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How Sonic Healthcare Drives Value Creation For Shareholders?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

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 - shareholders
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).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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