Abano Healthcare bought three new dental practices in the first three months of its financial year, in a period when same-store sales were mixed.
Chief executive Richard Keys told shareholders at today's annual meeting that the healthcare investor has completed three acquisitions in the first quarter, which are expected to generate $5.5 million of annual gross revenue. The company raised $35m of new capital last month to speed up its buying programme, and Keys said the firm expects to meet its acquisition target this year and has a number of dental practice purchases due to settle in the next couple of months.
"Dental is a long-term growth sector with an ageing demographic needing more dental care; better oral healthcare meaning people retain their teeth for longer; and increasing demand for cosmetic services," Keys said in speech notes published to the NZX. "We are growing scale by acquisition, targeting the mid- to high-end of the dentistry market and the majority of our income is from private paying patients."
Abano sees dental care as a major opportunity with a highly fragmented market paving the way for it to build up a trans-Tasman footprint. It's chasing a 10 per cent share of the $11 billion trans-Tasman market, which would turn Abano into a $1b revenue firm.
Still, the first-quarter trading period was mixed for its dental business with same-store sales down 1 percent in Australia where a tough 2017 for the sector prompted the firm to respond with a number of new programmes. In New Zealand, same-store sales rose 1 percent.
Keys said the radiology unit performed well, increasing revenue and earnings in the first quarter.
Abano's dental strategy had been a bone of contention with the company's biggest shareholders Peter and Anya Hutson, who in conjunction in with James Reeves, had sought to take control of the firm through several takeover bids and an attempt to spill the board. Those shareholders quit their collective 19 percent stake, held in the Healthcare Partners vehicle, last month.
Chair Trevor Janes told shareholders at today's annual meeting in Auckland that the departure of those shareholders was "a significant relief for the company" ending a "protracted period of responding to a disaffected and antagonistic shareholder who has been very disruptive for the company." The stake was bought by a number of different investors on both sides of the Tasman, he said.
Abano is still pursuing the group for costs associated with the failed takeover bid.
Janes reiterated his intention to leave the board at the end of his term and said more changes are planned for the next two years.
"As our company evolves, we believe it is important for board skills to include governance expertise, financial skills, industry knowledge, an indepth understanding of the company, fresh thinking and capabilities which will add value," he said.
The shares were unchanged at $9.27 and have gained 15 per cent this year, outpacing the 10 percent increase in the S&P/NZX All Index over the same period.