Skin, hair and body treatment specialist Silk Laser Australia [ASX:SLA] has announced its acquisition of rival Eden Laser Clinics, expanding its network to 142 stores and clinics.
This number includes the group’s prior acquisition of stores and clinics previously owned by Unique, an advanced laser and skin company that boasts ‘exclusive’ technology.
Earlier in the week, the laser specialists released a report for its FY23 first-half results, in which the company reported profit went up 22% to $5 million.
Despite evidence of ambitious growth and steady earnings, the SLA share price plummeted more than 5% as investors mulled over the acquisition post-Tuesday’s spike.
Silk’s shares have sunk by 46% in the past full year:
Source: tradingview.com
Silk Laser accelerates growth with Eden Laser Clinics
Reporting from Adelaide this morning, leading luxury laser clinic Silk Laser announced its continued expansion of store networks in completing its acquisition of Eden Laser Clinics.
Taking on Eden Laser will give Silk another 10 cosmetic clinics across NSW and the ACT, upping its footprint in Sydney’s ‘under penetrated’ market to 142 clinics and stores.
Acquiring Eden Laser reinforces Silk’s position as one of the largest specialist non-surgical aesthetics clinic networks across Australia and New Zealand, with it also having exclusive technology in hair removal, skin treatments, tattoo removal, body sculpting, and injection treatments.
In July, Silk also acquired Unique Laser, which comprised five clinics across Victoria, which was chalked up at the (estimated) bargain price of $600,000.
The company rebranded Unique to ‘Australian Skin Care’ and expects these stores to be earnings accretive by around $200,000, post-tax.
Of the latest acquisition of Eden, Silk’s CEO, Martin Perelman, commented:
‘We’re delighted to welcome the Eden Laser Clinics team to SILK and excited by the opportunity for SILK to grow in the key state of New South Wales. Not only does this acquisition further deliver on our growth strategy of increasing network scale, it cements our position as a leading provider importantly it is also earnings accretive pre-synergies.’
Silk’s financial rundown
Though the company did not talk money today, in December, the group outlined an estimated $8.4 million (on a ‘cash free debt free basis’) would cover the acquisition price.
This price suggests a multiple of six-times cash EBITDA (earnings before interest, tax depreciation, and amortisation), with Eden expected to generate cash EBITDA (pre-synergies) of $1.4 million.
The company had also said that the acquisition is expected to be earnings accretive in the first full year of ownership (on a pro forma basis and before synergies) and funded by existing debt facilities and internal cash.
On the topic of cash, the group also presented its first-half FY23 financial results earlier in the week.
Silk had posted another half-year of revenue and earnings growth, with cash sales up 35% to $102 million and revenue up by 21% to $49 million.
Adjusted EBITDA had risen by 8% to $13.7 million, and statutory NPAT (net profit after tax) had gone up by 22% to $5 million.
Silk had also reported $19.4 million cash-in-bank with net debt of $3 million for funding its growth plans and capital strategies.
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