Offering Details: Australian Clinical Labs Limited (Proposed ASX Code: ACL) provides private pathology services operating in Western Australia, Victoria, South Australia, and the Northern Territory. It runs 30 specialist skin cancer clinics, services over 90 hospitals and has more than 500 scientists and 90 pathologists. ACL has announced an IPO via the issue of new shares and sale of existing shares by the shareholders of SaleCo (an SPV -Special purpose vehicle set up for the sale of existing shares held by its shareholders) at $4.00 per share. It will make available 102.1 million shares via the Retail Offer (consisting of the Broker Firm Offer, the Priority Offer, the Priority Employee Discount Offer, the Employee Gift Offer, and the Employee Offer) to investors. ACL estimates to raise ~$408.6 million from the Retail Offer, including ~$142.3 million via the issue of new ACL shares and ~$266.2 million proceeds from the sale of existing SaleCo shares. ACL has reported ~202.3 million shares on issue at the completion of the offer. The Joint Lead Managers fully underwrite the Retail Offer, excluding the Employee Gift Offer.

Current Investors: Crescent Entities, Crescent Co-Investors and Management Shareholders are the present investors as of the date of Prospectus. At the completion of the retail offer, Crescent Entities, Management Shareholders, and Crescent Co-Investors will hold 69.9 million, 9.4 million and 19.7 million shares, respectively, in ACL, accumulating to ~49% of the outstanding shares.

Key Dates: The company lodged the Original Prospectus with ASIC on 28 April 2021. The Retail Offer opens on 6 May 2021 and closes on 12 May 2021. The company expects to start trading on ASX (on a regular settlement basis) on 19 May 2021.

IPO Offer Dates (Source: Company Reports)

IPO Offer Statistics (Source: Company Reports)

Funds Utilisation: The company will use the estimated $408.6 million IPO proceeds to repay its existing debt of $119 million, pay transaction costs of $23.3 million, pay $266.2 million to the shareholders of SaleCo for the sale of their existing shares in the company.

 Sources & Use of Funds Summary, (Source: Company Reports)

Past Performance-Highlights: The company reported a revenue of $347.2 million in 1HFY21 versus $245.5 million in 1HFY20, primarily due to increased revenue from the Pathology services. It posted a positive NPAT of $57.1 million in 1HFY21 versus a net loss of $3.2 million in 1HFY20. It held a cash and cash equivalents balance of $35 million as of 31 December 2020.

Key Risks: The company is exposed to changes in the government policy and regulations for the highly regulated Healthcare industry and risks grant of license and accreditation for its facilities. It also faces the impact of the continuing pandemic on its staff and labs and the risk of maintaining the relationship with the private health insurance funds.  

Summary: ACL has projected a statutory revenue of $618.2 million and statutory NPAT of 48.3 million for FY21. It also intended to pay a first interim dividend for the period 1 July 2021 to 31 December 2021 and targets a dividend pay-out ratio of 50%-70% of its NPAT. As per the IPO-Prospectus, ACL has plans to acquire SunDoctors- a chain of skin cancer clinics in Australia and open a branch laboratory in Queensland in CY2021.

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