Sonic Healthcare: Transitioning out of Covid-19

About the author:

Dr Derek Jellinek
Author name:
By Dr Derek Jellinek
Job title:
Senior Analyst
Date posted:
18 August 2023, 10:00 AM
Sectors Covered:

  • Sonic Healthcare's (ASX:SHL) FY23 results were mixed, as Covid-19-related costs remained elevated, impacting profitability, while revenue was broadly in-line.
  • Notably, organic base testing (ex-Covid-19) was solid, up 7% in cc with good momentum (2H +9%; 1H +6%), while Radiology also showed strength, but Clinical Services was subdued, on lower Covid-19-related services.
  • While a rapid decline in 2H Covid-19 testing revenue (-72% h/h) mis-matched opex (+3 h/h) pressuring OPM (-320bp h/h to 19.3%), management is accelerating the reduction in legacy pandemic costs.
  • We believe this focus, along with numerous other near/medium term growth initiatives, supports a recovery in underlying profitability, reflected in guidance, although full bottom line improvement will take a bit longer.
  • We have adjusted FY24-25 estimates, with our target price decreasing to (login to view). Add.

Find out more

Download full research note

You can find further detailed analysis of company results this reporting season by browsing our reporting season tag, and view a full list of upcoming results on our Reporting Season Calendar.

If you would like more information, please contact your adviser or nearest Morgans office.

Request a call Find local branch

Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.

  • Print this page
  • Copy Link