Integral Diagnostics (ASX:IDX) executives said the company delivered “another strong set of results” in the first half of fiscal 2026, highlighting solid revenue growth, margin expansion, and faster-than-expected merger synergies from its Capitol acquisition.
First-half performance and key metrics
Chief Executive and Managing Director Ian Kadish said first-half revenue rose 55.6% to AUD 393.5 million, which included a six-month contribution from Capitol. The company reported an operating EBITDA margin of 20.6%, up 230 basis points from the prior corresponding period.
On a pro forma, like-for-like basis, White said operating EBITDA for the half was AUD 81.1 million versus an adjusted AUD 70.9 million a year earlier, representing 14.4% growth. He explained the comparable base was adjusted for items including repairs and maintenance that had been capitalized, management costs previously treated below the line, the closure of four clinics and sale of one site (Melton), and the impact of a 2% reduction in CT Medicare indexation implemented in November 2024.
Capitol integration and synergy progress
Kadish said the Capitol integration is “well advanced,” with annual merger synergies of more than AUD 14 million already achieved, above the AUD 10 million estimate provided at the time of the merger. White said additional synergy opportunities are continuing to emerge, particularly in procurement, IT contract renewals, equipment service agreements, and consumables purchasing as the group leverages its larger scale.
Asked to quantify further synergy potential, White said it was difficult to give a definitive number because benefits continue to surface, but he described further procurement gains as a feature over the next 12–18 months. He also emphasized the opportunity to increase teleradiology usage across legacy Capitol clinics, where penetration was described as materially below the legacy IDX level.
Organic growth, modality mix, and teleradiology
White said headline revenue growth on a like-for-like basis was 5.7%, or 6.9% after adjusting for closed clinics and constant currency in New Zealand. In Australia, he said legacy IDX revenue grew 8.5% and legacy Capitol grew 5.4%, resulting in combined Australia growth of 7.4% compared with Medicare growth of 9.1%.
Executives attributed stronger legacy IDX growth to underlying performance and the impact of MRI deregulation and the National CT Lung Cancer Screening Program, both effective from 1 July 2025. By contrast, Kadish said Capitol’s lower growth was largely tied to its heavier reliance on GP referrals, with GP attendance growth described as “fairly low, almost flat” early in the half and improving later after the GP Bulk Billing incentive began in November. He also cited challenges including radiologist recruitment issues at a large South Australian site and workforce constraints (particularly sonographers) in parts of Melbourne.
Teleradiology was a central theme of the call. Kadish said the IDXt platform had 124 teleradiologists as of 31 December 2025, up from 93 a year earlier, and management indicated recruitment remains a constraint but said the pipeline includes 20–30 candidates. White said teleradiology penetration was around 15% of group scans, made up of roughly 20% in legacy IDX and 7%–8% in legacy Capitol. He said increasing teleradiology penetration improves radiologist productivity, describing the radiologist cost as a percentage of revenue as being about 4%–5% lower when reported via teleradiology versus in-clinic reporting. Kadish said the company believes teleradiology could reach 30% of group scans over a three- to four-year timeframe.
Costs, cash flow, capex, and balance sheet
White said operating expenses reflected labor cost improvement, with labor costs down 140 basis points as a result of integration synergies and increased use of IDXt, despite ongoing clinical labor shortages and wage pressure in regional Australia. Consumables were slightly higher due to modality mix shifts toward higher-end modalities and higher prices for radiopharmaceuticals and contrast, while equipment costs were modestly lower as procurement benefits began to appear.
Operating free cash flow rose about 65%, although conversion was lower than the prior period (65% versus 76.9%), which White attributed to working capital movements including AUD 4.1 million in higher prepayments and around AUD 9 million lower accounts payable. Capital expenditure totaled AUD 24.9 million, including AUD 16.9 million in replacement capex and AUD 8 million in growth capex, with spend including new sites and MRI investment.
The company ended the half with net debt to EBITDA at 2.5x (down from 2.8x), with White noting leverage was slightly above the merger forecast due to an unanticipated Capitol stub-period tax payment and additional MRI capex ahead of deregulation. Management said the group had about AUD 115 million of liquidity headroom and had hedged just over 51% of gross debt, effective late December, at a rate White said was about 0.5% favorable to current BBSY.
Outlook, regulation, and non-recurring costs
Kadish said IDX is positioned to benefit from industry tailwinds including an aging population, Medicare indexation (2.4% effective 1 July 2025), and a shift toward higher-acuity modalities. He said about 10% of scans are processed through AI algorithms, and teleradiology and AI are being used to improve productivity. He also referenced the AUD 8 billion GP Bulk Billing Incentive Program (effective 1 November 2025) and said an expedited specialist pathway for radiologists from the U.K. and Ireland is expected to be implemented sometime in the second half of FY2026.
For trading, management said the group achieved 7.8% constant-currency revenue growth in January 2026 on a like-for-like basis (or 7.6% reported, reflecting currency). The company guided to FY2026 operating EBITDA margin of approximately 21% (consistent with AGM guidance), with Kadish saying the company aims to be “at least” 21%. Full-year replacement and growth capex is expected to be AUD 45 million to AUD 55 million.
On non-recurring items, White said first-half transaction, restructure, and integration costs were AUD 10.3 million, including merger integration, Workday implementation, and business development/M&A activity. He indicated a lower level in the second half, and in Q&A agreed an estimate of around AUD 12 million pre-tax for the second half was reasonable. Kadish said integration-related costs were expected to continue for up to two years post-merger but have been declining each half.
Asked about M&A, Kadish said the company is looking at both completing integration and evaluating opportunities, describing the market as continuing to consolidate and saying the group would participate “strategically and in a sensible way.”
About Integral Diagnostics (ASX:IDX)
Integral Diagnostics Limited, a healthcare services company, provides diagnostic imaging services to general practitioners, medical specialists, and allied health professionals and their patients in Australia and New Zealand. It provides services through 67 radiology clinics. The company was incorporated in 2008 and is headquartered in Melbourne, Australia.
