Shares of Capitol Health Ltd (ASX: CAJ) have slipped more than 5% today despite a strong lift in unaudited earnings for the 2015 financial year (FY15). Capitol Health, which provides diagnostic imaging services to the healthcare industry, said it expects to report 23% growth in revenues to $111.2 million for the 12 months ended 30 June 2015, driven by above system organic growth (8%) and from acquisitions made during the period.
Meanwhile, it expects underlying net profit before tax (NPBT) to grow an impressive 58% to $16.1 million. Actual NPBT is expected to be a more modest $7.8 million, impacted by significant one-off acquisition costs and restructuring costs amounting to a total of $8.3 million.
Pleasingly however, the company said that its underlying NPBT margin had increased substantially during the year from 11.3% in FY14 to 14.6% in FY15. That means that the company gets to keep more from every dollar of revenue which will improve future profitability.
The company's Managing Director, John Conidi, said: "Capitol has maintained its strong revenue and profit growth over the past twelve months. The transformative nature of the acquisitions we made in FY 2015 will drive earnings in FY 2016 and beyond. The company is actively seeking opportunities for further growth as the diagnostic imaging market continues to consolidate."
With a market capitalistion of less than $400 million and plenty of room left to expand, Capitol Health could be a great prospect for long-term investors. Although it isn't necessarily 'cheap' at its current price of 73 cents per share, it could still provide greater upside than other service providers in the healthcare sector such as Primary Health Care Limited (ASX: PRY) or Sonic Healthcare Limited (ASX: SHL). Shareholders will also be rewarded with a 0.65 cent per share dividend, which represents an increase of 30% on the final dividend of FY14 and 8% on the interim dividend during the first half of FY15.
