They are an interesting business. You can see that healthcare is trending to this aggregate, corporate model. Most GP practices are being acquired by roll ups, and dental is further progressed in this transition than allied health.
I guess the net benefit to HLA is the arbitrage effect of buying small businesses at a 6-7x earnings multiple and then rolling them in to their aggregate and trading at 12-15x. They aren't too many costs that can be stripped out of the acquired practices, given most allied health practices operate with wages at around 60% of EBITDA, being easily the biggest expense. Knowing a "CCS" partner personally, I understand their recent grad program is quite attractive, and helps considerably with recruitment. This is the biggest challenge for allied health. The CCS model is unique, it gives local clinicians "skin in the game", which is crucial to the success of a business where clinician goodwill is so important. I understand that CCS owners purchase up to 48% of the practice via Class B type shares, tied to the specific location and pay a 4-5x multiple of EBITDA for them. Personally, I feel there is a lot of risk in paying that much for a profit share type arrangement without having any voting rights/ ownership of assets etc, but each to their own.
I feel the obvious end game for healthia will be a sale to private equity/ health insurer etc. A couple of board members have the track record, given the links to greencross vets. I imagine a healthcare roll up would be quite attractive to a private health insurer, to then rebrand as their own clinics. This has occurred in dental already.
