Why the belated reopening for health care may represent a growth opportunity

While much of the so-called ‘reopening trade’ has already been priced into markets, Merewether Capital’s Luke Winchester says healthcare names still have some way to run.

Speaking to guests of Reach Markets’ fortnightly Meet the Fund Manager sessions, Mr Winchester said stricter lockdowns imposed on health and aged care facilities pushed back the start of the reopening trade.

As a result, businesses that operate in these sectors should still see some growth in the months ahead as health facilities ease restrictions and rejoin the broader economy.

“If you’re selling to hospitals or doctors or aged care, you weren’t able to sell last year. Those places shut down to external people; you couldn’t get sales people through the door,” he said.

“I think there’s a real benefit to the reopening of health care. That doesn’t mean buy any healthcare name, but it’s a good place to look for an opportunity.”

Global Health Limited was one business that Mr Winchester named as being a potential beneficiary of this belated reopening.

The company provides software designed specifically for allied and community health, and has a strong foothold in Victoria where it holds 13% share of the market.

The company also brought in new management players in 2021, including CEO Michael Davies, a former Macquarie Telecom executive, whom Mr Winchester said has a “clear” growth plan for the business – and the nous to deliver on it.

“I’ve come to a view that the business could easily be worth double [in the next 2-3 years] if they can execute to that vision,” Mr Winchester said.

Mr Davies said the executive appointments – including his own – were part of Global Health Limited’s plans to grow.

“The business has been around for a significant amount of time, has a compelling track record delivering software solutions, and has been founder-led for north of 25 years,” Mr Davies said.

“[Last year] the company took two significant steps; the first was a capital raising that took place in two tranches and raised north of $7.5 million in capital, and the second was the transition from founder-led … to myself as the new CEO.

“The purpose of those two activities was to refocus the business with a sales and marketing focus and a change program for research and development.”

In the six months since commencing in the CEO role, Mr Davies said he and his team have implemented a raft of “sales 101” changes to accelerate the business’s expansion, rather than rely on word-of-mouth referrals as the company has done in the past.

Click here to view more videos from Luke Winchester’s  Meet the Fund Manager’ session, or click here to view the full ‘The Insider: Meet the CEOs’ session.

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