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Imaging Australia (MIA)
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This page documents the formation of MIA in
2000 by a group of radiologists, its rapid growth,
its global expansion, its financal difficulties and
it takeover by DCA's I-Med in 2004
Medical Imaging Australasia was formed by a group of radiologists in 2000 and one of them became CEO. It expanded rapidly to become Australia’s largest with 21% of the market. Its management seems to have been unstable. Its performance and its share price swung erratically. Although it was formed and run by doctors, and boasted of their involvement, it seems to have adopted a centralised form of management which did not work well. This may have alienated its doctors.
The gap between management and radiologists is reflected in management’s entry into whole body screening for disease, a procedure frowned on by reputable doctors and radiologists in the USA and Australia because of the radiation given without proven benefit.
MIA bought into the United Kingdom. It bought pathology and cardiology businesses in NSW and a pathology business in the UK. The pathology and cardiology businesses made huge losses, and the UK radiology business performed poorly.
In 2003 the CEO and COO were replaced. New management sold off the money losing pathology businesses and restructured the other money losers. A decentralised management structure was instituted with a greater role for radiologists.
A friendly merger with successful radiology and aged care operator DCA was entered into in 2004.
Extracts from press reports tell the story.
2000
- starting up
Medical Imaging Australiasia was
formed by the amalgamation of a large number of radiological groups
in July 2000. It floated in May of the same year. The radiologists
retained a 60% majority holding.
The amalgamation has brought together six such groups in five states and two territories, with 114 separate practices, about 80 radiologists and 900 staff.
Mar 2000 The beginning
----------------------------------
"The combined group expects to gain the benefits of efficiencies and productivity improvements, as well as being able to stay abreast of technological developments," MIA chairman David Mortimer said yesterday.
Medical groups merger on plate. Adelaide Advertiser March 13, 2000
Chairman of the merged group David Mortimer said MIA expects to grow within Australia and possibly internationally, and has appointed Grant Samuel and Associates to advise on a possible public float.
Mar 2000 Business plan
-------------------------------------
"Ultimately this will help control the rising cost of health services, while allowing us to use the latest technology to help us save more lives each year through early detection and preventative medical services."
AAP finance news in brief : IMAGING Australian Associated Press March 13, 2000
MIA shares (listed at 80cents) yesterday hit a high of $1.25 before closing 5cents lower at $1.14 compared with their issue price of 80cents.
Jul 2000 MIA floats
The Beer's On Tap At ABN Amro Australian Financial Review July 11, 2000
MIA is still owned some 60% by its specialist doctors and this permeates through the group in terms of career development, training and education and doctor involvement in the management structure.
Nov 2000 Controlled by doctors
New Listing (MIA.AX) MOU with Ultrascan Radiology NSW. Australian Stock Exchange Company Announcements November 3, 2000
During 2000 MIA merged with additional radiology groups in Tasmania and NSW. It won a contract to supply services to a region in Victoria and a research grant to explore computer assisted image interpretation in NSW. It was profitable and the outlook was positive. It won a venture capital award.
By the end of 2000 MIA, briefly the largest radiology provider in Australia, was overtaken by Sonic Healthcare which entered the market by buying several large groups. Newly formed DCA and Mayne diagnostics trailed behind. MIA lost out on some key purchases and its share price fell.
MEDICAL Imaging Australasia's growth from a small Victorian radiology practice to a national operation in just four years won it the best expansion capital award at last night's annual Australian venture capital awards.
Nov 2000 Venture capital award
------------------------------
Turnover for the radiology group has jumped from $50 million when it was a single Victorian practice to $200 million, with the company undertaking some 1.5 million scans a year.
Radiology group's award - Venture Capital - A special report. The Australian November 18, 2000
2001
growth
MIA continued to grow by acquisitions
during 2001 and soon became larger than Sonic again buying two large
groups in Victoria and another in South Australia. It also entered
the pathology market in NSW. It made a handsome profit.
It expanded into Europe by buying radiology business Lodestone in the United Kingdom, and then Omnilabs, a UK pathology business at the end of 2001. It also bought a company called HealthSouth, but it is not clear whether this was a subsidiary of the fraud ridden US company of the same name.
The UK government was embarking on a policy of contracting National Health Services out to private enterprises and MIA planned to capitalise on the opportunity presented.
By the end of 2001 MIA was once again a market favourite.
Lodestone is one of the largest private providers of MRI services to the UK National Health Service. Lodestone will be the platform for our European expansion.
Feb 2001 Buys Lodestone in UK
Medical Imaging Australasia Limited (MIA.AX) Half Yearly Report & ASIC Half Yearly Accounts. Australian Stock Exchange Company Announcements February 28, 2001
The UK Government is also committed to Private Funding Initiatives (PFI's) and to further outsourcing. Pressure on the NHS has led to greater private patient demand for services.
May 2001 UK outsoursing policy
Medical Imaging Australasia Limited (MIA.AX) Acquires 75% of Lodestone - UK. Australian Stock Exchange Company Announcements May 1, 2001
Macintosh says MIA is not interested in buying general practices as a way of shoring up its markets.
Jun 2001 Not buying GPs - enters pathology and consolidation ceiling
-----------------------------------
Although it is not planning to diversify into primary health care, MIA has opened its first pathology laboratory at Westmead Hospital in Sydney's west. (In terms of corporate ownership, pathology is several years ahead of the radiology sector, with 83% of practices in the hands of four groups. Sonic is the largest, with a 37% market share, followed by Mayne with 22%.)
------------------------------
"The British market is huge and the possibilities enormous," Macintosh says. "We will hit the wall with consolidation in Australia in quite a short time, so Lodestone gives us a wonderful platform for expansion in a market which is very similar to ours."
The Uncanny X-ray Men Business Review Weekly June 22, 2001
Since floating in July 2000 Medical Imaging has acquired 10 radiology businesses "with annualised earnings of around $140m." This represents expansion of over 75% in the size of the business in 14 months, he said. Macquarie has increased its FY02 EPS by 0.5% to 6.9c and FY03 by 1.5% to 7.7c and has a Outperform/LT Outperform rating.
Aug 2001 Acquisitions
Medical Imaging [MIA] to see sharp rerating after full year results says Macquarie. My Money Midcap Newswire August 16, 2001
During 2000/2001 MIA completed six successful acquisitions in Australia and one in the UK. The MIA Model whereby doctors retain equity and have involvement at all levels of the company, has been a significant factor in the successful integration of the mergers.
Aug 2001 Acquisitions and successful model
New Listing (MIA.AX) Preliminary Final Report. Australian Stock Exchange Company Announcements August 29, 2001
Medical Imaging Australasia Limited ("MIA") is pleased to announce a Memorandum of Understanding to acquire OmniLabs Limited, a United Kingdom based pathology business. OmniLabs is the second largest private pathology provider in the United Kingdom with revenue of GBP11 million.
Oct 2001 Buys Omnilabs pathology in UK
New Listing (MIA.AX) MOU with Omnilabs Limited. Australian Stock Exchange Company Announcements October 1, 2001
2002
global expansion
MIA started 2002 promising rapid
expansion in the UK. It bought a large Harley street radiology
business.
It soon became clear that MIA’s management strategies in the UK, and particularly in entering pathology were flawed. In May it issued a profit warning but continued to expand in radiology. It entered an agreement to buy Queensland Diagnostic Imaging (QDI) but by the end of the year when MIA’s fortunes had plummeted QDI backed out. MIA entered two new fields, radiation oncology and cardiology.
The extent to which a market focus had overtaken the management of this company is illustrated by its purchase of a group selling whole body scans to the public to screen normal people. The procedure exposed citizens to significant radiation without any proven benefit. It was opposed by medical and radiology groups in Australia and the USA. This was a company in which radiologists held a controlling interest. A radiologist was CEO. It is clear that commercial interest dominated clinical responsibility. Many radiologists must have been uncomfortable with this.
MIA Group is to continue its aggressive British expansion after announcing a doubling in interim earnings per share, with offshore revenues rising sharply to contribute 25 per cent of the result.
Feb 2002 Still expanding aggressively
-------------------------------
It was a busy six-month period for the group with the acquisition of UK businesses Healthsouth and Omnilabs and Victorian imaging groups Taft and Radclin.
MIA Tips UK Growth Australian Financial Review February 27, 2002
At Sonic and MIA, for example, much is made of the fact that senior management positions (in the business units and in head office) are held by medical people. They say that, as a result, their businesses are sympathetic to clinical issues and more responsive to the needs of their clients, who are the doctors that make the decisions about where pathology and radiology tests should be done. So far, in a business in which the main clients are fellow doctors, this has been a popular sales line.
Apr 2002 Doctor friendly policies
Medicine Man Business Review Weekly April 4, 2002
Shares in diagnostic imaging company Medical Imaging Australasia Ltd tumbled 21 percent to a year low on Wednesday after the group said its earnings margin for 2001/02 would be at the lower end of its forecasts.
May 2002 Lower profits forecast - shares fall
MIA shares plunge as warns on margins. Reuters News May 1, 2002
Analysts said the group's rapid expansion, particularly in the UK market, was cause for concern and said that management had yet to established a solid track record in the pathology industry.
May 2002 Expanded too rapidly
Let Us Be Frank: MIA Is Flogged For Its Sins Sydney Morning Herald May 2, 2002
Analysts said the company's latest bolt-on acquisition of Radiation Oncology Associates would lift revenue and boost MIA's earnings per share.
Sep 2002 Enters oncology - previously paid too much and UK pathology is bleeding
The company's earnings per share have fallen by more than 70 per cent since listing on the Australian Stock Exchange in January 2000.
MIA's profits have been hurt by high-priced acquisitions which have cut the company's profit margins.
This has triggered a loss of confidence by investors and contributed to a 25 per cent slide in its share price this calendar year.
------------------------------
But, analyst David Low warned the continued losses in the UK pathology business posed a risk to their price target and valuation of $1.20 per share.
Acquisition improves the health of MIA. Australian Financial Review September 11, 2002
MIA runs more than 150 radiology clinics across Australia but this is its first private body-scanning clinic. Its chief corporate affairs officer, Chris Ericksen, says that it is watching to see how the clinic - or "wellness centre", as he describes it - progresses before opening others.
Oct 2002 Enters Total Body Scan market
Ericksen relates the lack of support from doctors to the fact that "screening is often slow to be taken up by the medical profession. Quite reasonably, it likes to see a very proven process in place before it introduces it." However, he is optimistic the public will embrace the idea in the same way the United States has seen body-scanning become big business.
CT scanning clinics have opened throughout the US but it remains no more accepted by the medical establishment than here. The US Food and Drug Administration and the American colleges of cardiology and radiology have all refused to endorse the practice.
The business of body scans The Bulletin October 1, 2002
Financial
problems
The company’s shares had fluctuated wildly since it floated in
2000 and management’s continuous upbeat assessments were losing
credibility. That there were problems in management became clear when
the CEO and COO were replaced at the end of 2002. As we have seen in
other companies management seemed to have lost a grip with reality
and had accepted instead the fantasies of their ambitions. They could
not see what was happening.
Since floating on July 7, 2000 MIA has been a frustrating investment, soaring to a peak of $1.71 in November 2000 before tumbling to below 90 cents months later. The next rally took the stock back over $1.50 in February 2002 before aggressive selling saw the stock dumped to current levels around 80 cents.
Oct 2002 Analysts now wary
----------------------------------
We have to be honest and say we are not entirely comfortable with MIA as an investment, which is the reason we have not covered it to date. Despite the track record of raising hopes and then disappointing, management commentary is universally buoyant, giving the impression that all is well and there is nothing but blue sky ahead. - - - - - As time goes on we are becoming jaded about companies which only tell us the good news and we really prefer to wait for result from such companies before recommending you commit your capital to them.
MIA GROUP LTD (MIA) $0.79 - Diagnostic Imaging Your Money Weekly October 17, 2002
We were disappointed by the speeches at the AGM. The Chairman and the CEO spoke at length about the company's stature and scale in the healthcare sector, MIA's growth through acquisition, industry conditions and corporate governance but did not explain why MIA has been a bad investment since floating in July 2000 and whether shareholders' fortunes will recover. The speeches were glossy and triumphant and did not indicate an acceptance of responsibility for shareholder wealth destruction. We would not blame shareholders for feeling disbelief and bewilderment.
Nov 2002 In trouble but management either lacks insight or honesty
---------------------------------------------
We suspect the actual problem is loss of market share, probably associated with inefficient integration of acquisitions and diversion of management time to the UK operations, to Sonic and other competitors.The CEO's recent decision not to renew his contract beyond March 2003 is probably more than a coincidence. What MIA needs now is a CEO who can marry clinical excellence, which MIA has achieved, with adequate shareholder returns, which it has not.
It's also not a surprise a potential acquisition, Queensland Diagnostic Imaging, recently walked away from discussions. The partners of QDI would have been wary of selling their equity in exchange for shares in an accident-prone stock.
MIA GROUP LTD (MIA) $0.59 - Diagnostic Imaging Your Money Weekly November 21, 2002
2003
decline
By 2003 MIA was a potential takeover target although competition
issues created problems for some potential purchasers. Its
radiological business continued to have some limited success in the
UK where it won contracts.
A paucity of consolidation opportunities in the medical diagnostics space, coupled with a parlous share price, is expected to put MIA Group firmly in the firing line of larger rivals Sonic Healthcare and a cashed-up Mayne Group.
Dec 2002 Company crumbles and radiologists walk away
------------------------
MIA has a wide-open share register full of unhappy radiologists who have watched their net assets bounce up and down like a yo-yo.
----------------------------
MIA recently lost its chief executive, Peter Macintosh, and has been plagued by radiologists selling out as escrow provisions expire. Its UK expansion has also had mixed success. Yet it offers $392 million in sales, which competitors would dearly love.
MIA diagnosis interests suitors. Australian Financial Review December 3, 2002
MIA Group Ltd reports its UK subsidiary MIA Lodestone will set up an on-site MRI service at Kingston Hospital in Surrey.
Dec 2002 Wins UK tender
This follows MIA Lodestone's win last week of the Stockport NHS Trust tender.
MIA sets up MRI service at Kingston Hospital in UK Australian Associated Press Ralph Wragg Equities News December 3, 2002
MIA Group has a radiology market share of 23 per cent and, after having fallen massively out of investor favour, is looming as a takeover target. It has lost its chief executive (a shortlist of five for his replacement has been assembled) and it was booted out of the S&P/ASX100 index.
Jan 2003 Out of favour
An MIA takeover no easy feat. Australian Financial Review January 14, 2003
Shares in MIA Group fell to historic lows yesterday after the company reported a 43 per cent drop in net profit for the six months to December.
Feb 2003 Profits down 43%
------------------------------
MIA identified the under-performing business units as its UK Omnilabs Pathology Services as well as the Australian-based Sydney Heart Imaging and Australian Pathology.The Sydney Heart Imaging centre has been closed and relocated to a CBD location and two other clinics are to cut costs.
UK unit drags down MIA. Australian Financial Review February 26, 2003
The UK pathology business, Omnilabs, lost $1.8m. This acquisition has never paid for itself and continues to damage MIA's reputation in the market. Management expects Omnilabs to break even by June but the breakeven date has been pushed out before. The goodwill in this investment is at risk of being written down.
Mar 2003 UK businesses bleeding but Australia also down
The UK radiology business has experienced severe margin erosion due to an unfavourable mix of public and private patients and higher corporate costs.
Interestingly MIA's poor performance in Australia is attributable to more than low growth in referrals. The AGM gave the impression referrals were the main problem but we never believed this.
MIA GROUP (MIA) $0.54 - Medical Diagnostics Your Money Weekly March 27, 2003
New CEO and
restructuring
An experienced businessman was appointed as CEO of the company. He
(Paul Mirabelle) immediately downgraded the forecasts, and sold the
money losing pathology businesses to Mayne Health in Sydney and Sonic
Healthcare in the UK. He restructured management to give radiologists
more say.
MIA Group Ltd has downgraded its forecast for the full year to EBITA in the range of $63 million to $64 million on revenue between $387 million and $390 million.
Jun 2003 Downgrades and sells pathology
As a result, MIA will be exiting ownership of pathology in the UK and Australia.
"The sale of these business units will terminate ongoing losses and will recoup as much as possible of the capital cost.
MIA Group downgrades year EBITA forecast to $64m Ralph Wragg Australian Business News June 2, 2003
Mayne today announced that it had signed an agreement to purchase the assets of MIA’s NSW pathology business, Medical Diagnostics Australia (MDA).
Jun 2003 Sells to Mayne in Australia
Mayne to purchase NSW pathology assets from MIA Mayne WEB SITE June 2003
Mr Mirabelle has also instigated a strategic review into MIA's core diagnostic imaging business, with a blueprint to be completed by the end of July.
Jun 2003 A business review
MIA Group downgrades 2002/03 earnings/revenue forecasts. Australian Associated Press Financial News Wire June 3, 2003
Sonic Healthcare Ltd has signed a heads of agreement to acquire MIA Group Ltd's UK pathology operation, Omnilabs.
Jun 2003 Sonic buys UK pathology business but forms alliance
-----------------------
The heads of agreement also outlines the establishment of a strategic alliance between Sonic and MIA for joint development of public and private sector opportunities in pathology and radiology respectively.
Sonic Healthcare to buy MIA's UK Omnilabs business Ralph Wragg Australian Business News June 5, 2003
A $34.1 million loss on MIA's disastrous UK acquisition, Omnilabs, has helped turn a $25 million net profit into a $26 million loss for the healthcare group.
Aug 2003 Massive losses in the UK
Reporting for the year to June 30, recently appointed managing director Paul Mirabelle said the result was "unsatisfactory" and that a new strategy was now in place following the decision taken a couple of months ago to get out of the pathology industry.
MIA Takeover Turns Big Profit Into Bigger Loss The Sydney Morning Herald August 27, 2003
Radiology provider MIA Group drew a line through its disastrous expansion into pathology yesterday, booking $43 million worth of write-offs in a disappointing full-year result.
Aug 2003 Large write-offs
MIA Books $43m In Write - Offs Australian Financial Review August 27, 2003
A new regional structure should become effective at the end of the month under which MIA will be reorganised into 11 geographic regions, plus radiation oncology. Each region and clinic will be headed by a doctor rather than a professional manager.
Dec 2003 New structure
------------------------------
The return of power to doctors is to be followed by a "consolidation and corporatisation" phase MIA believes is necessary to capture full synergistic benefits of the network.
MIA Focuses On Watershed Year Australian Financial Review December 3, 2003
2004
merger with I-Med
With the loss making groups sold off
the new CEO successfully sold the company to DCA and left himself
without a job..
DIAGNOSTIC imaging company MIA Group said yesterday it was in potential merger discussions with aged care, medical imaging and retirement company DCA Group.
May 2004 Merger with DCA
MIA diagnosis is merger The Australian May 29, 2004
Australia's DCA Group Ltd is set to become one of the world's largest radiology businesses, worth $1.2 billion, with the acquisition of MIA Group Ltd for $700 million.
Jun 2004 Merger makes DCA's I-Med largest in Australia
DCA today announced plans to merge MIA with its radiology business, I-Med, to form the largest diagnostic imaging service in Australia.
DCA Group to acquire MIA Group for $700 mln Australian Associated Press Financial News Wire June 7, 2004
MIA will add its 170 radiology clinics here and in the UK to the 101 clinics run by DCA's radiology business, I-Med, to form one of the world's largest radiology businesses.
Jun 2004 Size
MIA Hits Peak As Investors Rush Raising Australian Financial Review June 9, 2004
Former MIA chief executive Paul Mirabelle is part of a purge of 30 management and administrative staff from the merged radiology business I-Med/MIA and won't take up the reins as chief executive officer as originally planned.
Oct 2004 Thirty staff purged
Ex-MIA head, staff go in post-merger purge The Sydney Morning Herald October 16, 2004
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This page created January 2006 by
Michael
Wynne
