[Held IRL]

I was most of the way to fleshing out a sub-$1 position when out of the blue today there's a fait accompli announced to acquire for $1.80 per share, with a choice of all cash, all scrip 1-for-1 in the private entity, or a mix of both. All major shareholders + the board appear to be on board, so seems like a done deal barring a bidding war.

Can't complain too much about the extremely quick windfall, but I don't know much of anything about holding shares in a private entity. Any war stories or experience folks can share on taking cash vs private scrip in this sort of situation?

Presumably the scrip option means ending up with shares you can only dispose of via off market private sale which sounds complicated? Or are there share-registry-like platforms which make transacting in private shares straight forward (but presumably with far less liquidity than on a public market)?

Healthia expects to achieve an EBITDA(u)1(pre AASB16)2 in the range of $38.0m to $39.0m, an increase of between 55.5% and 59.6% on FY22’s EBITDA(u)1(pre AASB16)2 of $24.5m but below previous guidance of EBITDA(u)1(pre AASB16)2 of >$40m4. 

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Chart Trend not good! . Thinking not a buy at this stage

This is a company where it's business model is growth by acquisition of allied health practices at cheap multiples. Management look sensible and look fairly disciplined about not overpaying, but I can't help but wonder where the growth is going to come from.

The costs that can be stripped out of these predominantly sole trader allied health profressionals earning personal services income aren't huge, and the back end operations where most roll ups strip out costs are not going to be high for most allied health practices.

The dominant health/practice management package (Halaxy) is already free or super low cost and will more than likely already be in use for most of the small individually owned practices.

Like Greencross, National Veterinary Care, and Primary Health Care (now Healius) before it, the end game is likely to be acqusition or merger and being taken off market at some point in the future.

As long as they don't go crazy and pay at multiples over the odds to grow by acquisition like ABC Learning did before getting bitten by the GFC, Healthia will probably be OK and be a relatively steady investment, but this isn't a hyper growth story.

Disc: not held.

HLA 30/8/21

Highlights of our FY21 results were:

• $140.4m revenue, +52% increase (FY20: $92.5m)
• $21.5m underlying EBITDA, +62% increase (FY20: $13.2m)
• $8.9m underlying NPATA, +91% increase (FY20: $4.6m)
• 9.1% organic growth (FY20: 5.3%)
• 212 allied health businesses, including +61 added in FY21
• Successful integration of The Optical Company, opening a $3.3 billion market opportunity for the new Eyes & Ears division
• Final fully franked dividend of 2.50 cents per share, bringing the total dividend for FY21 to 4.50 cents per share

I will be presenting these results in further detail at 10.00am AEST this morning at our online investor briefing which I welcome you to attend by clicking below to receive a link to join.

*Acquisition:
During the 2020 Financial Year, Healthia acquired 31 allied health businesses (18 Podiatry Clinics, 9 Physiotherapy Clinics and 4 Hand Therapy Clinics)

Disc' just researching this mob.

There is a real oppotunity here to create a leading health company covering what they call are the areas of bodies and minds (physios, occupational therapist), feets and ankles (podiatry, orthotics, footwear)and eyes and ears (optical and audiology clinics). At present the indvidual industries are very fragmented and made up of small franchise operations or individual small busnesses. There is then, an opportunity to consolidate and accrue these individual businesses, allowing for rationalisation of operational costs and expenses increasing the potential for margin improvement. Add to this the ability for cross-selling and moving into other health areas and you have the beginning of a potential health conglomerate . HLA is steadily aquiring businesses covering healths services that will only continue to grow in demand. If you are after a small company with a good growth runway that will provide both steady capital growth and a growing dividend stream then HLA may be the health stock for you.