Integral Diagnostics Ltd · ASX:IDX
Integral Diagnostics — Merger or Acquisition (February 2022)
44 slides from Integral Diagnostics's merger presentation, Feb 23, 2022
Slide 1: Acquisition of Peloton Radiology and Entitlement Offer Investor Presentation
T +61 3 5339 0704 E info@idxgroup.com.au Suite 9.02, Level 9, 45 William Street Melbourne Vic 3000 www.integraldiagnostics.com.au Acquisition of Peloton Radiology and Entitlement Offer Investor Presentation 23 February 2022, Melbourne Integral Diagnostics Limited (ASX:IDX) attaches the Acquisiti
Slide 2: Acquisition of Peloton Radiology and Entitlement Offer
INTEGRAL DIAGNOSTICS ACQUISITION OF PELOTON RADIOLOGY AND ENTITLEMENT OFFER 23 FEBRUARY 2022 “Good Medicine is Good Business”
Slide 3: Important Notice and Disclaimer
IMPORTANT NOTICE AND DISCLAIMER This investor presentation (Presentation) is dated 23 February 2022 and has been prepared by Integral Diagnostics Limited (ABN 55 130 832 816) (IDX or Integral). By attending an investor presentation or briefing, or accepting, accessing or reviewing this Presentation,
Slide 4: Important Notice and Disclaimer (cont.)
IMPORTANT NOTICE AND DISCLAIMER (CONT.) The distribution of this Presentation in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. Any failure to comply w ith such restrictions may constitute a violation of applicable securities laws. This Present
Slide 5: Important Notice and Disclaimer (cont.)
IMPORTANT NOTICE AND DISCLAIMER (CONT.) Future performance and forward-looking statements This Presentation contains certain "forward-looking statements". The w ords "expect", "anticipate", "estimate", "intend", "believe", "guidance", "should", "could", "may", "will", "predict", "plan" and other sim
Slide 6: Contents
CONTENTS 1 Transaction Summary 2 Entitlement Offer A Additional Information B Key Risks C International Offer Restrictions D Summary of Underwriting Agreement 5
Slide 7: Transaction Summary
1 TRANSACTION SUMMARY
Slide 8: Transaction Summary
TRANSACTION SUMMARY Integral Diagnostics (IDX or Integral) has agreed to acquire Peloton Radiology (the Acquisition) for $66.5m1 (Upfront Consideration) payable as 90% in cash and 10% in new ordinary IDX shares 2 In addition, a retention based earn out of up to $4.0m may be paid subject to the b
Slide 9: Transaction Summary
TRANSACTION SUMMARY Upfront Consideration to be funded by: – Fully underwritten entitlement offer to raise approximately $90 million, offered at $3.44 per new ordinary share (Offer Price) (Entitlement Offer) – New IDX shares issued to the Peloton Radiology vendors at $3.44 per share at completion
Slide 10: Peloton Radiology Group Overview
PELOTON RADIOLOGY GROUP OVERVIEW Business Overview Peloton Radiology is a scale provider of diagnostic imaging services with a strategic presence from Brisbane to the Sunshine Coast in the high growth corridor of South East Queensland Operates 9 wholly-owned clinics, with an experienced team of
Slide 11: Peloton Radiology – An Attractive Strategic Acquisition
PELOTON RADIOLOGY – AN ATTRACTIVE STRATEGIC ACQUISITION Strong cultural fit Experienced team of 12 High quality footprint long-tenured radiologists Enhance IDX’s presence in the high growth corridor of South East Focus on clinical excellence in Queensland diagnostics and patient outcomes High growth
Slide 12: Strong Cultural Fit with Focus on Clinical Excellence
STRONG CULTURAL FIT WITH FOCUS ON CLINICAL EXCELLENCE Vision Mission Community focused, people-first Improve patients’ health through quality organisation committed to our patients, diagnostics referring health professionals and employees Well regarded team of Broad range of focus areas radiologists
Slide 13: Strategic Portfolio in High Growth Region with Attractive Demographics
STRATEGIC PORTFOLIO IN HIGH GROWTH REGION WITH ATTRACTIVE DEMOGRAPHICS Peloton enhances IDX’s presence in the high growth corridor of South East Queensland South East Qld Sunshine Coast Peloton sites Brisbane and Sunshine Coast of population ~21% aged 65+ Beerwah Caloundra 2.5% of population Cooroy
Slide 14: Satisfies IDX's Investment Criteria
SATISFIES IDX’S INVESTMENT CRITERIA Multiple future growth avenues Offer Peloton radiologists access to Expand successful subspecialty reporting Peloton offerings into Integrate back-office from hospital and broader IDX group, e.g. and IT support specialist netw orks Utilise IDX’s buying GORD1 studi
Slide 15: Integration Plan
INTEGRATION PLAN IDX has a strong track record of integrating diagnostic imaging businesses Overarching Integration Goals Establish clear and dem onstrable path to Minim ise disruption to Retain key people – “best Clear lines of leadership optim ising the netw ork Capture synergies operations of bot
Slide 16: IDX to Operate in Key Geographic Markets
IDX TO OPERATE IN 6 KEY GEOGRAPHIC MARKETS Western New Victoria Queensland Australia Zealand Total IDX Queensland Western Geographic Market Victoria Victoria & NSW Queensland Queensland New Zealand & NSW Australia Albury, Ballarat, Geelong, Sunshine Wodonga, Gold Coast, South West Warrnambool and Co
Slide 17: Entitlement Offer
2 ENTITLEMENT OFFER
Slide 18: Overview of the Entitlement Offer
OVERVIEW OF THE ENTITLEMENT OFFER A 1 for 7.75 pro rata Accelerated Non-Renounceable Entitlement Offer to existing IDX shareholders 1 to raise approximately A$90 million Entitlem ent Offer Approximately 26.2m New Shares to be offered to existing shareholders (equivalent to approximately 12.9% of
Slide 19: Entitlement Offer Timetable
ENTITLEMENT OFFER TIMETABLE Event Date Trading halt and announcement of Acquisition and Entitlement Offer Wednesday, 23 February 2022 Institutional Entitlement Offer opens Wednesday, 23 February 2022 Institutional Entitlement Offer closes Thursday, 24 February 2022 Announcement of completion of Inst
Slide 20: Additional Information
A ADDITIONAL INFORMATION
Slide 21: IDX Pro Forma Balance Sheet
IDX PRO FORMA BALANCE SHEET Unaudited Peloton IDX Radiology1 PF combined group A$m (as at 31 December 2021) (as at 31 December 2021) Acquisition adj ustments 2 (as at 31 December 2021) ASSETS Cash and cash equivalents 55.6 1.1 24.6 81.3 Trade and other receivables 16.8 1.1 - 17.9 Other assets (curre
Slide 22: Key Risks
B KEY RISKS
Slide 23: Key Risks
KEY RISKS This section discusses some of the key risks associated with any investment in IDX, w hich may affect the value of IDX shares. The risks set out below are not listed in order of importance and do not constitute an exhaustive list of all risks involved w ith an investment in IDX. Before inv
Slide 24: Key Risks (cont.)
KEY RISKS (CONT.) the Medicare regime as it relates to the diagnostic imaging industry in Australia, including adverse changes to: – the indexation (or non-indexation) by the Commonw ealth Government of the Medicare Benefits Schedule (MBS) fees and overall level of rebates, including a failure to
Slide 25: Key Risks (cont.)
KEY RISKS (CONT.) In the event that IDX breaches a service agreement or service level agreement, including if it fails to deliver diagnostic imaging services to the specified standard, IDX may be liable for damages under the relevant agreement and in certain cases the counterparty may be entitled to
Slide 26: Key Risks (cont.)
KEY RISKS (CONT.) IDX’s relationship with referrers m ay deteriorate A referrer (being a medical professional, such as a general practitioner) must refer a patient to a diagnostic imaging services provider in order for those diagnostic imaging services to be eligible for a full or partial Medicare r
Slide 27: Key Risks (cont.)
KEY RISKS (CONT.) Any damage or interruption to, or reduction in speed or functionality of, IDX’s information systems or those provided by third party technology vendors could result in a material loss of referrals and could significantly curtail, directly and indirectly, IDX’s ability to conduct it
Slide 28: Key Risks (cont.)
KEY RISKS (CONT.) IDX m ay not achieve anticipated benefits from acquisitions IDX has historically grown its business by acquisition, and growth through acquisition is likely to remain an important part of IDX’s strategy in the future. For example, as previously announced to ASX, IDX has recently ac
Slide 29: Key Risks (cont.)
KEY RISKS (CONT.) IDX’s insurance cover may be inadequate or unavailable Insurance cover is maintained by IDX consistent with industry practice, including workers compensation, business interruption, property damage, public liability, professional indemnity and medical malpractice. How ever, no assu
Slide 30: Key Risks (cont.)
KEY RISKS (CONT.) Evolving expectations w ith respect to environmental, social and governance (ESG) standards Evolving community attitudes tow ards, and increasing regulation and disclosure in relation to, ESG issues may impact the operation of IDX’s business. In August 2021 IDX published its second
Slide 31: Key Risks (cont.)
KEY RISKS (CONT.) Risks relating to the Acquisition Information has been provided by the vendors of Peloton IDX undertook a due diligence process in respect of Peloton, w hich relied in part on the review of financial and other information concerning the business and corporate structure of Peloton,
Slide 32: Key Risks (cont.)
KEY RISKS (CONT.) If the Acquisition is not completed as a result of a failure to satisfy conditions (or otherwise), IDX w ill need to consider alternative uses for the proceeds of the Entitlement Offer, which may include funding other M&A opportunities, or ways to return some or all of such proceed
Slide 33: Key Risks (cont.)
KEY RISKS (CONT.) Underwriting risk IDX has entered into an underwriting agreement with the Lead Manager pursuant to which the Lead Manager has agreed to underwrite the Offer (Underwriting Agreement), subject to those terms and conditions of the Underw riting Agreement. If certain conditions are not
Slide 34: Key Risks (cont.)
KEY RISKS (CONT.) General investment risks Risks associated with an investment in shares There are general risks associated with investments in equity capital such as IDX shares. The trading price of IDX shares may fluctuate with movements in equity capital markets in Australia and internationally.
Slide 35: Key Risks (cont.)
KEY RISKS (CONT.) Risk of dilution Investors who do not participate in the Entitlement Offer, or do not take up all of their entitlement under the Entitlement Offer, will have their percentage security holding in IDX diluted by not participating to the full extent in the Entitlement Offer. Investors
Slide 36: International Offer Restrictions
C INTERNATIONAL OFFER RESTRICTIONS
Slide 37: International Offer Restrictions
INTERNATIONAL OFFER RESTRICTIONS This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in w hich it w ould be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in a
Slide 38: International Offer Restrictions (cont.)
INTERNATIONAL OFFER RESTRICTIONS (CONT.) Norw ay This document has not been approved by, or registered with, any Norwegian securities regulator under the Norwegian Securities Trading Act of 29 June 2007 no. 75. Accordingly, this document shall not be deemed to constitute an offer to the public in No
Slide 39: International Offer Restrictions (cont.)
INTERNATIONAL OFFER RESTRICTIONS (CONT.) United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct Authority in the United Kingdom and no prospectus (w ithin the meaning of section 85 of the Financial Services and Marke
Slide 40: Summary of Underwriting Agreement
D SUMMARY OF UNDERWRITING AGREEMENT
Slide 41: Summary of Underwriting Agreement
SUMMARY OF UNDERWRITING AGREEMENT IDX entered into an underwriting agreement with Jefferies (Australia) Pty Limited (the Lead Manager) (Underwriting Agreement), pursuant to w hich the Lead Manager is acting as lead manager, underwriter and bookrunner of the Entitlement Offer. The Underw riting Agree
Slide 42: Summary of Underwriting Agreement (cont.)
SUMMARY OF UNDERWRITING AGREEMENT (CONT.) • IDX w ithdraws the Entitlement Offer, or notifies the Lead Manager that it does not intend to, or is unable to proceed w ith, the Entitlement Offer; • IDX is prevented from allotting and issuing the New Shares in accordance with the ASX Listing Rules, appl
Slide 43: Summary of Underwriting Agreement (cont.)
SUMMARY OF UNDERWRITING AGREEMENT (CONT.) • there is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any State or Territory of Australia a new law or regulation, or the Reserve Bank of Australia, or any Commonw ealth or State authority (i
Slide 44: Investors & Media
Investors & Media Kirsty Lally, Company Secretary P: +61 402 094 569
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