Highlights IDX share price closes 4% higher on ASX. Integral Diagnostics has acquired a regional peer X-Ray Group. IDX’s current acquisition brings in growth opportunities and operational synergies.

Medical imaging service provider Integral Diagnostics Limited (ASX:IDX) has acquired Albury based X-Ray Group. The current acquisition deal includes an upfront purchase consideration of AU$37.5 million. The X-Ray Group’s business aligns with IDX’s regional operations.

Acquisition Details

The current acquisition deal includes an upfront purchase consideration of AU$37.5 million. IDX will pay AU$25.95 million in cash and AU$11.55 million as new ordinary IDX shares. The new shares are to be issued on acquisition completion. 100% of the consideration in shares will remain under escrow arrangements. Deferred consideration of up to AU$1 million shall also be payable after three years of transaction completion. The acquisition is due to completion in November 2021. How will IDX benefit?

Integral Diagnostics believes that X-Ray Group’s business complements its existing regional footprint. While IDX has a presence in Australia and New Zealand, the X-Ray group has radiology clinics in Albury and Wodonga and three smaller community clinics. It has potential operational synergies in Australia and offers growth opportunities. The acquisition has a projected FY22 EBITDA between AU$5 to AU$5.5 million, before COVID impacts. As part of the deal, there is a possibility of an extra EBITDA of AU$4 million for FY22 and AU$2.5 million for FY23, given X-Ray Group meets EBITDA performance targets. How did IDX shares react?

IDX shares opened higher on ASX on the acquisition announcement and peaked up to AU$4.96 during trade hours. However, shares consolidated the gains and closed at AU$4.92 per share, around 4.016% above the previous close.

Bottom line

IDX shares have performed well on a YTD basis peaking up to AU$5.49 in July. However, ex-dividend after 2 September 2021, IDX shares were have remained below AU$5. Today’s acquisition announcement has shown new possibilities for growth in IDX, taking share prices higher.