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Why we’ve invested in Integral Diagnostics

The Montgomery Fund recently invested in Integral Diagnostics (ASX:IDX), which provides medical imaging services at 67 radiology clinics across Australia and New Zealand. Our investment in IDX gives us exposure to an expanding business in the fast-growing



The Montgomery Fund recently invested in Integral Diagnostics (ASX:IDX), which provides medical imaging services at 67 radiology clinics across Australia and New Zealand. Our investment in IDX gives us exposure to an expanding business in the fast-growing digital imaging industry. The IDX share price has grown four-fold over the past five years, and we’re confident there’s more growth to come.

Most Australians above a certain age have one thing in common, they are all in possession of one of these:

Medicare is Australia’s common public insurance scheme that helps pay for visits to doctors and other medical treatments to provide universal access to healthcare for all Australians. The uptake of private health insurance in Australia is about 44 per cent meaning that Medicare pays for all the healthcare (less gap payments) for 56 per cent of Australians. We can draw a few conclusions from analysing the data on Medicare payments. Today, we will have a look at the long-term trends in a few different parts of the healthcare sector.

The chart below shows the benefits paid by Medicare for:

  1. GP visits – pretty self-explanatory but this is the benefits paid for any visits to a General Practitioner and does not include referrals to specialists
  2. Diagnostic Imaging – this includes all types of diagnostic imaging including traditional ultrasounds and x-rays and also more complicated forms of imaging like MRI and CT scans
  3. Pathology – all types of sample testing that doctors order to be carried out in a laboratory
  4. Surgical Procedures – all treatment that requires an operating theater including both more complicated overnight stays and less complicated day surgeries

Screen Shot 2021-11-25 at 10.50.21 am

There are a number of interesting conclusions we can draw from this chart:

  • The first is of course the strong growth in pathology payments in FY21. This can all be contributed to COVID-19 relating testing and the pathology exposed companies are enjoying very good trading conditions. The question is how long it will last with increasing levels of vaccination rates and the introduction of Rapid Antigen Tests that does not need to be processed by a lab.
  • We can also see the sharp drop in GP visits during the last two years. This is also COVID-19 related as people have been put off visiting their GP due to fear of attracting COVID-19. Part of these missed visits will not have any longer-term effects but it is clear that some have resulted in early diagnosis of potential serious problem having been missed and we should expect an increase in severity of illnesses overall going forward.
  • Thirdly, we can see the drop in growth rates for surgical procedures where non-urgent elective surgeries have been restricted during lockdown periods due to the need to keep capacity in the hospital system free to be able to treat more serious medical emergencies including people contracting severe COVID-19.
  • We can also see that the long-term trends in benefits paid tends to follow each other, diagnostic imaging has had the fastest growth rate over time growing by an average of 7.0 per cent over the last 19 years which is higher than pathology at 6.4 per cent (this is though pulled up by the current very strong COVID-19 related revenues so underlying growth rates is around 4.5-5 per cent), surgical procedures at 5.5 per cent and GP visits at 4.4 per cent.

This brings me to the main point of this post which is to introduce a new company that we have recently invested in. The company is called Integral Diagnostics (ASX:IDX) and it is the fourth largest provider of diagnostic imaging services in Australia with a market share of approximately 6 per cent and a market cap of around $1 billion.

There are a number of reasons why we think that digital imaging is an interesting sector to have exposure to including:

  • Digital imaging has been growing the fastest of all sectors of healthcare and we think this will continue. The reason for this is that Australian doctors have traditionally been taught to follow a “low cost” way of diagnosing patients and the benefits of diagnostic imaging has not been that well understood, especially the more advanced forms like MRI and CT scans. As a result, the usage of MRIs and CT scans is significantly lower in Australia than in other developed countries as we can see in the charts below courtesy of Goldman Sachs. We see good scope for the overall usage of more advanced imaging methods to continue to increase over time and this will continue to drive growth rates for the industry overall faster than for other parts of healthcare.

Screen Shot 2021-11-25 at 10.50.56 am

  • The digital imaging sector is much more fragmented than the pathology and hospital market with a lot of small independent operators. There are strong local economies of scale and high barriers to entry in a local market as once you have established a relationship with referring doctors in the area, they are likely to continue to refer patients to you out of habit. IDX has historically grown both organically by opening new centres and through acquisitions and we believe that they should be able to continue to do so.
  • Radiologists (the doctors interpreting the images) are highly trained professionals and they are paid a lot of money. The power balance between radiologists and their employer has historically been tilted towards radiologists with salaries of $500-800k common. The advent of artificial intelligence (AI) should over time tilt this power balance more towards the company as AI will enable quite significant increases in productivity. IDX has shown they can reduce the time a radiologist spends looking at an image by 20 per cent by having an AI tool assess the image first and highlight areas to focus on for the radiologist. Over the coming years, more AI tools will be developed and the diagnostic imaging companies should be able to drive productivity and increase margins on back of this.

These are the main reasons we are attracted to the diagnostic imaging market. Sonic (ASX:SHL) and Healius (ASX:HLS) also have diagnostic imaging businesses but their pathology businesses are far larger for them. Capitol Health (ASX:CAJ) is another pure play diagnostic imaging company but is smaller in size and market capitalisation making IDX our preferred way to get exposure.

The Montgomery Fund owns shares in Integral Diagnostics. This article was prepared 25 November 2021 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Integral Diagnostics you should seek financial advice.

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“The Omicron Variant” – Magic Pills, Or Solving The Africa Problem?

"The Omicron Variant" – Magic Pills, Or Solving The Africa Problem?

Authored by Kit Knightly via,

Yesterday the WHO labelled the sars-cov-2 variant B.1.1.529 as a “variant of concern” and officially named it “Omicron”.




"The Omicron Variant" – Magic Pills, Or Solving The Africa Problem?

Authored by Kit Knightly via,

Yesterday the WHO labelled the sars-cov-2 variant B.1.1.529 as a “variant of concern” and officially named it “Omicron”.

This was as entirely predictable as it is completely meaningless. The “variants” are just tools to stretch the story out and keep people on their toes.

If you want to know exactly how the Omicron variant is going to affect the narrative, well The Guardian has done a handy “here’s all the bullshit we’re gonna sell you over the next couple of weeks” guide:

  • The Omicron variant is more transmissable, but they don’t know if it’s more dangerous yet (keeping their options open)

  • It originated in Africa, possible mutating in an “untreated AIDS patient” (sick people are breeding grounds for dangerous “mutations”)

  • “it has more than double the mutations of Delta…scientists anticipate that the virus will be more likely to infect – or reinfect – people who have immunity to earlier variants. (undermining natural immunity, selling more boosters, keeping the scarefest going)

  • “Scientists are concerned” that current vaccines may not be as effective against the new strain, they may need to be “tweaked” (get your boosters, and the new booster we haven’t invented yet)

  • “Scientists expect that recently approved antiviral drugs, such as Merck’s pill, will work as effectively against the new variant” (more on this later)

  • It’s already spreading around the world, and travel bans may be needed to prevent the need for another lockdown

We’re already seeing preparations for more “public health measures”, with the press breathlessly quoting “concerned” public health officials. We’re being told that a new lockdown won’t be necessary…as long as we remember to get boosted and wear masks and blah blah blah.

Generally speaking, it’s all fairly boilerplate scary nonsense. Although it is quite funny that the Biden administration has already put a bunch of African nations on a travel ban list, when Biden called Trump a racist for doing the same thing in 2020.


It’s interesting that the new variant has allegedly come from Africa, perhaps “mutating in the body of an AIDS patient”, since Africa has been the biggest hole in the Covid narrative for well over a year.

Africa is by far the poorest continent, it is densely populated, malnourishment and extreme poverty are endemic across many African nations, and it is home to more AIDS patients than the entire rest of the world combined. And yet, no Covid crisis.

This is a weak point in the story, and always has been.

Last Summer, the UK’s virus modeller-in-chief Neil Ferguson attempted to explain it by arguing that African nations have, on average, younger populations than the rest of the world, and Covid is only a threat to the elderly. But five minutes of common sense debunks that idea.

The reason Africa has a younger population, on average, is that – on average – they are much sicker.

There are diseases endemic to large parts of Africa that are all but wiped out in most of the Western world. Cholera, typhus, yellow fever, tuberculosis, malaria. Access to clean water, and healthcare are also much more limited.

And while it has been nailed into the public mind that being elderly is the biggest risk factor for Covid, that is inaccurate. In fact, the biggest risk factor for dying “of Covid” is, and always has been, already dying of something else.

The truth is that any REAL dangerous respiratory virus would have cut a bloody swath across the entire continent.

Instead, as recently as last week, we were getting articles about how Africa “escaped Covid”, and the continent’s low covid deaths with only 6% of people vaccinated is “mystifying” and “baffling” scientists.

Politically, African nations have shown themselves far less likely to buy into the “pandemic” narrative than their European, Asian or American counterparts. At least two “Covid denying” African presidents – Pierre Nkurunziza of Burundi and John Magufuli of Tanzania – have died suddenly in the last year, and seen their successors immediately reverse their covid policies.

So maybe the Omicron Variant is a way of trying to fold Africa into the covid narrative that the other continents have already fully embraced. That will become clear as the story develops.

Of course, it’s also true that being “African” is media shorthand for being scary, relying on the deeply-seated xenophobia of Western audiences. See: “Africanized killer bees”.

But, either way, Africa is the long game. There’s a more obvious, and more cynical, short term agenda here.


Let’s go back to the Guardian’s “Omicron” bullet points, above:

  • Scientists are concerned by the number of mutations and the fact some of them have already been linked to an ability to evade existing [vaccine-created] immune protection.

  • Scientists expect that recently approved antiviral drugs, such as Merck’s pill, [will work effectively] against the new variant

The “new variant” is already being described as potentially resistant to the vaccines, but NOT the new anti-viral medications.

Pharmaceutical giants Merck and Pfizer are both working on “Covid pills”, which as recently as three days ago, were being hyped up in the press:

US may have a ‘game changer’ new Covid pill soon, but its success will hinge on rapid testing

In the US, an emergency use authorisation can only be issued if there is no effective medication or treatment already available, so the vaccines not being proof against Omicron would be vital to rushing the pills onto the US market, at least.

If Omicron is found to be “resistant to the vaccines”, but NOT the pills, that will give governments an excuse to rush through approving the pills on an EUA, just as they did with the vaccines.

So, you bet your ass that testing is gonna be “rapid”. Super rapid. Blink-and-you’ll-miss-it rapid. Rapid to the point you’re not even sure it definitely happened. And now they have an excuse.

Really, it’s all just more of the same.

A scare before the new year. An excuse to make people believe their Christmas could be in peril. An exercise in flexing their control muscles a bit, milking even more money out of the double-jabbed and boosted crowd, now newly terrified of the Omicron variant, and a nice holiday bump to Pfizer’s ever-inflating stock price.

At this point either you can see the pattern, or you can’t. You’re free of the fear machinery, or you’re not.

There is one potential silver lining here: It feels rushed and frantic. Discovered on Tuesday, named on Friday, travel bans on Saturday. It is hurried, and maybe that’s a reaction to feeling like the “pandemic” is losing its grip on the public mind.

Hopefully, as the narrative becomes more and more absurd, more and more people will wake up to reality.

It has been pointed out that “Omicron” is an anagram of “moronic”.

One wonders if that’s deliberate and they’re making fun of us.

Tyler Durden Sat, 11/27/2021 - 23:45

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Israel Moves To Ban All Foreigners From Entry Amid Omicron Variant Fears

Israel Moves To Ban All Foreigners From Entry Amid Omicron Variant Fears

Israel’s Knesset is set to hold a special emergency "coronavirus cabinet" late Saturday night where government officials will vote on enacting a complete closure of…



Israel Moves To Ban All Foreigners From Entry Amid Omicron Variant Fears

Israel's Knesset is set to hold a special emergency "coronavirus cabinet" late Saturday night where government officials will vote on enacting a complete closure of the country to foreign travel. The ban will tentatively be in effect for the next two weeks.

Already Israel has banned all foreigners arriving from the majority of African countries in recent days on fears that the highly-mutated Omicron coronavirus variant, which first emerged in South Africa, could be the next deadly wave - and with the vaccine possibly doing little to stop it.

AFP/Getty Images

The greatly tightened travel and tourist restrictions are expected to be announced late Saturday night or early Sunday. It's expected to also include a new mandatory quarantine of three days or more for vaccinated Israeli citizens who've returned from traveling abroad. For unvaccinated inbound Israeli citizens the quarantine will be a week.

The fresh travel rules come as authorities scramble to do contact tracing on exposures related to at least one confirmed Omicron case:

Authorities are scrambling to locate 800 Israelis who may have been exposed to the new Omicron variant of COVID-19, a defense official said Saturday.

The Health Ministry confirmed one case of the new variant in Israel, and said there were seven other suspected cases who were awaiting test results.

Four of the suspected cases returned to Israel recently from international travel, and three had not traveled, raising fears of community transmission in Israel.

Prime Minister Bennett ahead of the vote said the government is "preparing for any scenario." And concerning the new still somewhat mysterious variant, the country's interior minister said, "It looks like it might be more infectious, so we’re taking action as fast as possible."

Just days ago the health minister Nitzan Horowitz announced that Israelis will likely have to get a fourth shot, also as children between the ages of 5 to 11 have begun receiving the jab. Ironically the foreign tourist ban is now being re-imposed for one of the most highly vaxxed nations on earth.

At least 80% of all Israelis 16 and older are now considered fully vaccinated.

Tyler Durden Sat, 11/27/2021 - 23:15

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Mexican Authorities List Conditions To Reboot “Remain In Mexico” Program

Mexican Authorities List Conditions To Reboot "Remain In Mexico" Program

Authored by Tom Ozimek via The Epoch Times,

Mexican authorities have laid out a series of conditions for reviving the “Remain in Mexico” program, the Trump-era…



Mexican Authorities List Conditions To Reboot "Remain In Mexico" Program

Authored by Tom Ozimek via The Epoch Times,

Mexican authorities have laid out a series of conditions for reviving the “Remain in Mexico” program, the Trump-era framework under which asylum-seekers were returned to Mexico to await the processing of their claims, with the development coming in context of the Biden administration’s plans to reinstate the policy following a court order.

Mexico’s Foreign Ministry said in a Nov. 26 announcement that talks have “intensified” with the United States on rebooting the program, known as the Migrant Protection Protocols (MPP), but that Mexican authorities are waiting for a formal response from the Biden administration on a number of concerns.

“The government of Mexico … has raised various concerns of a humanitarian nature regarding the asylum procedure in the United States,” the ministry said, adding that it has “highlighted the need to improve conditions for migrants and asylum seekers, so that they have better legal advice” regarding the processing of their clams, which Mexico said, “must be carried out as expeditiously as possible.”

One of the conditions is for the United States to accelerate development programs for southern Mexico and Central America in order to address the root causes of migration.

Another is for Washington to offer individuals deported under the MPP program medical care and vaccination against COVID-19 “to protect their right to health and prevent the spread of COVID-19 in communities on both sides of the border.”

Mexico has also requested that the United States respect designated return points, taking into account local security conditions and the capacity of Mexican authorities “to provide adequate care to migrants.”

Another “essential” request is for Washington to provide funding for shelters and non-government organizations “in order to improve conditions for migrants and asylum seekers in a substantive way.”

The demands come as talks between the two countries continue on reimplementing the MPP program after a court in August ordered that the Department of Homeland Security (DHS) reverse its June decision to halt the policy.

“In compliance with the court order, we are working to reimplement MPP as promptly as possible,” DHS spokesperson Marsha Espinosa told Axios.

”We cannot do so until we have the independent agreement from the Government of Mexico to accept those we seek to enroll in MPP,” Espinosa added.

“We will communicate to the court, and to the public, the timing of reimplementation when we are prepared to do so.”

The Biden administration is facing an unprecedented surge in illegal immigration that critics say is fostered by its lax enforcement policies, including halting MPP and curtailing the use of Title 42, which is used to expel illegal immigrants during the COVID-19 pandemic.

Tyler Durden Sat, 11/27/2021 - 16:45

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