consideration of $40.5 million comprising $28.09 million in cash and $12.15 million worth of shares at the offer price. The acquisitions are expected to complete on or about 30 June 2020.
With the completion of acquisitions of full ownership of the initial portfolio businesses, the Company will become one of only two service providers listed on the Australian Securities Exchange, specifically servicing the allied health sector.
Advent Health is offering 21 million shares to the public at an issue price of $1.00 each to raise $21 million before costs. The Company is targeting a market capitalisation of $44.5 million. Its offer opened on 25 May 2020 and is scheduled to close on 26 June 2020 with the anticipated commencement of ASX trading on 16 July 2020. The lead manager is Novus Capital Limited.
Due to situation around COVID-19, the Company’s roadshow has been underway online but going well as reported, in light of nature of vendors, a stellar management team and essential nature of healthcare services as perceived during the pandemic.
Moreover, its roll-up strategy to list on the local bourse is well thought including careful consideration of each complementary vendor in this highly fragmented industry, as all of them have reputation in terms of revenues, good infrastructure, market penetration and growth. However, due to capital constraints, their growth plans seem to be at a standstill.
Besides, Advent Health is not planning to rebrand everything under a single entity and the idea is to still maintain the local and independent nature of the small firms, so as to build a sustainable business that maintains and enhances profitability and clinical outcomes.
A roll-up strategy is defined as an acquisition and merger of several smaller companies, operating in the same industry (in this case, health care sector), consolidated into a larger group. This allows for putting together all the resources, cutting down operational costs, and achieving higher revenues.
Proceeds from the offer are planned to be directed towards
- Payment for the acquisitions
- Payment of the expenses of the offers
- Enhance the public and financial profile of the Company
- Provide access to equity capital markets for future funding needs
More About Advent Health
Advent Health’s value proposition for patients is centred around more patient involvement in planning the treatment, varied options for choice of provider, time and location of services as well as flexibility in terms of location including at clinic, online, home-based or in the workplace for delivery of services.
The Company operates on the belief that a multi-disciplinary and patient-first allied health approach is the key to a highly sustainable business and there is a big opportunity for both improving the industry conditions for patients and creating improved industry standards for clinicians. Led by an experienced Board of Directors comprising industry experts, Advent Health has a disciplined acquisition approach incorporating organic and strategic additions.
Moreover, provision of support, training, benchmarking, mentoring and flexibility to continue education to all its people, so they can improve career path options is also a component of the Company’s ambition to reinforce and enhance patient outcomes.
Due to the lockdowns and health crisis caused by the coronavirus pandemic (COVID-19), all businesses in Advent Health were impacted but none of them came close to being shut down. As a result, the overall performance of the Group did saw a low point of ~30% reduction in weekly revenue around mid-April 2020 following which the revenue has been on an upward trajectory and as of 25 May 2020, is at 10% below trend.
The Management foresees revenues rebounding further, as Australia has begun its journey of economic recovery with easing of lockdown restrictions and continuation of various business operations.
Operating Landscape – Healthcare Sector
Healthcare sector has particularly exhibited extreme resilience and innovative capabilities during the time of global crisis, which demonstrates its potential for growth and opportunities in the time to come. Especially, as people are staying vary of visiting hospitals and other healthcare centres due to long queues and fear around spread of the virus, the role of alternate healthcare services and individual professionals is going to be crucial in the upcoming months.
The allied health market of Australia had revenue of around $ 10.8 billion in FY19 with low revenue volatility and low reliance on government funding. The industry has grown by nearly 3% annually from 2014 to 2019 and the demand is expected to rise, primarily driven by ageing population and rising household incomes with health consciousness.
Going forward, Advent Health has already identified organic and acquisition growth opportunities to further expand its existing geographical footprint as well as the ambit of services offered.
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