Looking for an ASX All Ords healthcare stock with strong growth potential and offering a 2.2% fully franked dividend yield?
Then you may wish to run your slide rule over Integral Diagnostics Ltd (ASX: IDX), the second largest diagnostic imaging provider in Australia.
That's according to the analysts at Macquarie Group Ltd (ASX: MQG) following their latest deep dive into May's Medicare statistics.
In early afternoon trade today, Integral Diagnostics shares are up 4.0%, changing hands for $2.62 apiece.
For some context, the All Ordinaries Index (ASX: XAO) is up 0.2% at this same time.
While the ASX All Ords healthcare stock still remains down 1.3% over a year, not including those dividend payouts, the next 12 months could usher in a significant rebound.
Here's why.
ASX All Ords healthcare stock eyeing strong demand growth
In a research report released by Macquarie on Thursday, the broker noted that Medicare volumes for all services in May increased year on year on a days-adjusted basis, with pathology volumes up more than 14%.
And in potentially good news for this ASX All Ords healthcare stock, Macquarie said that, on a benefits basis, imaging and pathology "grew strongly in May". Pathology was up 15% while imaging was up more than 10% year on year (days adjusted).
Macquarie said its "key pick remains Integral Diagnostics, which we expect to benefit from cost synergies related to the CAJ merger, leading to significant EPS [earnings per share] accretion".
The broker has an outperform rating on Integral Diagnostics shares, with a $3.20 12-month price target. That represents a potential upside of 22.1% from current levels. And it doesn't include those upcoming dividend payouts.
On the risk front, Macquarie added:
Key downside risks to our thesis on IDX primarily relate to weaker-than-expected volume growth and/or operating cost growth ahead of our expectations. Downside from the potential merger would be less than expected cost synergies from the group.
The Capitol Health merger
The ASX All Ords healthcare stock first announced its now completed merger with Capitol Health Limited (ASX: CAJ) in June 2024.
Commenting on that merger at the company's half year results presentation in February this year, Integral Diagnostics CEO Ian Kadish said:
The merger with Capitol Health provides us with increased scale that will improve margins and growth in metropolitan areas.
The merger synergies of at least $10.0 million before tax annually are on track, and going forward the company is ideally positioned to materially benefit from the merger synergies, MRI deregulation and the NLCSP.
