Sonic (ASX: SHL) is a global healthcare company that provides laboratory medicine, diagnostic imaging, and primary care medical services. They cater to clinicians (GPs and specialists), hospitals, community health services, and their patients. The business is headquartered in Sydney and ranks as one of Australia’s ‘Top 50’ businesses. Sonic holds a strong position in the laboratory markets across eight countries in which it operates. This includes being the largest private operator in Australia, Germany, Switzerland, and the UK.
Sonic Healthcare Facility (Credit: MF and Co)
The company’s services
Sonic Healthcare delivers four main services, these being laboratory medicine, diagnostic imaging, clinical services and clinical trials. These services allow health practitioners or hospitals to outsource their patients’ examinations when it requires laboratory or radiology tests. The laboratory medicine services are staffed by more than 800 specialist pathologists and thousands of medical scientists. This allows them to cover 11 areas of examinations, such as haematology and molecular pathology, and provide highly accurate results. Sonic is positioned as the second-largest radiology provider in Australia, with more than 100 centres. In addition to patients’ examination related services, Sonic also provides clinical trial services to pharmaceutical, biotechnology, and research organisations in the Asia Pacific region. Sonic’s global presence and diverse range of services have supported the long-standing confidence investors have in the business.
FY19 Financial Results
Sonic is a $13.6B company that delivered a strong net profit of $550m for FY19, along with $6.2bn of revenue. One of the most significant events for FY19 was the acquisition of Aurora Diagnostic, which opened further growth paths for the company. The realisation of acquisition synergies will be a significant driver of share price performance over the coming year or two, so it’s something investors should pay close attention to.
The company is well-positioned for ongoing strong growth through a rich pipeline of acquisitions, joint ventures, and contract opportunities. In addition, the company is also actively diversifying its position geographically, providing growth opportunities and risk mitigation for shareholders. The company’s strong position and its potential growth create a strong investment case, but investors will need to put the company’s valuation under the microscope before making an investment decision.
This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
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