RCS - Optima Health Ltd - Planned admission to AIM

MarloweAnnouncement

12/09/2024 08:15

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RNS Number : 8563D  Optima Health Limited  12 September 2024

 

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE
A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION.

 

This announcement does not constitute or form part of an offer to sell or
issue or a solicitation of an offer to subscribe for or buy any securities nor
should it be relied upon in connection with any contract or commitment
whatsoever in any jurisdiction. An admission document (the "Admission
Document") may be published in due course in connection with the proposed
admission of the issued and to be issued ordinary shares in the capital of
Optima Health Limited, to be re-registered as a public limited company with
the name Optima Health plc, and admitted trading on AIM, a market operated by
London Stock Exchange PLC ("Admission"). Copies of the Admission Document
will, following publication, be available during normal business hours on any
day (except Saturdays, Sundays and public holidays) at the registered office
of the Company and online at www.optimahealth.com, subject to applicable
securities laws or regulations. Upon such publication the Admission Document
will supersede this announcement and the information contained herein in its
entirety.

 

Planned admission to AIM

 

LONDON, UK (12 September 2024), Optima Health Limited ("Optima Health", the
"Company", and, together with its subsidiaries, the "Group"), the UK's leading
provider of technology enabled corporate health and wellbeing solutions, today
announces its planned demerger from Marlowe PLC ("Marlowe" and the "Demerger")
and its intention to seek admission of its issued and to be issued ordinary
share capital to trading on AIM, a market operated by London Stock Exchange.

 

Admission is expected to occur on 26 September 2024. The Company has no
intention to raise new capital through an offer or sale of ordinary shares to
institutional investors or the public in connection with Admission. Panmure
Liberum Limited ("Panmure Liberum") is acting as the Company's nominated
adviser and corporate broker in relation to Admission.

 

Jonathan Thomas, Chief Executive Officer of Optima Health, commented: "Optima
Health is the UK leader in the management of workplace and employee health.
Optima Health offers a comprehensive range of flexible and progressive
occupational health services supported by statutory driven workplace health
requirements, and we are proud to help people and the organisations they work
for be the best that they can be, working across a range of sectors, both
public and private, from manufacturing, construction, professional and
transport and logistics services to the UK's Blue Light organisations, Civil
Service and NHS.

"Optima Health is well positioned to continue to take advantage of the large
and growing occupational health market in the UK. Our successful track record
of growth, both organic and through the acquisition and successful integration
of a number of transformational and bolt-on businesses, has provided us with
the critical mass to provide an unrivalled breadth and level of service to our
customers. We are excited by the prospect of an AIM listing for Optima Health,
which we believe will give us an opportunity for us to build and deliver
significant value for our investors and employees, as well as providing
additional visibility and transparency to our business."

Information on the Group

 

Optima Health offers a comprehensive range of flexible and progressive
occupational health services from statutory driven workplace health
surveillance medicals to proactive and preventive interventions, through to
workplace health advice and attendance management assessments, and ultimately
rehabilitation programmes and pathways aimed at returning people to work. A
comprehensive occupational health programme can provide a significant return
on investment for an organisation. Through the Group's integrated delivery
model and nationwide coverage, delivery of its services is facilitated via
several channels, both remotely and on-site. Across the UK, Optima Health has
an extensive network comprising four core hubs, a nationwide network of 48
occupational health clinics and over 30 mobile clinic solutions, with services
delivered by a team of over 800 clinicians employed directly in the UK across
a wide range of disciplines. In addition, Optima Health has a network of over
1,000 subcontracted associate clinicians providing resource flexibility to
align with client needs.

 

Supporting the delivery model is Optima Health's substantial investment in
digitalisation in which it has invested over £15 million in combined capital
and operational expenditure in the last seven years. Digital tools including a
proprietary workflow, case management, clinical intervention, and customer
referral platforms (facilitated through Optima Health's myOH) enable the Group
to deliver services efficiently, at scale and support future growth.

 

Further, the Group's proprietary and clinically validated digital triage and
wellbeing tools reduce the need for clinical intervention and enable supported
self-management, as well as self-referral. Through these tools and platforms,
the Group has access to high-value data, which can be leveraged to enable
proactive, preventive and predictive services.

 

Group key highlights

 

·      UK's leading provider of technology enabled corporate health and
wellbeing solutions in the occupational health sector

o  1.8x times larger than the second largest provider by revenue

o  Underpinned by a robust clinical governance framework

o  Leveraging proprietary technology and flexible delivery platform to foster
healthy high performance within its clients' workforces

 

·      Proven business model and track record of consolidation and
integration

o  In the 12 months ended 31 March 2024, the Group reported revenue of
£110.9 million (FY23: £115.3 million) and adjusted EBITDA of £18.0 million
(FY23: £21.0 million)

o  Cash generative and profitable (on an adjusted basis) with contracted and
recurring revenue

o  Optima Health has continued to perform strongly alongside the successful
integration of several acquisitions, testimony to the Group's resilient
business model and ability to consolidate its market leadership

o  Optima Health has a strong pipeline of new business, some of which has
already been won and is in the process of being transitioned

 

·      Well balanced portfolio comprising over 170 large clients
(contract size of more than £100,000 per annum) and over 2,000 clients in
total across both the public and private sectors

o  Broad, well balanced, and diversified client base focused on large clients
with high corporate health and wellbeing demands, through to efficient SMEs

o  Well-established and adhered-to strategy through which key sectors with
predictable revenue streams are targeted

 

·      Significant and growing market with multiple drivers for
long-term growth, attractive dynamics and opportunity for consolidation

o  UK occupational health market forecast to grow to £1.4 billion in 2028
with the Group's ambition to capture a 25% share of this

o  Highly fragmented nature of outsourced occupational health market provides
opportunities for growth through M&A consolidation

o  Growth opportunities in new and adjacent markets across additional
services, care settings and territories

 

·      Delivery via flexible, leveraged, digitally enabled operating
model

o  Well-invested technology architecture to support growth ambitions: over
£15 million of capital and operational expenditure invested into its
proprietary, bespoke occupational health and wellbeing technology platforms in
the last seven years

o  Digitally enabled and scalable platforms enable efficient delivery across
the nationwide offering and allow Optima Health to meet the evolving needs of
its clients and increasing scale of the Group

 

On Admission, the Board will consist of six directors: Julia Robertson,
Jonathan Thomas, Heidi Giles, Adam Councell, Simon Arnold and Mike Ettling;
three of which are independent non-executives (including the Chair). Julia
Robertson and Mike Ettling will be appointed to the Board as independent
directors as part of the transaction. Simon Arnold and Heidi Giles will also
be appointed to the Board as non-executive and executive directors
respectively.

 

Optima Health is currently a wholly owned subsidiary of Marlowe. The Demerger
is proposed to be effected by way of an interim dividend in specie, pursuant
to which the ordinary shares will be distributed to the shareholders on the
register of members of Marlowe shareholders as at 6.00 p.m. (London time) on
25 September 2024 (the "Record Time"), on a one for one basis such that each
Marlowe shareholder will receive one Ordinary Share for each Marlowe share
they hold at the Record Time. The Demerger will result in Optima Health being
independent of Marlowe on Admission. Marlowe will not retain any beneficial
interest in the share capital of Optima Health on Admission. For further
information on the Demerger, including its tax consequences for Marlowe
shareholders, please refer to the separate announcement released by Marlowe
today.

 

Market Size

 

In the UK, the combined economic cost of ill-health related absence and lost
output is estimated to be £150 billion per annum equivalent to 7 per cent. of
GDP, with mental health, stress and anxiety contributing almost 50 per cent.
of working days lost due to work-related injury and illness in the UK(( 1 
(#_ftn1) )).

 

Occupational health and wellbeing providers have clear responsibilities to
actively help organisations and their employees in managing and monitoring
health and wellbeing risks across the workforce. There is evidence that these
risks are worsening, with long term absence increasing to 2.8 million people
in 2024 (an increase of approximately 25 per cent. compared to pre pandemic
levels).

 

The addressable corporate occupational health market in the UK was estimated
at £1.2 billion in 2023, of which 44 per cent. was yet to be outsourced,
leaving £670 million serviced by outsourced providers. The total addressable
market is anticipated to expand to £1.4 billion through to 2028, as employers
increasingly see the return of investment on their spend on occupational
health and employers without occupational health services, currently estimated
to be 80 per cent. of all UK employers(1), start to incorporate services
within their workforce offering and organisations already providing such
services expand their scope.

 

Current Trading and Prospects

 

Optima Health has completed the comprehensive integration of businesses
acquired by the Group and the Marlowe group to build a robust scalable
platform with a diversified client base providing recurring revenue and
opportunity for further growth. To date the Company has focussed on growing
both revenue and EBITDA with EBITDA margin improvements arising from
synergies, good margins on new business opportunities and advancing the scope
of customers/contracts.

Alongside the potential expansion of existing contracts, the Company has an
active pipeline of potential new contacts, including those in active bidder
status and those won but not yet implemented, both of which will underpin a
portion of year-on-year core revenue growth. Core revenues are expected to
grow from FY24 (excluding the impact of recent changes to two top 10 customers
as summarised below) broadly in line with the Company's estimated UK market
growth rate with potential upside from inter alia:

(a)   larger than average contract opportunities (for example, Optima Health
is part of a bid to provide occupational health services as part of a
large-scale public-sector programme (with any revenue arising likely to
commence FY26) however the result of this bid is a binary outcome);

(b)   use of DART in the NHS;

(c)   mental health services expansion, such as NHS Talking Therapies
contracts; and

(d)   expansion into adjacent markets such as community health services.

As noted above, a major longstanding customer gave notice to the Group in H2
2023 which unusually coincided with the timing of a second large public
service contract significantly reducing the scope of the Group's services (as
a result of the client deciding to take a number of occupational health
services in-house). Notwithstanding that the Group has been successful in
significantly offsetting these contract reductions by redeploying staff to
other client revenue opportunities, winning a number of other contracts and
increasing the scope of a number of existing contracts, total revenue (before
the upside opportunities summarised above and before further acquisitions) for
the year ended 31 March 2025 is expected to be lower than in the year ended 31
March 2024.

In addition to organic revenue growth, the Board believe there are significant
opportunities to accelerate growth via further bolt-on acquisitions and
continued consolidation in the market.  The Company is targeting 25 per cent.
market share through organic and inorganic growth in the long-term. The
Company is currently in exclusive discussions for a small acquisition which if
completed would add single digit million revenue per annum. The consideration
payable is low single digit millions.

Adjusted EBITDA margins (excluding the costs associated with the Demerger,
Admission, reorganisation costs) are expected to remain in the mid tohigh
teens for the medium term with opportunities to further improve margins in the
medium to long term particularly through the increased use of technology
throughout the Group.

As part of the Demerger, the Group's accumulated cash balances will be paid to
Marlowe plc via a one-off cash dividend of £20.8 million alongside write-off
of all intercompany loans with Marlowe plc. The Demerger also allows for the
management incentive plan "MIP" to be settled in cash by Marlowe plc with
£3.95 million to be paid to the MIP subscribers shortly prior to Demerger and
subscription by the MIP subscribers for shares in Optima Health. Whilst the
Group expects to be cash generative for the year to 31 March 2025, the Company
has agreed a £20 million committed revolving credit facility to provide
working capital and cover transaction costs associated with the Demerger and
Admission and a further £15 million accordion which can be used for M&A.

Trading for the period from 31 March 2024 to the date of this announcement was
consistent with the Board's expectations. The Company expects to report its
unaudited interim results for the six months ended 30 September 2024 by early
December.

 

 Expected timetable of principal events
 Publication of the AIM Admission Document                                       23 September 2024
 Demerger Dividend paid to Marlowe shareholders on the Record Date               After 6.00 p.m. on 25 September 2024
 Admission and dealings expected to commence in the Ordinary Shares on AIM       8.00 a.m. on 26 September 2024
 under the stock ticker OPT
 CREST stock accounts credited in respect of Ordinary Shares in uncertificated   As soon as reasonably practicable after 8.00 a.m. on 26 September 2024
 form
 Despatch of definitive share certificates in respect of Ordinary Shares (where  Within 10 business days of Admission
 applicable)

 

 

Enquiries

 

 Optima Health Limited                           +44(0)3300085113

 Jonathan Thomas, CEO                            media@optimahealth.co.uk

 Heidi Giles CFO
 Nominated Adviser and Corporate Broker

 Panmure Liberum Limited                         +44 (0)20 3100 2000

 Emma Earl / Will Goode / Mark Rogers

 Rupert Dearden / David Cox

                                                 OptimaHealth@icrinc.com

 UK Financial PR Adviser

 ICR Consilium

 Mary-Jane Elliott / Angela Gray / Chris Welsh

 

About Optima Health

 

Optima Health is the UK's leading provider of occupational health and
wellbeing services, directly influencing and improving people's lives for 25
years. Optima Health's incredible team of professionals quickly and
effectively encapsulate client's needs, supporting organisations of all shapes
and sizes. Through tailored solutions and innovative systems, Optima Health
offers unparalleled clinical expertise to its clients. These solutions ensure
that processes are simple and allow its clients to spend more time focusing on
their employees driving a healthy, high-performing workplace. For more
information visit www.optimahealth.co.uk

 

Important Information

 

As set out above, upon publication, the Admission Document will supersede this
announcement and the information contained herein in its entirety. There will
be no offer or issue of Ordinary Shares in the Company in connection with
Admission and the Admission Document will be published solely in connection
with Admission.

There is no guarantee that an Admission Document will be published or
Admission will occur.

 

This announcement does not constitute, or form part of, any offer or
invitation to sell, allot or issue, or any solicitation of any offer to
purchase or subscribe for, any securities in the Company in any jurisdiction
nor shall it, or any part of it, or the fact of its distribution, form the
basis of, or be relied on in connection with or act as an inducement to enter
into, any contract or commitment therefor.

 

No reliance may be placed, for any purpose whatsoever, on the information or
opinions contained in this announcement or on its accuracy, fairness or
completeness. To the fullest extent permitted by applicable law or regulation,
no undertaking, representation or warranty, express or implied, is given by or
on behalf of Marlowe, the Company, Panmure Liberum, or their respective parent
or subsidiary undertakings or the subsidiary undertakings of any such parent
undertakings or any of their respective directors, officers, partners,
employees, agents, affiliates, representatives or advisers or any other person
as to the accuracy, sufficiency, completeness or fairness of the information,
opinions or beliefs contained in this announcement and no responsibility or
liability is accepted by any of them for any errors, omissions or inaccuracies
in such information, opinions or beliefs or for any loss, cost or damage
suffered or incurred, howsoever arising, from any use, as a result of the
reliance on, or otherwise in connection with, this announcement.

 

Panmure Liberum, which is authorised and regulated by the Financial Conduct
Authority is acting only for the Company in connection with the proposed
Admission and is not acting for or advising any other person, or treating any
other person as its client, in relation thereto, or giving advice to any other
person in relation to the matters contained herein. Such persons should seek
their own independent legal, investment and tax advice as they see fit.
Panmure Liberum's responsibilities, as the Company's nominated adviser under
the AIM Rules for Nominated Advisers and AIM Rules for Companies will be owed
solely to the London Stock Exchange and not to the Company, to any of its
directors or to any other person in respect of a decision to subscribe for or
otherwise acquire Shares in reliance on the Admission Document. No
representation or warranty, express or implied, is made by Panmure Liberum or
the Company or their respective affiliates, directors, officers, employees or
advisers as to any of its contents.

 

This announcement does not form the basis of or constitute any offer or
invitation to sell or issue, or any solicitation of any offer to purchase or
subscribe for any Shares or any other securities nor shall it (or any part of
it) or the fact of its distribution, form the basis of, or be relied on in
connection with, any contract or commitment therefor. No offer or sale of
Ordinary Shares has been and will not be registered under the applicable
securities laws of the United States, Australia, Canada, Japan or South
Africa. Subject to certain exceptions, the Shares may not be offered or sold
in the United States, Australia, Canada, Japan or South Africa or to, or for
the account or benefit of, any national, resident or citizen of the United
States, Australia, Canada, Japan or South Africa. There will be no public
offer of the Shares in the United States, Australia, Canada, Japan or South
Africa.

 

This announcement may include statements that are, or may be deemed to be,
"forward-looking statements". These forward-looking statements may be
identified by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "projects", "anticipates", "expects",
"intends", "may", "will" or "should" or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These statements reflect
beliefs of the Directors (including based on their expectations arising from
pursuit of the Company's strategy) as well as assumptions made by the
Directors and information currently available to the Company. Although the
Directors consider that these beliefs and assumptions are reasonable, by their
nature, forward-looking statements involve known and unknown risks,
uncertainties, assumptions and other factors that may cause the Company's
actual financial condition, results of operations, cash flows, liquidity or
prospects to be materially different from any future such metric expressed or
implied by such statements. Past performance cannot be relied upon as a guide
to future performance and should not be taken as a representation that trends
or activities underlying past performance will continue in the future.
Forward-looking statements speak only as of the date they are made. No
representation is made or will be made that any forward-looking statements
will come to pass or prove to be correct.

 

Whilst the contents of this announcement are believed to be true and accurate
as at the date of its publication, no representation or warranty is made as to
such contents continuing to be true and accurate at any point in the future.

 

For the avoidance of doubt, the contents of the Company's websites and social
media accounts are not incorporated by reference into, and do not form part
of, this announcement.

 1  (#_ftnref1) Mintel 'Occupational Health UK', May 2024

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