Australia’s labour shortage struggles are far from over, continuing to impact companies like diagnostic imaging services provider Integral Diagnostics (ASX: IDX). This impact was reflected in its mixed results for the first half of FY24. 

Integral Diagnostics is an Australia and New Zealand-based medical diagnostics company offering radiology services—from X-rays and CT scans to ultrasounds, MRI scans and the like. 

Despite EBITDA margins slightly improving to 18.7% from the previous year’s 18.5%, the Company’s financial leverage saw a marginal decrease, with the net debt EBITDA ratio dropping to three times by December 2023.

During this period, IDX invested $11.7 million in capital, allocating $3.5 million for growth initiatives. However, net debt increased by $15.8 million to $210 million, pushing the net debt-to-equity ratio to 69.9%. Meanwhile, cash reserves stood at $18 million, down from H2 FY23’s $33.9 million. It has access to $354.4 million in facilities, of which $126.3 million remained undrawn. IDX’s debt facilities are due in February 2026, with compliance maintained.

CEO of IDX, Dr Ian Kadish, said, “While the operating environment in H1 FY24 has proven to be challenging given higher than expected cost inflation and clinical staff shortages, we expect to deliver a materially stronger H2 FY24 profit result compared to 1H FY24, including through implementation of productivity and efficiency initiatives. 

“Despite the current cost challenges in a high inflation environment in FY24, the Company believes the fundamentals of the radiology industry are strong and the Company is well positioned to benefit from executing on these initiatives.”

Key financial metrics for the period include a statutory loss after tax of $66.8 million, primarily attributed to impairment losses and integration costs. An impairment loss of $71.5 million was recognised in the New Zealand division, reflecting revised growth expectations for this segment.

While IDX achieved solid revenue growth of 7.2% to $231.3 million, challenges such as cost inflation and staff shortages, particularly in regional areas, dampened operating profitability. Operating EBITDA margin improvement in 1H FY24 relative to the previous year was not realised as anticipated, further compounded by higher interest funding costs.

However, despite these challenges, IDX kept its hopes pegged on its diagnostic imaging services across Australia and New Zealand. In Australia, solid revenue growth of 7.8% was driven by improved Medicare indexation and fee increases. Organic operating revenue in New Zealand grew by 4.1%, adjusted for currency fluctuations and working days.

Looking ahead, IDX is focused on executing its strategy to drive growth, including organic earnings growth, leveraging teleradiology and AI, and advancing its environmental, social and governance (ESG) initiatives. The Company also aims to nurture its culture and leadership while considering strategic acquisitions that align with its clinical objectives.

With a promising outlook for the remainder of FY24 and beyond, IDX anticipates an improvement in trading performance and operating margins, building upon the momentum gained in the latter half of the previous financial year. Preliminary figures for January and February 2024 indicate solid revenue growth of 11.6%, providing a positive trajectory for Integral Diagnostic’s future performance.