Optima Health PLC's (AIM:OPT, OTC:OHLTF, FRA:J3N) agreement to buy rival PAM Healthcare for around £100 million has been framed by brokers as a defensive land grab that accelerates the company towards its ambition to dominate the UK outsourced occupational health market.
Cavendish said the acquisition, Optima’s largest since its September 2024 flotation, would lift the enlarged group to about 15% pro forma market share.
It will also “significantly” accelerate the business towards management’s targets of £200 million revenue and £40 million adjusted earnings before interest, tax, depreciation and amortisation in the medium term.
Panmure Liberum said the deal would create the clear market leader with 15% of the £1.6 billion UK and Republic of Ireland occupational health market.
And it argued that the strategic advantage should not be underestimated because a rival bidder could have made Optima’s leadership ambition “much more challenging”.
Both brokers pointed to valuation discipline, with Cavendish putting the price at about 12.2 times historic adjusted EBITDA and Panmure saying the forward multiple, including first-year synergies, was about 9.6 times, slightly below Optima’s own trading multiple.
The financing structure has also drawn attention, because Optima plans to fund the purchase with £70 million of new bank facilities and a £30 million bridge loan from Deacon Street Partners, controlled by Lord Ashcroft, the company’s largest shareholder.
It will then launch a fully underwritten £35 million open offer priced at 175p to repay the bridge and cover costs.
Panmure Liberum said the bridge-and-open-offer structure enabled Optima to commit to cash payment quickly “without the risk of a placing”, and described the open offer price as “attractively” set.
Cavendish upgraded its forecasts to reflect the transaction, lifting adjusted EBITDA expectations for the year to March 2027 to £28.2 million from £19.6 million and for March 2028 to £34.4 million from £22.4 million, while also raising its adjusted earnings per share forecasts for those years.
Panmure said the combination should generate “significant economies of scale” that support margin improvement over time, and it modelled rapid deleveraging given what it described as strong cash generation in the enlarged group.
On valuation, Cavendish set a 271p target price and argued Optima’s rating implied a discount to precedent transactions, while Panmure kept a 225p target ahead of completion but said a pro forma value of 250p looked appropriate once the deal and open offer are reflected.
In early afternoon trading, the stock was trading at 209.9p.