High yields on offer from healthcare company Capitol Health


Capitol Treasury, a subsidary of healthcare company Capitol Health, raised $50 million in a fixed-rate, senior unsecured bond in May 2016.

The bond is trading above its $100 face value and yield to maturity is 7.77% a year as at June 13, 2016, but subject to change.

Company description

capitol health

Capitol Health (ASX: CAJ) is a leading provider of diagnostic imaging and related services to the Australian healthcare market. Capitol was established in 2001 and listed on the ASX in 2006.

It is one of Australia's larger medical diagnostic imaging (DI) business and holds a 5%-7% share of its addressable market (Victoria and NSW). Capitol is ASX-listed with a market capitalisation of $89 million as at June 10.

Headquartered in Melbourne, Capitol owns and operates about 70 clinics in Victoria and NSW. It conducts more than 1 million procedures every year, with over 700 employees and contractors, including roughly 50 radiologists (full-time equivalent basis).

The company is a community-based (non-hospital) DI provider operating in Victoria and NSW. It is Victoria's second largest provider of DI services by clinical facilities (52 clinics versus Sonic Healthcare with 58). The overall Australian DI market is dominated by the top five providers, with an addressable market share of about 45%; the balance is held by smaller providers.

Trading occurs primarily under its flagship brand Capital Radiology. The company provides a range of diagnostic imaging services. Roughly 90% of revenue is generated through X-ray, ultrasound, CT and MRIs; additional offerings include nuclear medicine, mammography/breast screening, bone densitometry and other related services.

Key financials forecast 2016

Capitol's revenue and earnings have grown strongly from a combination of strong industry growth rates and more recently from acquisitions.

As the business has built scale, this has led to operating efficiencies with the EBITDA margin (earnings before interest, tax depreciation and amortisation) doubling between the 2012 and 2015 financial years.

  • Forecast 2016 revenue $154m (revenue for 2015, normalised for acquisition costs, was $111.2m).
  • Underlying EBIT $16.3m versus $17.3m in 2015.
  • Net profit after tax $7.1m compared with $3.9m in 2015.
  • New debt/EBITDA 3.7 times; in 2015 it was 1.7 times.

Investor information:

Minimum parcel: $50,000.

Bond type: Fixed rate, senior unsecured.

Interest rate at first issue: 8.25%pa.

Maturity date: May 2020 - four years from first issue.

Issuer call options: 103% after two years, 102% after 2.5 years, 101% after three years and 100.50% after 3.5 years of par plus accrued interest.

Note: Prices quoted are accurate as at 13 June 2016 but subject to change. Source:


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