Sonic Healthcare lifts first-half profit, reaffirms guidance

The news: Pathology services provider Sonic Healthcare has lifted first-half profit by 17% on the back of margin improvement and organic growth and reaffirmed full-year earnings guidance.

The numbers: Net profit for the six months to December rose to $237 million, up from $202 million a year ago. Revenue increased 8.4% to $4.67 billion, and the company will pay an interim dividend of 44 cents per share, up from 43 cents a year ago.

The context: Sonic said earnings margins were up 60 basis points during the half year, thanks to organic growth in its major markets in Australia, Germany and UK, and cost reduction programs. It said recent acquisitions of Dr Risch Group and PthologyWatch were initially margin dilutive, but is confident both will increase margins once substantial synergies are achieved.

The company maintained full-year guidance for earnings to be in the range of $1.7 billion to $1.75 billion, equivalent to a 10% increase from the previous year. Net interest expense is also expected to increase by about 25% due to acquisitions and higher interest rates on refinanced long-term debt.