Healthia (ASX:HLA) FY19 results & outlook


by Jessica Amir

Healthia Limited (ASX:HLA) Group CEO & Managing Director, Wesley Coote and Chairman, Dr Glen Richards talk about the company's FY19 results and its model of acquiring podiatry and physiotherapy clinics.

Anna Napoli: Hello, Anna Napoli for the Finance News Network, and joining me now from Healthia(ASX:HLA) is CEO and MD Wesley Coote, and (non-executive)chairman Dr Glen Richards. Wes, Glen, welcome to FNN.

Dr Glen Richards: Thanks Anna.

Anna Napoli: First up Glen, can you give us an introduction to Healthia for investors who might be new to your company?

Dr Glen Richards: We are a national network of allied health clinics with a focus at the moment on physiotherapy and podiatry as well as hand therapy.

Interesting background story. Wes and I were involved with Greencross Limited (ASX:GXL). I was the founding Managing Director and Wes was my CFO during that time, and we evolved a national network of veterinary clinics and pet stores. A few years after I left that business, started mentoring some podiatrists and separately some physiotherapists, and over time we evolved the logic of developing an allied health consolidation activity. Quite simply, we ended up merging our physiotherapy group, Allsports, with our podiatry group, My FootDr, and what evolved is multidisciplinary clinics with a national footprint. 

What we see with allied health is where the patient wants personal service, they want a professional service, but they want to feel optimal. They do that through having physiotherapists, podiatrists, nutritionists, exercise physiologists as part of their team looking after them to optimise their health.

Anna Napoli: Glen, can you tell us about the structure of the industry? And what does a corporate operator at scale offer?

Dr Glen Richards: It's a $2.5 billion industry. At the moment we represent less than 3 per cent of the total industry, and there's no other player the size that we're at, so there's plenty of opportunities to grow our network. What we bring is, I guess, operational back office support to the local front end clinics.

Our job is to help that local clinician with developing their facilities, their equipment, the education of their team. At the end of the day, full on corporate back end support, being financed, payroll, marketing, data analytics. So a whole bunch of reasons why it makes sense, but I want to reinforce with the Healthia model, we become partners with lead clinicians in the communities they look after. So we find great clinicians and partner with them and provide that back end service.

Anna Napoli: Wes, 2019 was Healthia'a first year as an ASX listed company, what were some of your results highlights?

Wesley Coote: We started the year by raising $34 million and then listing on the ASX on the 11th of September, 2018. At that same time, we settled the initial portfolio of clinics, which was 104 physiotherapy and podiatry businesses, and we integrated them within six months into our centralised practice management software as well as our shared services model. From there, we continued to do a lot of work. So during the last 12 months, we've recruited 33 new graduate clinicians.

We put them through a structured education program. We acquired another 24 podiatry and physiotherapy clinics. We also opened up two podiatry and two specialty hand therapy clinics inside our existing network of clinics.But despite all of that change, the businesses continued to perform really, really well. Our pro forma revenue was up $4.7 million or nearly 7 per cent on our prospectus forecast. Our EBITDA was up 1.4 million or nearly 14per cent on our prospectus forecasts, and our EBITDA margin has improved by 90 basis points, with EPS at 7.7 cents per share and the forecast was 7.1.

Anna Napoli: Let's talk about your divisions in more detail, starting with the podiatry.

Wesley Coote: Yeah. So the podiatry division has 80 clinics in it at the moment. We have about 150 podiatrist and 170 support staff that run those businesses. We also own DBS Medical. So DBS is a podiatry equipment and wholesaling business. The business provides our clinic with all of their equipment, consumables and instrument needs. On top of that, we own iOrthotics. So iOrthotics is an orthotic manufacturing laboratory. So the orthotics is the main product that the podiatrists sell in clinic. We either mill the orthotics, a rubber orthotic, or we 3D print our plastic polyorthotics.

Our 3D printing technology is world class. We've partnered with HP to develop that technology, allowing us to lower our costs and improve our margins as we go forward.

Anna Napoli: And where does the physio fit in, in the model?

Wesley Coote: Yeah, so physiotherapy, we've got 38 physiotherapy clinics and 13 specialty hand therapy clinics. We co-locate podiatry and hand therapy. So of our 38 physiotherapy clinics, there's 15 podiatry clinics inside of them, and three specialty hand therapy clinics in there.

Anna Napoli: Last question to you both. Is there anything else you'd like to add?

Wesley Coote: We've got $11 million left in our finance facility with the Bank of Queensland and ANZ, so we're well positioned to continue to grow.

We know we can acquire one to three clinics per month at the current run rate, and we don't have to go back to the market for any capital raisings.

We're in the process of looking to recruit some new graduates for next year, and we continue to work on our organic side, whether that's refining our marketing initiatives or finding better ways to engage our teams,

Dr Glen Richards: The corporate team, I think, are now quite seasoned. But I think absolute key to our success is the fact that our board and our senior management team still have industry insiders or founders, podiatrists and physios that deeply understand what our clinicians want and what we need to drive performance in our clinics

Anna Napoli: Well, it sounds like there's lots of growth ahead for Healthia. Wesley Coote, Glen Richards, thank you so much for joining us at FNN today.

Dr Glen Richards: Thank you, Anna.

Wesley Coote: Thanks, Anna.


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Jessica Amir

Finance News Network
Jessica joined FNN in January 2017 after having worked in financial advising for seven years and in TV journalism for seven years, specialising in finance, equities and analysis. She has interviewed former Prime Ministers of Australia, Tony Abbott, Julia Gillard and Kevin Rudd and ex Treasurer Jo Hockey. Jessica has worked as a journalist with Sky News Business, ABC 1, ABC's The Business, ABC24 and has also been a regional Channel 7 and 9 TV reporter with Prime7 and Win News.