The Sonic Healthcare Ltd (ASX: SHL) share price is on watch after revealing a large acquisition called Canberra Imaging Group.
What is Canberra Imaging Group?
Sonic called the CIG acquisition a significant and positive step in developing its imaging division in Australia. The deal will broaden its footprint, deepen its talent pool, increase the revenue of the division by around 10% and offer the potential opportunity for synergy benefits.
CIG has annual revenue of around $60 million. It’s the leading radiology practice in Canberra, with branches in Goulburn and Queanbeyan in NSW.
The practice, with a history going back more than 50 years, employs 15 radiologists and has 10 service sites across nine locations.
CIG operates one fully-funded (through Medicare), two partially funded and tow unlicensed MRI scanners and also operates one of two PET CT scanners in Canberra. It is the only private operator of an angiography and interventional day suite in the area.
The acquisition is going to be funded from cash and/or available debt lines and will immediately add to profit / earnings per share (EPS). Settlement is expected in the first quarter of FY22.
Management comments
Sonic Healthcare CEO Dr Colin Goldschmidt said: “Canberra Imaging Group is a high-quality imaging practice, with outstanding radiologists, management and staff, and with a culture that is strongly aligned with Sonic’s medical leadership model. CIG has a proven track record in the greater Canberra market, with a history of strong organic growth based on personalised and excellent customer service. I am delighted to welcome warmly all CIG staff to the Sonic Healthcare group.”
Summary thoughts on Sonic and the share price
Sonic is one of the best healthcare businesses on the ASX in my opinion. It offers integral services for the healthcare sector with its pathology and imaging services. Sonic has been very important for testing for COVID-19 over the last 15 months.
This acquisition will help Sonic hang onto this elevated level of profit. However, I also believe that COVID-19 testing is going to last longer than expected. Based on CommSec projections, Sonic shares are valued at 22 times the estimated earnings for the 2022 financial year.
