Business Overview
Carlisle Health has identified an attractive consolidation opportunity in the diagnostic imaging sector and is seeking to undertake a “roll-up” of radiology practices Australia-wide.
Our clinics will offer a competitive range of diagnostic imaging modalities, including X-ray, ultrasound, computed tomography, magnetic resonance imaging and nuclear medicine imaging, with a focus on improving patient experience.
Under Carlisle’s model, clinicians will retain autonomy, clinical control, upside and income, with owners rewarded via an attractive buy in multiple and opportunity for further upside through retained equity in Carlisle.
We will not compromise patient service and in fact aims to enhance service levels by providing a seamless experience and greater satisfaction level for the patient, referrer and diagnostic practitioner.
Profits will be maximised by revenue growth from high value and high quality services, operational streamlining, reaping IT synergies and capability as well as lowering overhead costs, greater utilisation of plant and equipment, potentially from tele-radiology services into Asia and other targeted geographies.
Strategic Rationale
Carlisle views the fragmented nature of the diagnostic imaging as an opportunity for value generation through consolidation and believes it has a first mover advantage.
The structure of the industry is attractive due to its fragmentation, with many small to medium sized players across Australia and the fundamentals of the diagnostic imaging sector add further attraction:
- Large addressable market of $4.0+ billion revenues annually. Carlisle intends to target 60% of the more accessible market ($2.4 billion)
- Industry revenue growth rates in excess of CPI and other services sectors (with an FY18 to FY23 revenue CAGR of 3.5% forecast)
- High barriers to entry
- An ageing Australian population and increasing prevalence of chronic illnesses driving demand for diagnostic imaging
- A shift towards higher quality (fee) clinical services creating revenue growth opportunities for radiology practices.
The profitability prospects will allow medium to long term facilitation of initiatives to use technology to deliver ‘value based’ care as a key driver for competitive differentiation in the diagnostics market and, importantly , deliver beneficial outcomes for patients through:
- Enhanced patient care and an increased value proposition
Carlisle is confident that its business model positions us well to capture a significant share of the Australian radiology market.
Industry Overview
Diagnostic imaging encompasses techniques which non-invasively produce images of the human body for analysis and medical intervention to prevent, diagnose, treat and monitor injuries, illnesses and diseases. Procedures are undertaken through either private providers or at public hospitals utilising various modalities.
Magnetic attraction: Rising demand for MRI scans has driven industry revenue growth. Demand for these services is stronger among the elderly, and has surged as Australia’s population has aged over the past five years. Price competition and government policies have increased bulk-billing over the period, making diagnostic imaging more affordable and boosting service volumes.
Carlisle’s addressable market includes services funded by the Commonwealth Government, private health insurers and other parties. Medicare provided benefits for 25.7 million individual imaging procedures totalling $3.4 billion in FY17 out of the $3.9 billion total addressable market. Industry revenue is expected to rise at an annualised 3.9% over the five years through 2018-19, to $4 billion. This includes anticipated growth of 2.8% in 2018-19.