RBC Capital Markets reiterated its 'outperform' rating on Optima Health PLC (AIM:OPT, OTC:OHLTF, FRA:J3N) and maintained its 240p price target following Tuesday’s announcement of a £100m acquisition of People Asset Management Healthcare.
The broker said the deal cemented Optima’s position as the leading standalone UK occupational health provider, with an estimated 15% share in a £1.6bn market.
RBC argued that acquiring one of the top four outsourced providers removed a key competitor and materially accelerated progress towards Optima’s medium-term targets of £200m revenue, £40m adjusted earnings before interest, tax, depreciation and amortisation, and around 25% market share.
The £100m consideration represented roughly 12.2 times 2025 adjusted earnings before interest, tax, depreciation and amortisation and would be funded through £70m of existing bank facilities and a £30m interest-free bridge loan from entities controlled by Optima’s largest shareholder.
An equity open offer of £35m at 175p per share, an 18% discount to the pre-announcement price, would refinance the bridge facility and cover around £5m of acquisition costs.
RBC expected leverage to rise to around 2.7 times net debt to earnings before interest, tax, depreciation and amortisation at completion, before deleveraging to roughly one times within three years, given PAM’s cash conversion above 60%.
The broker introduced pro forma forecasts but left its published estimates unchanged pending Irish foreign direct investment clearance, which could take up to 90 days.
On a combined basis, RBC forecast 2027 revenue of £205m and adjusted earnings before interest, tax, depreciation and amortisation of £28.5m, implying a 13.9% margin including £1m of cost synergies.
It estimated earnings per share of around 14.1p in 2027 on 108.8m shares, equating to approximately 2.5% accretion in year one.
With cost synergies rising towards £4.5m by year three, RBC expected earnings accretion to exceed 20% by 2029.
The broker modelled one-off integration costs of around £3m in both 2027 and 2028.
Applying a 10.5 times multiple to 2027 enterprise value to adjusted earnings before interest, tax, depreciation and amortisation, in line with its discounted cash flow derived valuation, RBC calculated a pro forma equity value of 255p per share.
Discounted cash flow values a company by estimating its future cash flows and discounting them back to today using a weighted average cost of capital.
RBC concluded that the acquisition strengthened Optima’s scale and strategic position, while execution and regulatory timing remained the key near-term variables.
In afternoon trading, the shares were down 2% at 198p.