In Australia, the landscape of diagnostic imaging is evolving rapidly, especially in response to the needs of an ageing population. With Medicare expanding its coverage of diagnostic imaging items, there’s a newfound impetus for individuals to prioritise early detection and preventative healthcare measures, ushering in a promising era of proactive health management.
In keeping with that, companies like diagnostic imaging services provider Capitol Health (ASX: CAJ) are positioned to benefit.
In H1 FY24, the Company reported a 20.1% increase in revenue on H1 FY23, reaching $117.8 million. Key factors contributing to this growth include the successful acquisition of Future Medical Imaging Group (FMIG), the indexation of Medicare benefits for most imaging services, and the inauguration of a new MRI-comprehensive clinic at Sunshine Private Hospital in Melbourne. Additionally, investments in additional and replacement MRI services further fueled its growth.
At the same time, the revenue was tempered by the closure of small unprofitable sites, with activities consolidated into larger nearby clinics, and the cessation of low-margin services as contracts reached their end dates.
Operating EBITDA rose to $23.9 million, reflecting a 21.4% increase compared to the pcp, with an operating margin of 20.3%. Plus, Capitol spent over $100 million on suppliers and employees.
Capitol Health’s Managing Director and Chief Executive Officer Justin Walter said, “The Company continues to experience a return in demand for our services, which is more aligned to historical trends. Organic growth of our existing business has been solid for the half year and continues year to date. We thank our Radiologists and all staff at clinics who work tirelessly for our referrers, patients and local communities.”
Capitol Health is a diagnostic imaging and services provider catering to the Australian healthcare market. Based in Melbourne, Victoria, the Company manages clinics across Victoria, Tasmania, South Australia, and Western Australia. Its primary objective is to establish a community-based infrastructure that enables radiologists and other medical professionals to deliver precise and efficient healthcare services, ensuring optimal outcomes for patients.
Looking forward to FY24, Capitol Health is advancing on multiple fronts. Notable achievements include a 10.2% organic growth rate, the successful recruitment of six new radiologists, and the expansion of the Trainee Sonographer program. An external review identified cost efficiencies, while the integration of FMIG and the performance of the new Sunshine Private Hospital clinic demonstrate progress.
It has plans for an additional MRI to be added to the network in the fourth quarter. Moreover, Capitol Health continues to invest in technological infrastructure to meet growing demand. Besides that, the Company remains focused on delivering key initiatives, including organic revenue growth through brownfield developments, aligning labour resources with patient demand, conducting cost-to-serve reviews of clinics, and standardising operating procedures across its network.
Capitol Health is attempting to chart its path to long-term growth with these efforts. Plus, in a bid to drive growth, the Company announced the appointment of Brendon Pentland as its Chief Financial Officer (CFO), effective 1 April 2024.
Alinda is a Business Reporter for The Sentiment
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