IDX guides to 4%-6% FY27 revenue growth and 19.5%-20.5% EBITDA margin

Labour shortages pull FY27 opening growth below expectations

Integral Diagnostics Limited (ASX:IDX) has started FY27 with a capacity problem rather than a demand problem. Group revenue rose 3.0% in the first quarter, or 4.4% excluding closed sites and adjusting for constant currency, as shortages of radiologists and sonographers prevented the imaging network from servicing all available demand.

Australian revenue growth excluding closed sites was 5.1%, below management’s estimated 7.1% growth in Medicare benefits for the quarter. Metro Victoria remained the weakest area on both revenue and profitability, while South Coast Radiology recorded flat revenue because of doctor shortages. The company has appointed a new Victorian general manager and made clinic profitability the immediate priority.

The softer start marks a sharp change in emphasis from the company’s recently reported FY26 performance. IDX delivered revenue growth of 25.6% to $788.7 million and operating EBITDA growth of 30.3% to $164.8 million, with operating EBITDA margin reaching 20.9%. That result also included more than $14 million of Capitol Health merger synergies, as detailed in the FY26 results.

Cost inflation puts the second-half margin plan to work

Radiologist costs increased as a share of revenue in the first quarter after doctor shortages drove greater reliance on locums and prompted additional incentives to reduce unreported lists. The rollout of the Clario reporting platform in Victoria also had a short-term productivity impact, while changes to quarterly superannuation caps brought 52% of expected annual radiologist superannuation expense into the first quarter.

IDX has also reclassified $2.5 million of annualised labour costs from below the line to above the line following the Capitol integration. Management said the change affects presentation rather than total spending, but means future reported margins include a cost that earlier periods did not.

The company now expects FY27 revenue growth of 4.0% to 6.0%, with operating EBITDA margin of 19.5% to 20.5% for the full year. Management expects margin improvement in the second half, supported by lower locum reliance, tighter rostering, procurement savings and reductions in other non-labour costs. The guidance remains dependent on improved clinical staffing, stronger execution and the ramp-up of newer sites.

MRI growth contrasts with constrained ultrasound capacity

Not every part of the network is moving in the same direction. MRI revenue grew by more than 10% in the quarter and CT was broadly in line with growth in the services IDX provides, supporting management’s focus on higher-value modalities. Hospital contract volumes increased, while the Maroochydore Private Hospital site, opened in August, exceeded revenue expectations.

Ultrasound capacity, by contrast, declined because of staff shortages. In New Zealand, revenue fell 6.5% in New Zealand dollars and 15.1% in Australian dollars, with the latter also affected by unfavourable currency movements. IDX attributed 4.5% of the decline to the absence of CT referrals from Health New Zealand and 2.0% to a site closure; its strategic review of the New Zealand business remains under way.

Management targets productivity, procurement and clinic accountability

New chief executive Jason Martinez said the underlying fundamentals remained sound after his first three months, but described performance as uneven by geography and labour management as too retrospective. The response includes forward-looking doctor-cost forecasts, more disciplined scheduling, closer alignment between remuneration and revenue, centralised procurement and a review of pricing, low-margin clinics and the group’s footprint.

Technology is part of the same operating reset. IDX is progressing the PACE program, covering online bookings, digital forms, electronic referrals, a unified worklist and voice AI, while Clario is creating a shared radiologist reporting environment. The company also plans to expand AI-enabled and autonomous draft reporting and IDXt teleradiology, with benefits and delivery costs to be quantified at the half-year result.

FY27 capital expenditure guidance remains $50 million to $60 million. The company’s full-year FY26 numbers were accompanied by a lower net debt-to-EBITDA ratio of 2.3 times, but the immediate test is whether operational changes can restore margin momentum without clinical capacity becoming the limiting factor again. The half-year result in February is scheduled to provide the first quantified evidence of annualised benefits, implementation costs and progress in Victoria.