continues to deliver strong growth

Capitol Health continues to deliver strong growth
Revenue up, NPBT up
? Revenue up 52% to $43.3 million over prior comparative period
? NPBT up 109% to $4.3 million over prior comparative period
? NPBT Margin up 274 Basis Points to approx. 10%
? MRI referral changes impacting positively
? 5 new (“unlicensed”) MRI’s ordered
The Directors of Capitol Health Limited (ASX: CAJ, “Capitol” or the “Company”) are pleased to report
another record financial result for the half year ended 31 December 2013, based on the unaudited
figures as presented for Audit Review.
Capitol expects to release its formal results and declaration of Interim Dividend by 13 February 2014.
Results overview:
Operating revenues totalled $43.3 million for the 6 month period, representing a 52% increase on the
previous comparative period (FY 2013: $28.5 million). The key drivers of this solid uplift were further
gains in market share, revenues and margins generated by the MDI clinics, immediate benefits from
the changes to MRI referral regulations from 1 November 2013 and continued improvements in
internal operating efficiencies.
Net Profit Before Tax (NPBT) for the 6 months to 31 Dec 2013 amounted to $4.3 million (at a margin
of 9.97%), up 109% on the $2.1 million for the 6 months to 31 Dec 2012 (at a margin of 7.23%).
MDI acquisition delivering strategic and financial benefits:
The strategic acquisition of MDI Group is meeting all expectations, positioning Capitol Health as the
largest community-based network of diagnostic imaging facilities in Victoria.
Of the half year results, the MDI acquisition provided revenues of $12.1 million and NPBT of $1.8
million for the reporting period. There were no cost transfers out of the MDI operation.

MRI Performance Positive:
From November 1, 2013, the Federal Government allowed GP’s to refer patients 16 years and over for
a selected number of MRI scans to Medicare eligible MRI units, of which Capitol has seven (7).
Although the Directors stress that it is early days, the MRI changes have already delivered an
immediate positive impact on the business. Whether this is a trend by “First Adopters” or an initial
experimentation by Referrers only time will tell. By its nature, the changes should naturally provide
for a substitution effect where MRI replaces another form of diagnostic test. This substitution effect
could take the form of substituting existing Capitol services, transfer of services from providers who
do not offer MRI capability or the or the substitution of MRI’s referred by GP’s against those that were
previously referred by Specialists.
We are pleased to advise that there is no apparent internal substitution of existing Capitol services.
We note that MRI revenue to Capitol as a percentage of total revenue has increased from an average
of 6.5% for the first 4 months of FY 2014 to 10.7% for the November/December period.
That being said, the results to date have provided Capitol with the confidence to order 5 new MRI’s,
to be progressively installed over the next 18 months. These machines will not attract a Medicare
rebate (termed as “unlicensed”) but are to provide an MRI service to those patients who currently pay
a complete “out-of pocket” charge for items not covered by the recent referral changes. We see this
as a protection capability to prevent any perception of internal competition for available MRI
bookings with different financial returns on the current licensed machines. We see that as GP’s
become more comfortable with the results from MRI imaging that they will regard this modality as the
preferred option, when appropriate, to be recommended to patients regardless of attracting a
Medicare Rebate - for an improved medical outcome.
Managing Director, Mr John Conidi commented:
“Capitol continues to go from strength to strength, with another period of real growth. We continue
to make gains in market share driven by both strategic and organic measures.
The strategic acquisition of MDI Group in May 2013 has added value to the group and contributed
materially to our current financial performance.
The Directors are confident in our strategic focus on MRI and we expect to further grow in this area.”