ASX Health Stocks: Integral goes big in Queensland, Credit Suisse says it’s time to choose between HLS and ACL
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- IDX snaps up QLD-based radiology group for circa $38m
- NSB starts HREC review process
- Credit Suisse downgrades HLS, initiates coverage of ACL
Integral Diagnostics Limited (ASX:IDX) says it’s agreed to terms with Queensland-based Exact Radiology. The acquisition comes with an upfront price tag of $37.5m in cash, on a cash and debt free basis – as well as an earn-out of up to $1.875m to be completed within FY22, subject to revenue performance targets being achieved.
MD and CEO Dr Ian Kadish says the acquisition provides IDX the opportunity to expand its business in South-East Queensland.
Kadish says Exact is already a comprehensive provider of radiology services and offers IDX attractive financial metrics, including earnings accretive in year one.
NeuroScientific Biopharmaceuticals (ASX: NSB) says it’s made an application for HREC approval to commence an early-phase clinical trial of EmtinB, keeping NSB on track for commencing clinical development of EmtinB in 1H 2022.
The early-phase clinical trial will include biomarker studies and guide efficacy outcomes for product targeting patients with Alzheimer’s disease and Multiple Sclerosis.
MD and CEO Matt Liddelow says with the HREC review process underway and other supporting activities well-advanced, “NeuroScientific has officially transitioned from being a preclinical to a clinical stage company.”
The brokers at Credit Suisse are o’erlooking a few health stocks this morning with Healius (ASX:HLS) copping a Downgrade to Neutral from Outperform.
With Healius yet to invest in a unified lab information system and therefore missing a bunch of efficiency benefits, Credit Suisse notes better longer-term earnings margins exist elsewhere in the health sector.
Anticipating a fair amount of COVID-disruptions as likely to impact the HLS base business, the broker downgrades full year earnings by -5% and -30% for FY22 and FY23 respectively.
Credit Suisse, it turns out, has a clear preference for Australian Clinical Labs (ASX:ACL) over Healius. The HLS target price has been clipped to $4.65 from $5.50.
The broker forecasts Healius’ pathology margin to be -150 basis points below Australian Clinical Labs.
Unsurprisingly, Credit Suisse has also initiated coverage on ACL, which is Australia’s third largest private pathology provider.
The broker reckons ACL earnings are declining from their COVID-ish-driven peak, but adds that the market is undervaluing its core business with Unified Laboratory Network its key differentiator, allowing high-volume central labs to crack on with improved turnaround times and manage peaks at a lower cost base. CS says this will support the company’s base business earnings margin target of 27%, compared to 19% pre-pandemic.
The broker highlights the company is likely to continue its acquisition growth strategy and currently holds a cracking warchest of circa $500m in acquisition capacity. The brokers at CS rate ACL an Outperform with a target price of $6.15.
