caj vs integral

hi i am new to caj
can any experts or holders of caj compare integral offer details to CAJ's current multiples and get back to me
thanks

OVERVIEW OF INTEGRAL DIAGNOSTICS

Please find below a brief summary of Integral Diagnostics which has been extracted from the Pathfinder Prospectus. For further information, please refer to the Chairman’s letter, and Section 1 – “Investment overview” of the Pathfinder Prospectus.

· Integral Diagnostics is a leading provider of Diagnostic Imaging Services in Australia.

· The demand for Diagnostic Imaging Services in Australia has experienced year-on-year growth over the last 10 years, with total services provided growing at a CAGR of 5.4% between FY2005 and FY2015.

· IDX operates in three regional areas:

o Victoria: primarily around Ballarat, Geelong and the outer western areas of Melbourne;

o Queensland: primarily in the Gold Coast area and the Toowoomba and Mackay regional areas; and

o Western Australia: primarily in the south west regional area.

· Across the regional areas in each State in which it operates, IDX is a market leader by number of sites and operates more sites than other competitor.

· IDX’s success is driven by its network of 44 sites (including 12 hospital sites), comprehensive service offering, strength in higher-value equipment and technology used to take images (also referred to as Modalities) and a large team of high quality Radiologists and Technical Professionals

· In FY2015, IDX provided close to 1 million patient images and generated $160.0 million of pro forma revenue, making it one of the largest providers of Diagnostic Imaging Services in Australia.





OFFER DETAILS AND STATISTICS

Please find below a brief summary of the terms of the Offer which has been extracted from the Pathfinder Prospectus. For further information, please refer to the Offer Summary section and Section 1 – “Investment overview” of the Pathfinder Prospectus.




Issuer


Integral Diagnostics Limited (ACN 130 832 816)

Industry


Diagnostic Imaging

Listing


Australian Securities Exchange (“ASX”)

Transaction Type


Initial Public Offering

ASX Code


IDX

Offer Price (excluding the Employee Offer)


[$1.91] to [$2.33] per Share

Total number of Shares offered under this Prospectus1


[67.2] to [70.0] million

Total Offer proceeds


[$133.7] to [$156.7] million

Number of Shares to be held by Existing Shareholders at Completion of the Offer2


[74.1] million

Total number of Shares on issue at Completion of the Offer


[141.4] to [144.1] million

Market capitalisation3


[$275.3] to [$329.4] million

Pro forma net debt on Completion of the Offer4


[$50.2] million

Enterprise Value5


[$325.5] to [$379.5] million

Enterprise Value/pro forma consolidated FY2016F EBITDA


[11.2] to [13.1] times

Enterprise Value/pro forma consolidated FY2016F EBI


[11.5] to [13.4] times

Offer Price/pro forma consolidated FY2016F NPATA per Share


[15.0] to [18.0] times

Implied FY2016F dividend yield at the Offer Price6 (shown for illustrative purposes only)


[3.9] to [4.7]%

Use of Proceeds


The Offer is being conducted to:

· Provide IDX with funds to repay a portion of IDX’s existing debt;

· Pay the costs of the Offer;

· Provide IDX with a capital structure which, together with access to capital markets, will provide additional financial flexibility to pursue future growth opportunities; and

· Provide a liquid market for its Shares and an opportunity for others to invest in IDX.

The Offer also provides the Existing Shareholders with an opportunity to realise part of their investment in IDX by the sale of Existing Shares through SaleCo.

Quotation on ASX


IDX will apply to ASX within 7 days after the Prospectus Date for admission to the official list of ASX and for quotation of the Shares on the ASX under the code IDX. It is expected that quotation will initially be on a conditional and deferred settlement basis. Completion of the Offer is conditional on the ASX approving this application.

If approval is not given within three months after the Prospectus Date (or any longer period permitted by law), the Offer will be withdrawn and all Application Monies received will be refunded without interest as soon as practicable in accordance with the requirements of the Corporations Act.



1 Includes the transfer of Existing Shares through SaleCo and the issue of Shares by the Company.

2 For further information, see Section 1.8 of the Pathfinder Prospectus. Certain Management Shareholders will also have the opportunity to subscribe for Shares under the Offer, including under the Employee Offer.

3 Market capitalisation is determined by multiplying the number of Shares expected to be on issue immediately following Completion of the Offer by the Offer Price. It is possible that Shares may trade above or below the Offer Price after Listing. If Shares trade below the Offer Price after Listing, the market capitalisation may be lower.

4 Net debt is calculated as current and non-current borrowings less cash and cash equivalents.

5 Enterprise Value is calculated by adding the market capitalisation of [275.3] to [329.4] and pro forma net debt of the Group on Completion of the Offer.

6 Calculated as the implied dividend per Share (assuming a dividend payout ratio of 70% of pro forma NPATA in FY2016F) divided by Offer Price. Payment of a dividend by the Company is at the discretion of the Directors and will be a function of a number of factors the Directors may consider relevant. No assurance can be given by any person, including the Directors, about the payment of any dividend and the level of franking on any such dividend. For more information on the Company’s dividend policy, see Section 4.9 of the Pathfinder Prospectus. It is intended that the first dividend paid will be in respect of the period from 1 January 2016 to 30 June 2016. The implied dividend yield has been calculated on the basis of pro forma FY2016F results. It is presented to illustrate a full 12 month dividend yield under the new capital structure of IDX following Completion of the Offer.



KEY STRENGTHS

The following is a description of the key strengths of Integral Diagnostics and the Offer which have been extracted from the Pathfinder Prospectus. For further information, please refer to Section 1 – “Investment overview” of the Pathfinder Prospectus.



Growing demand for Diagnostic Imaging Services

· The demand for Diagnostic Imaging Services in Australia has experienced year-on year growth over the last 10 years, with total services provided growing at a CAGR of 5.4% between FY2005 and FY20151. The rate and consistency of growth are underpinned by the key drivers of demand set out in Section 1.2 of the Pathfinder Prospectus.



Large Addressable Market where scale is important

· IDX estimates that the Addressable Market for private Diagnostic Imaging providers generated approximately $3.6 billion in revenue in FY20152.

· Scale of operations at both a local and national level delivers competitive advantages to providers of Diagnostic Imaging Services.

· Scale of operations at a local level enables providers such as IDX to:

- Tender and/or renew contracts to operate hospital sites: where the ability to operate and manage a large site, deliver required service levels, attract a quality Radiologist group and fund required equipment is important;

- Develop a clinical network around hospital sites: where the clinical network benefits from its proximity to hospital sites and is able to deliver continuity of care to patients and Referrers;

- Profitably deliver higher quality clinical services: providers with scale have the financial capacity and patient demand to profitably operate MRI, PET and Nuclear Medicine Modalities; and

- Attract high quality Radiologists: where the ability to offer Radiologists a highly attractive professional environment due to diversity of clinical mix and higher value Modalities and equipment is important in attracting and retaining key staff.

· Scale at a national level enables providers such as IDX to:

- Invest in systems and technology platforms: that enable clinic networks to deliver high quality services to patients and Referrers;

- Share best-practice techniques and collaborate across the network;

- Procure and utilise equipment more efficiently: that enables providers to obtain better prices on new equipment and share equipment across their network; and

- Spread central operating costs: enabling providers to spread operating costs over a larger number of clinics.



Strong market position

· Across the regional areas in each State in which it operates, IDX is a market leader by number of sites and operates more sites than other competitors. Key features of IDX’s strong market position include:

- Hospital sites: 46% of FY2015 pro forma revenue was generated from hospital sites (many of which have been operating for a number of years), the majority of which have a contract length of five or more years, often with renewal options to extend for another five or more years;

- MRI Licences: nine full and three partial MRI Licences that provide significant competitive advantages3;

- Comprehensive Modality offering, with strength in higher value Modalities: providing Referrers and patients with access to all major Modalities and in particular higher value Modalities that deliver better quality patient and Referrer outcomes and which are experiencing stronger growth; and

- Located in high-growth areas: IDX operates with strong positions in the Gold Coast and outer western Melbourne region, which are population growth corridors that are expected to grow faster than the national average in the period between 2013 and 2026.4

· The strength of IDX’s local market position enables it to operate with a large and growing Referral network and operate an attractive specialist healthcare model that attracts and retains high quality Radiologists.



High quality systems deliver better patient and Referrer outcomes

· IDX uses its high-quality technology platform and clinical and operating systems to deliver better outcomes to patients and Referrers. IDX, through Lake Imaging, became the first private radiology practice in Australia to operate various technology platforms that currently connect its 44 sites with approximately 16,000 Referrers and which handled close to 1 million scans in FY2015. The technology platform enables IDX to:

- Reduce the turnaround time for Referrers; Provide Referrers with access to images on a mobile device in many locations, which allows them to use their time more efficiently;

- Store digital images for comparative reporting;

- Deliver workflow efficiencies for Radiologists, which increases the available time for clinical work; and

- Distribute images between local clinics to share the workload across its Radiologist group.



Diversified service mix and sources of funding

· In FY2015, approximately 55% of IDX’s pro forma revenue was funded directly by the Commonwealth Government, 28% was paid directly by patients and the remaining pro forma revenue was derived from a range of other funding sources. The significant component of funding received directly from patients reflects the strength of IDX’s competitive position, its focus on higher value Modalities and its billing policies.



Multiple levers for growth

· IDX employs three primary strategies to drive growth in its business:

- Existing business: servicing growing demand for Diagnostic Imaging Services in the regions where it operates and utilising existing capacity within its business;

- Capacity expansion: adding capacity to its business in existing regions to service the growing demand for Diagnostic Imaging Services. Given IDX’s strong competitive position in these regions, IDX has a good understanding of where capacity constraints may exist and the likely utilisation of increased capacity, meaning that demand risk for these projects is generally low; and

- Acquisition: IDX has a track record of expanding its business via acquisition and will consider opportunities in existing and new regions in order to continue to expand its leading regionally-focused Diagnostic Imaging platform.



Attractive specialist healthcare model

· IDX operates an attractive specialist healthcare model that has enabled it to attract, retain and grow its Radiologist group. As at 30 June 2015, 52 Radiologists were employed by IDX, with approximately half of these below 45 years of age.

· Key features of IDX’s specialist healthcare model include:

- Clinical autonomy and excellence within IDX’s quality framework;

- A diverse and interesting mix of clinical work;

- Benefits arising from IDX’s large Referrer network;

- Opportunities to develop sub-specialty interests and share clinical workload;

- IDX’s technology and systems, which reduce administrative burden and increase the time available for clinical work;

- Attractive employment terms, with financial remuneration in line with other leading private providers; and

- The potential for long-term Share ownership.



Track record of growth and strong financial performance

· IDX has delivered 13 years of year-on-year revenue growth since 2002 under the leadership of CEO John Livingston. Over the last two years (between FY2013 and FY2015), IDX’s pro forma revenue and EBITDA (pro forma for the impact of the acquisitions of South Coast Radiology and Global Diagnostics Australia made part way through this period) have increased at a CAGR of 7.4% and 16.3% respectively



Experienced management team and Board

· IDX’s senior management team has considerable experience in Diagnostic Imaging and has a proven track record of growth. The senior management team is led by CEO John Livingston who, with a small group of Radiologists and Radiographers, founded IDX’s original business, Lake Imaging, in 2002 and has driven its growth over the last 13 years. The Board is led by Helen Kurincic (Chairman) who brings 20 years of healthcare executive and board experience.

1 Medicare Benefit Schedule Item Statistics Report for Category 5 ‘Diagnostic Imaging Services’ .

2 Based on information sourced from The Department of Health ‘Annual Medicare Statistics – Financial Year 2007-08 to 2014-15’ .

3 Includes the MRI Licence held by South West MRI, a 50%-owned joint venture.

4 Australian Bureau of Statistics Reports for item 3222.0 ‘Population Projections, Australia, 2012 (base) to 2101’ .



KEY risks

The following is a description of some of the key risks which have been extracted from the Pathfinder Prospectus. For further information, please refer to Section 1 – “Investment overview” of the Pathfinder Prospectus.

IDX operates in a heavily regulated industry

· As a participant in the Diagnostic Imaging industry, IDX is subject to extensive laws, government policies and regulations relating to matters including the conduct of its operations, Commonwealth Government rebate arrangements, licensing, registration and accreditation of facilities and equipment and the addition and development of new facilities and equipment.

· Changes to these laws, government policies and regulations may have a material adverse impact on the financial and operational performance of IDX, and may result in IDX being required to dedicate more time, resources and expenditure to ensure ongoing compliance. Further, any violation by IDX of applicable laws and regulations may result in penalties, damages, fines, disruption to its operations and reputational damage, which could adversely affect IDX’s financial results and ability to operate its business.



Inadequate rebates may reduce demand for IDX’s services

· The eligibility for, and level of, Commonwealth Government rebates for Diagnostic Imaging Services depend on a number of factors. Non-indexation of MBS fees for Diagnostic Imaging Services by the Commonwealth Government, or a reduction in MBS fee levels, could reduce the level of patient rebates. In turn, this would lead to an increase in out-of-pocket costs incurred by patients in obtaining Diagnostic Imaging Services from companies such as IDX. If patient out-of-pocket expenses continue to rise, this may adversely affect the affordability and demand for IDX’s services, which may negatively impact IDX’s ability to sustain current prices, growth and services and/or impact its financial position and prospects.

· In relation to privately-insured Inpatients, whose Diagnostic Imaging Services attract a combination of Medicare and private health insurance rebates, a reduction in, or failure to increase, private health insurance rebates would also increase patient out-of-pocket expenses, which could adversely affect the affordability and demand for IDX’s services for these patients.



Rebate eligibility criteria applying to equipment may change, and could restrict IDX’s future growth

· Equipment eligibility criteria rules, known as ‘capital sensitivity’, govern the level of rebates available in respect of Diagnostic Imaging Services provided from IDX’s equipment. Changes to capital sensitivity rules could result in IDX having to refurbish current Diagnostic Imaging equipment or acquire new equipment earlier than intended in order for patients to be eligible for higher levels of rebates from Diagnostic Imaging Services provided by the relevant equipment, failing which IDX’s patients would face increased out-of-pocket expenses. This could reduce the demand for IDX’s Diagnostic Imaging Services and erode its competitive position, which could have a material adverse effect on IDX’s financial position, performance and prospects.

· Strict eligibility criteria governing the introduction of new MRI Eligible Units may also place restrictions on IDX’s growth opportunities in the MRI Modality.



IDX’s service agreements and related property leases may be breached, terminated or not renewed

· Service agreements (with public hospitals) and service level agreements (with private hospitals) are a key feature of IDX’s business and in FY2015 were responsible for approximately 46% of IDX’s pro forma revenue.

· In the event that IDX breaches a service agreement or service level agreement, including if it fails to deliver Diagnostic Imaging Services to the specified standard, IDX may be liable for damages under the relevant agreement and in certain cases the customer may be entitled to terminate the agreement. IDX’s service agreements and service level agreements may also not be renewed for a number of reasons, including performance below required service levels, adverse publicity or increased competition.

· In circumstances where a service agreement or service level agreement is connected, or interdependent, with a related property lease, the term of the lease generally coincides with the term of the relevant agreement (and the term of the relevant agreement will generally coincide with the term of the lease). Accordingly, in the event that IDX materially breaches certain of its property leases, there is a risk that the breach (or subsequent termination by the landlord) may give the hospital termination rights under the relevant service agreement or service level agreement.

· Any breach, termination or non-renewal of a service agreement or service level agreement or related property lease between IDX and its public or private hospital customers could materially adversely affect IDX’s reputation, financial position and prospects.



IDX may be unable to recruit and retain Radiologists and Technical Professionals

· IDX relies on Radiologists to provide the core medical services associated with Diagnostic Imaging. There have been shortages of qualified Radiologists, particularly in some of the regional markets that IDX operates in. Failure to recruit and retain a sufficient number of Radiologists could result in IDX being unable to achieve its growth projections or maintain its market share, which could adversely impact IDX’s revenue generation and profitability.

· IDX’s success also depends on its continuing ability to recruit and retain other highly skilled Technical Professionals, such as Radiographers, Sonographers and Nuclear Medicine Technologists. In the event that IDX is not able to hire and retain a sufficient number of skilled employees, or to do so at anticipated salary levels, this could have a negative impact on IDX’s operations, financial position and future prospects.



IDX’s relationship with Radiologists and Technical Professionals may deteriorate

· The ongoing success of IDX’s business relies on the strength of its relationship with its Radiologists and Technical Professionals.

· In the event that IDX experiences a deterioration in its relationship with its Radiologists and Technical Professionals, this could potentially lead to reputational damage, loss of key employees, increased labour costs and the inability for IDX to undertake the number of Diagnostic Imaging Services it anticipates in the future. Any of these outcomes could have a negative impact on IDX’s operations, financial position and future prospects.



IDX’s relationships with Referrers may deteriorate

· IDX depends on referrals of patients from unaffiliated Referrers, who have no obligation or incentive to refer patients to IDX, for a substantial portion of its revenue. Accordingly, relationships with Referrers are vitally important to IDX’s business.

· If a sufficiently large number of Referrers were to discontinue referring patients to IDX, the volume of Diagnostic Imaging Services that IDX undertakes could decrease, which would adversely affect IDX’s business, financial position and prospects.



IDX’s competitive position may deteriorate

· IDX competes for patients on the basis of its reputation, its ability to provide multiple Modalities at its facilities, the location of its facilities, the quality of its Diagnostic Imaging Services, the level of skill and experience of its Radiologists and the prices it charges its customers. If IDX is unable to successfully compete, its business, financial position and prospects may be adversely affected.



IDX’s labour costs may increase

· IDX faces the risk of increased direct and indirect labour costs, particularly in circumstances of low unemployment or competition for personnel, such as IDX faces in respect of Radiologists and certain of its Technical Professionals. Any increase in direct or indirect labour costs incurred by IDX may result in actual labour costs being higher than IDX has budgeted for, which could lead to reduced profitability.



IDX may be unable to recruit and retain key management personnel

· The successful operation of IDX’s business relies on its ability to recruit and retain experienced and high-performing key management and operating personnel. The unexpected loss of any key members of management or operating personnel, or the inability on the part of IDX to attract experienced personnel, may adversely affect its ability to develop and implement its business strategies.



IDX’s information systems may fail

· IDX relies on its information systems to perform key functions critical to its ability to operate equipment, store and transmit images and schedule and invoice patients. Any damage or interruption to IDX’s information systems could result in a material loss of referrals and could significantly curtail, directly and indirectly, IDX’s ability to conduct its business and generate revenue and could result in significant costs being incurred, for example to rebuild internal systems, respond to regulatory inquiries or actions, pay damages, or take other remedial steps with respect to third parties.



KEY DATES

The following are some of the key dates of the Offer which have been extracted from the “Important Dates” section of the Pathfinder Prospectus.



Broker Firm Offer, Employee Offer and Priority Offer open


[Monday, 12 October] 2015

Broker Firm Offer, Employee Offer and Priority Offer close


[Monday, 19 October] 2015

Expected commencement of trading on ASX (conditional and deferred settlement basis)


[Wednesday, 21 October] 2015

Settlement of the Offer


[Monday, 26 October] 2015

Issue and transfer of Shares (Completion of the Offer) and last day of conditional trading


[Tuesday, 27 October] 2015

Expected despatch of holding statements


[Wednesday, 28 October] 2015

Shares expected to begin trading on a normal settlement basis


[Thursday, 29 October] 2015