PORT MELBOURNE: Austco Healthcare Limited said Friday it will acquire two Brisbane-based companies, real-time monitoring software provider RTM and nurse call maker CareTech Systems, in a pair of cash deals expected to total about $19.3 million.

The ASX-listed company called the RTM purchase its largest to date and its first acquisition of a software company. The two transactions are conditional on each other and are expected to close on or around Dec. 1, subject to standard conditions.

Austco, which is based in Port Melbourne and supports more than 5,000 healthcare facilities in over 60 countries, said it will pay about $12.44 million up front for the two businesses. That money will come from existing cash reserves and a new $12 million loan from the Commonwealth Bank of Australia. No Austco shares will be issued.

After both deals close, the company expects to have about $7.7 million in cash and $5 million in undrawn committed facilities, before any earnout payments.

RTM

RTM, founded in 2012, has 27 staff and sells cloud-based software that monitors nurse call, duress, access control, CCTV, building management and other systems across a facility, flagging faults before staff notice them. Its platform connects with more than 300 systems, including Austco’s Tacera nurse call platform, and is deployed at more than 600 sites in Australia.

Austco will pay about $9.44 million up front for RTM. Of that, $3 million would be held in escrow if a key customer contract has not been renewed by completion. The money would go to the sellers if the contract is renewed for at least 12 months, and would revert to Austco, reducing the purchase price, if it is renewed at a lower value or not at all. The escrow period ends 24 months after completion.

An uncapped earnout, calculated at six times the average of RTM’s fiscal 2027 and 2028 earnings before interest, taxes, depreciation and amortization, less the upfront price, is estimated at about $5.82 million on current forecasts. That would put total consideration at about $15.26 million.

For the 12 months to June, RTM had normalized revenue of about $15.6 million and normalized EBITDA of about $2.2 million, a margin of about 14.1%. The figures are unaudited. Austco expects RTM to contribute about $9.1 million in revenue and $1.3 million in EBITDA in fiscal 2027, which reflects seven months of ownership.

“RTM is Austco’s most significant acquisition to date and accelerates our shift towards software and recurring revenue,” CEO Clayton Astles said in a statement.

Austco plans to sell RTM’s platform through its operations in North America, the United Kingdom, New Zealand and Asia, as well as through its reseller network. RTM will run as a standalone business within Austco’s Australian operations through the earnout period, which ends June 30, 2028.

CareTech

CareTech, which has operated for more than 25 years, designs lower-cost nurse call systems for aged care facilities and smaller hospitals, along with wireless call points, pendants, mats and location tags. Its products are built by a contract manufacturer and installed at about 200 sites. RTM is its largest customer.

Austco will pay $3 million up front for CareTech, plus an uncapped earnout equal to 3.5 times the average of CareTech’s fiscal 2027 and 2028 EBITDA, less the upfront price. On current forecasts the earnout is about $1.04 million, for total consideration of about $4.04 million. Austco said the 3.5 multiple matches those it paid in earlier acquisitions.

CareTech had revenue of $3.4 million in the year to June, of which $1.5 million came from sales to RTM that will be eliminated on consolidation. Normalized EBITDA was about $0.9 million, a margin of about 26%. Those figures are also unaudited. For fiscal 2027, Austco expects CareTech to contribute about $1.1 million in net revenue and $0.5 million in EBITDA.

Unlike Austco’s earlier purchases of resellers, CareTech gives the company product designs and intellectual property, allowing it to capture the full product margin. CareTech will continue to sell under its own brand in Australia.

“It broadens our in-house nurse call portfolio with a lower-cost system designed for aged care and adds wireless products we do not currently offer,” Astles said.

Conditions

Both deals are subject to a no-material-adverse-change condition and agreements with key personnel. The RTM deal also requires meetings with, and consents from, key customers, renewal of a key customer contract, and delivery and verification of RTM’s source code. The CareTech deal requires a manufacturing agreement with its contract manufacturer and the release of security interests and repayment of secured debt.

Austco said both acquisitions are expected to add to earnings per share immediately after completion.