Integral Diagnostics' NZ revenue dented by vertically integrated rivals

Integral Diagnostics (IDX) reported a 7.4% decline in its New Zealand revenue as the Australian-listed medical imaging service provider struggles with doctors referring patients to rival radiology practices because they own a piece of that business. 

The Australian company, which has spent about $191.1 million building its NZ footprint over the past four years, blamed its softer NZ revenue on a growing practice of referrers buying ownership interests in rival radiology practices, which they then used when referring patients. 

"IDX is working with the New Zealand Institute of Independent Radiologists to encourage New Zealand payors and regulators to review these practices against their published guidelines on non-arm's length referrals and will undertake the necessary actions to manage referrer conflicts of interest," the company said in its annual report. 

"IDX supports the upholding of the current published guidelines to ensure that quality is maintained, patient choice is retained, and payors are not subject to over-servicing and unnecessary imaging." 

ACC

The institute is taking high court action by seeking a judicial review of the Accident Compensation Corporation's (ACC) funding of work for such vertical integration that fits with the state-owned workplace insurer's guidelines. A hearing was scheduled for last week but has been postponed. 

IDX's NZ revenue fell to A$42.6m (NZ$47.6m) in the 12 months ended June 30 from A$46.4m. 

That lagged behind the 2.8% increase in operating revenue across the wider group, generating revenue of A$358.7m in an environment where covid-19 and influenza weighed on the firm's operations. Operating earnings before interest, tax, depreciation and amortisation (Ebitda) fell 20% to A$74.8m at a skinnier margin of 20.8% from 26.8% a year earlier. 

Net profit more than halved to A$14.6m, with transaction and integration costs adding to the wider drag.

The board declared a fully franked final dividend of 3 Australian cents per share, payable on Oct 5, taking the annual return to 7 Australian cents. That's down from 12.5 cents a year earlier.