Integral Diagnostics Ltd reports: Underlying NPAT up 22.7%

Integral Diagnostics Ltd (ASX: IDX) reported its half-year result to 31 December 2017 today.

Integral Diagnostics is one of the larger radiology businesses on the ASX. Here are some of the highlights from its report compared to the prior corresponding period to 31 December 2016:

  • Operating revenue up 5.8% to $92.8 million
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 12.4% to $19 million
  • Underlying earnings before interest and tax (EBIT) up 17.6% to $14 million
  • Underlying net profit after tax (NPAT) up 22.7% to $9.2 million
  • Free cash flow increased by 70.2% to $17.7 million.
  • Cash and cash equivalents increased by $4 million.

Underlying profit is the best measure of performance because the statutory performance includes one-off acquisition costs.

Management believe that the long-term drivers remain for the business. A number of Medicare and government changes means that the business’ future is rosier than before.

The ageing population of Australia will also be a very positive tailwind for the business over the coming years.

The business expects that normalised FY18 NPAT for the whole year will come in at around 20%, this prediction excludes the takeover costs.

Management expect to deliver revenue growth stronger than previously expected, better cost efficiency initiatives, a lower effective tax rate and lower capital spending due to economies of scale.

The board also gave an update about the takeover offer from Capitol Health Ltd (ASX: CAJ). The board re-iterated that shareholders should do nothing until they have read Integral Diagnostics’ target’s statement, which will be provided no more than 15 days after Capital Health has dispatched its bidder’s statement. The target’s statement will contain the Board’s recommendation.

Capitol may bid a higher amount for Integral, but I wouldn’t buy shares just for that purpose.

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