Capitol Health runs diagnostic imaging under the brands Capitol Radiology & Direct Radiology. FY21 was a strong year despite lockdowns, particularly in Melbourne where the bulk of the clinics are. EBITDA grew 32% in the year in a sign of the pent up demand that flows through from reopening as we all get out and about. FY22 is shaping up to be even better – management guided to earnings growth despite consensus estimates currently expecting a fall, as well as acquisition upside with plenty of balance sheet flexibility with just $11m in net debt. It’s also cheap trading on just ~9x forecast EBITDA versus peer Integral Diagnostics (IDX) trading in the low teens. Hard not to like – cheap with an earnings tailwind to come. Despite targeting acquisitions, Capital Health could be a target itself.
MM is bullish CAJ
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