After rallying 30% year-to-date, Sonic Healthcare share price will be put to the test after the release of the company’s FY21 results.
The post Sonic Healthcare (ASX:SHL) share price on watch after 149% profit boost in FY21 appeared first on The Motley Fool Australia. –
Sonic Healthcare share price in focus after bumper profit result
The Sonic Healthcare share price could be a mover following a well-rounded financial performance in FY21. Key highlights include:
Revenue of $8.8 billion, up 28% on the prior corresponding period (pcp).
Earnings before interest, taxes, depreciation, and amortisation (EBITDA) surged to $2.6 billion, up 81%.
Net profit rocketed to $1.3 billion, up 149%.
Final dividend of 55 cents, up 8%.
Full year FY21 dividend of 91 cents, up 7%.
What happened for Sonic Healthcare in FY21?
The Sonic Healthcare share price has rallied strongly in FY21, thanks to its resilient base business and active role in combating the COVID-19 pandemic.
The company has performed approximately 30 million COVID-19 PCR tests to date across ~60 Sonic laboratories globally.
The results noted that COVID-19 PCR volumes were lower in the second half of the year versus the first half, but have been increasing post-year end with the spread of the Delta variant.
Its base business revenue (excluding COVID testing) grew 6% compared to FY20 and was up 4% versus FY19.
Sonic Healthcare’s EBITDA surged 81%, again enhanced by COVID-19 testing and leveraging existing infrastructure. The company’s laboratory businesses across ANZ, USA and Europe contribute approximately 88% of Group revenues, and the company was pleased to highlight a significant improvement in EBITDA margins
EBITDA margins for its Laboratory division increased from 21.3% to 30.8%. At the same time, Sonic Healthcare’s medical imaging business reported 24% EBITDA growth and 108 basis points of margin improvement.
Sonic Healthcare’s CEO Dr Colin Goldschmidt commented on the results, saying:
As a global healthcare organisation, we have continued to play a major role in combating the COVID19 pandemic, by providing 30 million PCR tests and over 2 million serology tests to date. We are also proud to be the largest non-government provider of COVID-19 vaccinations in Australia.
Goldschmidt also shed light on the company’s strategic focus on acquisitions:
In addition to organic growth, Sonic continues to focus on synergistic acquisitions and other growth opportunities, supported by our current record low gearing levels, geographic footprint, leading market positions and brands, and our deeply embedded Medical Leadership culture. We were delighted to recently announce the pending acquisition of Canberra Imaging Group, following on from our move in March 2021 to majority ownership of Epworth Medical Imaging. We are actively considering further acquisition opportunities, as well as bidding for a number of outsourcing contracts.
What’s next for Sonic Healthcare?
The Sonic Healthcare share price has rallied strongly this year, up 30% year-to-date.
The company advised that it will not provide earnings guidance for FY22 due to COVID-19 related unpredictability:
“The pandemic has the potential to cause fluctuations in both COVID-19 testing revenues and the base business, although the base business has become increasingly resilient to the impacts of pandemic waves. The underlying growth drivers for healthcare services remain unchanged. Base business fluctuations are also mitigated by geographical and business sector diversity. The COVID-19 Delta variant is currently driving increases in COVID-19 testing revenues.”
Should you invest $1,000 in Sonic Healthcare right now?
Before you consider Sonic Healthcare, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Sonic Healthcare wasn’t one of them.
The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of August 16th 2021
Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.