Omicron infects Healthia's bottom line

Allied health company Healthia (ASX: HLA) has seen its December half underlying profit sink after the Omicron wave caused a surge in patient cancellations and staff absenteeism due to government-imposed isolation mandates.

As a result, the Brisbane-based company reported a loss of $86,000, down from a $4.9 million profit in the six months to 31 December 2020. This is largely due to $7.61 million received in JobKeeper payments in the prior corresponding period.

Government imposed lockdowns and restrictions meant impacted trading days more than tripled compared to the prior corresponding period (from 2,152 days to 6,869 days) across Healthia's entire network. 

At the time of writing, shares in HLA have fallen by 4.59 per cent to $1.98 each - the second time this year shares have dipped below $2.00.

“Starting in late December 2021, the Omicron variant of COVID-19 emerged across Australia and negative same clinic growth was recorded as a result of increased patient appointment cancellations and significant team member absenteeism due to illness and isolations (the latter resulting from Government mandated isolation periods),” the company said in an ASX update today.

“As was the case in H121, which saw Healthia achieve same clinic growth of 14.5 per cent, organic activities coupled with pent-up demand for allied health services typically sees stronger than normal trading post COVID-19 impacted trading periods.”

Despite the impact of coronavirus, revenue grew by 51.3 per cent to $93 million like-for-like and was primarily attributed to the acquisition of 76 physiotherapy clinics, three optical stores and one podiatry clinic – totalling $102.2 million of capital.

Underlying earnings also grew by 11.1 per cent to $12.2 million.

In the first half of FY21, the company reported its underlying profit had almost doubled as a result of acquisitions and organic growth. Since then, it has grown further to own a total of 292 businesses – an increase of 40 per cent.

“On behalf of the Healthia Board, it is most important to thank our clinicians and support staff for the incredible strength and commitment they have demonstrated during what has been a tough time,” Healthia CEO Wesley Coote said.

“The support they have shown to their patients and each other is to be commended and Healthia is stronger for it.

“As we head into 2022 and our “new normal” we will continue our focus on providing excellence in patient care and supporting our team members which are key factors in the ongoing success of the company.”

The company expects to deliver underlying revenue and earnings growth in FY22 over FY21, but acknowledges “some impacts have been felt during calendar year 2022 due to the Omicron outbreak.”

February trading is approximately 4 per cent below the prior comparative period on a same clinic growth basis.

In addition to acquiring more health brands, Healthia will focus on integrating 63 acquired Back In Motion clinics for the remainder of the financial year.

The deals settled between 5 October 2021 and 23 December 2021 brought in $11.3 million in revenue for the December half and $2.4 million in underlying earnings (excluding supporting costs).

The company expects to commence the second half with an annualised portfolio greater than $40 million of underlying earnings (assuming no material impacts from COVID) and deploy $20 million of capital per annum on acquisitions.