Integral Diagnostics announces transformative merger with Capitol Health

Integral Diagnostics (ASX: $IDX) has entered into a Merger Implementation Deed with Capitol Health to create one of the largest diagnostic imaging companies in Australia and New Zealand. The merger aims to combine two highly complementary diagnostic imaging businesses, delivering significant and enduring benefits for patients, doctors, and shareholders. The transaction is based on Integral's closing share price of $2.54 on 14 June 2024, and it is expected to create a leader in ANZ diagnostic imaging with compelling acquisition terms, unanimously recommended by Capitol's Board.

Executive Commentary on Merger Implementation

The merger between Integral Diagnostics and Capitol Health is a strategic move to create a leading player in the ANZ diagnostic imaging market. The combined entity will have a nationwide footprint of 155 clinics supported by more than 350 radiologists and approximately 3,000 employees. This merger is expected to deliver at least $10 million of anticipated annual pre-tax net cost synergies, with the majority expected to be realized within the first year post-implementation. Additionally, it is anticipated to deliver double-digit pro forma FY25 EPS accretion to Integral shareholders, including cost synergies. The merger will provide a platform to drive best-in-class clinical outcomes for patients, doctors, and referrers, and it is well-positioned for future growth, with the ability to invest in high-end equipment and drive teleradiology volumes through IDXt.

Summary of Merger and Future Outlook

The transformative merger between Integral Diagnostics and Capitol Health is set to create a leader in the ANZ diagnostic imaging market, with a vision to deliver best-in-class clinical service, technology, and capabilities. The merger is expected to result in significantly enhanced scale, improved clinical outcomes, and substantial financial benefits. With a focus on achieving optimal healthcare outcomes for patients and referrers, the combined entity aims to provide the leading platform to attract and retain radiologists and key professionals. The merger also presents revenue synergy opportunities, including doctor productivity improvements and additional revenue opportunities. Looking ahead, the merger positions the combined group to pursue further value-accretive investments, including potential M&A, and to drive sustained long-term earnings growth. The integration framework emphasizes a careful and measured approach to preserve the positive elements of both businesses and ensure business continuity while delivering accelerated synergy and value realization.