Diagnostyka focuses on acquisitions in diagnostic imaging; no foreign acquisitions planned

"We are primarily focused on organic growth, but since the entry of MidEurope in 2011 there are also acquisitions. We have completed 128 acquisitions since then (...). They are mostly laboratory companies, but also e-commerce. Currently, our biggest focus is on acquisitions of imaging diagnostics companies," CEO Jakub Swadzba said.

"There are still more than 300 small laboratories in Poland, so our business plan is to buy about 10 small companies a year for the next few years," he added.

As assessed by the CEO, the players in the diagnostic imaging market are more competitive and there is more opportunity to buy, underlining that there are plenty of medium-sized entities.

"The share of the largest players in the market is 55 percent, there is no dominant player. There is a lot to do," Swadzba said.

"M&A are one of the factors that allows us to show momentum above the market. Our focus is on diagnostic imaging. This is a very fragmented market, with several large players. We have several diagnostic imaging businesses in our portfolio, and we have discussions with about 10 players in the pipeline," deputy CEO Pawel Chytla added.

The management board does not plan to pursue acquisitions abroad.

"Diagnostyka intends to stay in Poland and does not intend to acquire foreign laboratory or imaging entities," said the CEO.

The company does not assume the need to raise additional funds for acquisitions of smaller entities.

"But going public provides this opportunity (...). If there would be an opportunity to buy something bigger, by being on the capital market, this opportunity appears," the CEO added.

In the prospectus, the company stated that it assumed capital expenditure related to M&A transactions, focusing mainly on diagnostic imaging at around PLN 100 million (EUR 23.5 mln) in 2024, around PLN 80 million (EUR 18.8 mln) per year in the short term, and around PLN 70 million (EUR 16.5 mln) per year in the medium term.

The deputy CEO Pawel Chytla assessed that the laboratory diagnostics market in Poland is very attractive compared to other European markets.

"Therefore, we have great potential to catch up with Western European markets in terms of prices. The prices of products, laboratory tests and imaging tests in Poland are among the lowest in Europe - they are several times lower than analogous tests in France, Germany or other countries, which gives us growth potential," he said.

Another feature of the Polish healthcare market, he added, is that it is underfunded by the government and the Polish national health fund NFZ.

"As a result of the underfunding of the market, there is a high level of the private segment, and patients pay for their tests themselves. In terms of finances and volume of research, we have great potential to catch up with European countries," he assessed.

In the presentation, the company said that it expects the diagnostic imaging market to grow at a CAGR of around 10.4 percent and the laboratory testing market to grow at a CAGR of 9-11 percent between 2023 and 2030.

Diagnostyka's public offering will collectively include the sale of up to 16,147,124 existing shares, held by LX Beta S.à r.l., an entity controlled by MidEuropa III Management Limited. The maximum price of the shares in the offer is PLN 105 (EUR 24.68). The value of the entire offering could be up to PLN 1.7 billion (EUR 399.5 mln).

The selling shareholder, before the offer, holds 47.83 percent of the company's shares and 47.83 percent of the votes. The remaining shares are held by the company's founders, key management and board members, who will not sell shares in the offer.

Subscriptions from individual investors and a book-building process among institutional investors are planned from January 22-30, with a subscription period for institutional investors from January 31 to February 4.

The expected first day of listing of the admitted shares on the Warsaw Stock Exchange is February 7.

Poland's financial watchdog KNF approved Diagnostyka's prospectus on Tuesday.

The Diagnostyka Group operates in the medical diagnostics market in Poland, with an extensive network of more than 1,100 of its own collection points, more than 7,000 partner collection points, 156 diagnostic laboratories and 19 diagnostic imaging laboratories.

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