Capitol Health drops $8.1 million on Melbourne radiology network

Melbourne-based med-tech company Capitol Health (ASX: CAJ) has acquired four new clinics for $8.1 million to extend its reach in Victoria.

The four clinics in metropolitan Melbourne were previously owned by Uniradiology and extend Capitol Health's reach into Carlton.

Uniradiology's network comprises clinics in Frankston, Dandenong, Boronia and Carlton.

Capitol Health currently owns and operates clincs throughout Victoria, Tasmania, and Western Australia.

The company says these four clinics offer a suite radiology services including CT, Xray, Ultrasound, OPG and Mammography.

As part of the transaction, key resources will join the company on completion.

CAJ says the new clinics are expected to contribute $6.3 million in revenue and up to $1.16 million in earnings on an annual basis.

The sale will be completed in the third quarter of FY19 and the new clinics are expected to contribute to Capitol Health's full year result.

Capitol Health managing director Andrew Harrison says the acquisition is highly complementary to the group's existing network.

"This acquisition represents a consolidation and expansion of our existing Victorian network," says Harrison.

"The businesses are highly complementary to Capitol, sharing many of the same referrers and are largely bulk billed in nature."

The acquisitions will be funded from existing cash reserves and debt facilities.

Capitol Health's Victorian expansion follows its recent entrance into the Chinese diagnostic imaging market through a joint venture with CITIC Pharmaceutical to provide consulting and clinic management services to a network of independent imaging clinics to be created by CITIC and Zhouxin across mainland China.

Shares in Capitol Health are down 1.13 per cent to $0.26 per share at 10.51am AEDT.

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