Rural veterinary group Apiam corrals NSW regional clinics for $11.2m

Rural veterinary group Apiam corrals NSW regional clinics for $11.2m

Apiam's dairy and mixed animal segment accounts for about 74 per cent of group revenue. Photo: David Dolenc via Unsplash

Rural veterinary clinic aggregator Apiam Animal Health (ASX: AHX) has corralled five new clinics in high-growth regional areas of NSW through two separate acquisitions worth $11.2 million.

The buyouts more than double the mixed animal clinics owned by the Bendigo-based Apiam to nine in NSW by bringing the Singleton Veterinary Hospital and three founder-led clinics on the state’s South Coast into the Apiam stable.

The acquisition of Singleton Veterinary Hospital, which has clinics at Singleton and Branxton, comes on the heels of Apiam firming up its Hunter Valley assets by settling on the $6.5 million acquisition of Hunter Equine Centre in December.

The latest expansion includes the Merimbula, Pambula and Eden Vet Clinics, all three of which are operated by joint veterinarian founders.

The $11.2 million cash-and-scrip deal for the Singleton Veterinary Hospital and the South Coast clinics have been struck at a combined average multiple of six times normalised FY22 EBITDA.

Apiam expects the clinics will add annual revenue of $8.3 million and EBITDA of $1.9 million on a normalised FY22 basis, taking the company closer to its target of pro-forma revenue of $300 million by FY24 as part of its accelerated growth strategy.

Apiam reported 24.6 per cent revenue growth in FY22 to $157.2 million.

“These acquisitions represent attractive entry points into strategic regions of NSW where increasing regional populations and household pet ownership have driven significant growth in animal numbers,” says Apiam managing director Dr Chris Richards.

“We see strong potential to use these locations as a base to launch our product and services such as our Best Mates and ProDairy programs through these regions - initiatives that are driving strong organic growth across our existing and recently acquired clinics.”

Richards says Apiam sees both the Hunter Valley and the NSW South Coast as key growth areas for veterinary services, being among a number of regional locations that the company says demonstrate strong underlying industry conditions with animal numbers increasing.

He says the demographic nature of the NSW South Coast region in particular means that all three clinics are mixed animal clinics with a large companion animal focus.

Singleton Veterinary Hospital, which services pets, livestock and exotic animals, is reported to have experienced significant revenue growth in the companion animal segment in recent years.

The clinic employs 19 full-time-equivalent staff, including eight veterinarians, while the South Coast clinics employ a total of 11 staff including six vets.

Apiam is funding the acquisition through an $8.7 million cash payment and $2.5 million in shares, with half the shares subject to 12-month escrow and the other half to a two-year escrow.

Apiam says it has secured employment agreements with key personnel to ensure business continuity.

The latest acquisitions bring the total number of veterinary clinic locations under the Apiam umbrella to 80, which is up from 49 at the end of FY19.

The company’s dairy and mixed animal segment accounts for about 74 per cent of group revenue.

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