Capitol Health triples Melbourne radiology portfolio

Perth-based Capitol Health Ltd has emerged as Melbourne's third largest private radiology clinic owner following the addition of the established Bell Imaging and South East Medical Imaging groups to its Victorian portfolio.

The move announced today is expected to more than double Capitol's anticipated annual total group revenue to $29 million, by taking its stable of clinics from seven to 21.

The cost of the latest expansion is just under $8 million.

Capitol will cover these commitments partly through a new $2.5 million placement to clients of Patersons Securities Limited, bank debt, share issues and the assumption of liabilities.

Capitol, which started in the dental business, made a $14.6 million entry into the eastern states' private radiology sector in August, as part of a growth strategy to underpin Capitol's business around several cornerstone healthcare contributors.

Capitol managing director Andrew Harrison said the Bell and South East Imaging acquisitions represented a further milestone in the company's growth.

"In financial terms, they will contribute significantly to working capital and cash flow and be accretive on an earnings per share (EPS) basis," Mr Harrison said in a statement.

"Strategically, they more soundly position the group to become a major player in the private radiology market in Victoria, add additional services, and strengthen our management and clinical teams in that state."

"We continue, however, to review acquisition and expansion opportunities both in Victoria and other states and expect to add other Melbourne clinics in 2008."

Mr Harrison said one of the strategic imperatives behind the acquisitions was the expansion of Capitol's geographic network in Melbourne.

"Both the Bell and SEMI acquisitions provide significant expansion of the existing network, with no significant duplication of services," he said.

Under the funding arrangements for the acquisitions, Capitol has placed 27.8 million fully paid ordinary shares to sophisticated and institutional investors at $0.09 per share.

Patersons Securities Limited is acting as lead manager to the issue.