2013 Annual Report


Diagnostics is comprised of Insight+Ascot Radiology in Auckland and Aotea Pathology in Wellington. The sector provided 16% of Group gross revenue in FY13. The flat result at EBITDA is mainly due to start up costs related to the new radiology clinic at the Millennium Institute, which was officially opened in February 2013.

Insight+Ascot Radiology

Insight+Ascot Radiology is a leading specialist radiology business in Auckland. Abano owns 73% of Insight+Ascot Radiology, with the remaining 27% held by radiologist partners. We expect to add several new radiologist partners in FY14.

Radiology is an important investment area for us, with $17 million spent in the past five years on establishing new clinics and introducing leading edge technologies such as PET CT scanning and latest generation MRI and CT equipment. In FY13, we opened another new clinic in the Millennium Institute on Auckland’s North Shore. This is the third clinic we have opened in the past five years and, while it is currently in a start up phase, we expect to see demand grow as we market our service offering.

Imaging is now an intrinsic part of any medical examination as improved diagnosis often leads to better and more efficient patient care and outcomes. Investing in the best possible, world class equipment and clinics does not come cheap, however the high initial cost is more than offset by the mid to long term benefits and revenue expected from these services. As a result of these investments, our radiology business is recognised as a leader in providing speciality radiology services in the Auckland area. Local DHBs are also utilising our services to cater for excess public demand.

In November 2012, we merged our two radiology businesses into one entity.

Aotea Pathology

Aotea Pathology is a joint venture between Abano (55%) and Sonic Healthcare (45%). It has a reputation for very high quality, professional service and continues to lead the way in industry innovation with initiatives such as the ongoing development of eLab technology.

FY13 performance was solid, with a pleasing result despite the fixed price, DHB contracting environment.

Aotea Pathology operates under a DHB contract for community pathology in the wider Wellington and Hutt Valley region. This contract is currently due to expire in October 2014 and the three Wellington region DHBs (Wairarapa, Capital & Coast and Hutt Valley) have recently launched a project to review laboratory collaboration and integration across the region.

Outlook

In FY14, we will continue to build demand for the new radiology technologies and services we have established over the past five years, with a stronger focus on marketing and customer relationships. We are starting to see growing demand as referrers become more knowledgeable about the benefits of quicker, better and more accurate diagnosis provided by these new modalities.

In pathology, we are looking to the future and working closely with regional health providers and the DHBs to ensure this world class service continues to benefit its local communities.