Capitol Health Ltd (ASX: CAJ) is mainly involved in the operations of providing imaging services in Australian Healthcare market. On 5 October 2018, the company provided an update regarding the Federal Government’s recent announcement about the pending allocation of 20 new Medicare MRI licenses, comprising a mix of fully eligible units and upgrades of existing partial units. Following this news, the share price of the company decreased by 1.818 percent as on 5 October 2018.
The Australian Prime Minister and the Minister for Health announced that there will be an increase in patient access to Medicare-funded MRI services and Twenty new licenses will be issued shortly through an invitation to apply process and these new licenses will have access to Medicare funding from as early as 1 March 2019. Capitol is planning to submit its applications for the number of new licenses.
Capitol is currently operating clinics across Victoria, Western Australia, and Tasmania. And, the company currently has a fleet of 18 MRIs which includes one under installation and two are having full Medicare licenses, eight have partial Medicare licenses, and eight do not have Medicare licenses and they operate without attracting a Medicare rebate. The Company has several sites suitable for Medicare-funded MRI services and it is expected that the allocation process will support the Capitol’s commitment to providing bulk-billed MRI services in communities that need them.
In advance of this process, Capitol has been advised that the partial MRI Medicare license which was previously transferred to Mildura will transfer back to Imaging at Olympic Park from March 2019 and the full MRI Medicare license which was transferred to Imaging at Olympic Park in December 2016 will revert to Mildura to coincide with the commencement of newly-allocated MRI licenses. The company will try to retain the full license at Imaging at Olympic Park through the recently-announced MRI licensing program by applying for an upgrade to its existing partial license and it is expecting that this valuable service to Melbourne’s CBD will be retained after the allocation process is complete. The company has concluded that the impact of the potential reversion to a partial license and the potential timing will not have any significant impact in FY 2019 and confirms its earnings guidance range.
CAJ’s shares traded at $0.270 with a market capitalization of circa $220.48 million as on 5 October 2018 (AEST 2:18 PM).
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