Healius shares climb after meeting FY earnings guidance
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The news: Healius shares climbed on the ASX after the healthcare services provider met its full-year earnings guidance, boosted by margin improvements in its pathology business.
The numbers: Shares were up 10% to $1.62 by 12:30pm AEST, having shed 35% over the last 12 months.
Healius grew business-as-usual revenue by 6.1% year on year to $1.74 billion while Covid revenues reduced from $63.5 million to $2.5 million, equating to an EBIT reduction of $30.4 million compared to FY23.
Underlying EBITDA of $346.6 million fell 7.9%, but came in around the midpoint of its guidance range and marginally short of consensus forecasts of $347.1 million. Underlying EBIT of $65.4 million was down 33.9% year on year, but compared favourably to the midpoint of its guidance range, $62.5 million, and average estimates of $61.5 million.
However, the Sydney-based pathology services provider extended its full-year loss from $367.8 million to $645.8 million and did not declare a final dividend.
The context: Healius, which saw its former CEO and managing director Maxine Jaquet abruptly resign in March ahead of a "comprehensive review of its structure and assets", said the process to sell its diagnostic imaging unit Lumus Imaging is "well advanced" and it is "pleased with the number of interested parties undertaking detailed due diligence".
The company said it will continue to focus on growth initiatives and efficiency opportunities in FY25, including increased atomisation, digitisation and the use of artificial intelligence and other technology enablers.
RBC Capital Markets analyst Craig Wong-Pan said that Healius' reported EBIT was worse than expected due to higher digital transformation, higher transaction and unexpected termination costs. Pathology earnings exceeded consensus expectations, he said, whilst imaging earnings were slightly below consensus expectations.
RBC was 'neutral' on the results and had a price target of $1.45 on the stock.
Jarden analysts said that Healius' pathology business delivered a bigger EBIT margin improvement in the second half compared to the first, benefitting from closures to collection centres and laboratories during the year.
They noted that trends in FY24 are "encouraging" and expect the stock to trade up on this result, particularly in light of pathology margin improvements and the potential for asset sales.
Jarden had an 'underweight' rating on the stock with a price target of $1.22.
The sources: ASX announcement, RBC Capital Markets research, Jarden research
