Sonic Healthcare (ASX: SHL) is a leading provider of medical diagnostic services (pathology and radiology). Sonic is the dominate position in the Australian market and has established a large presence in the United States and German markets and, to a lesser extent, the United Kingdom, Switzerland, Belgium, and New Zealand markets.
What is the FY19 result?
Today (Tuesday 20 August 2019), Sonic Healthcare released its FY19 results. The main points are as follows:
- Underlying EBITDA of A$1,061 million, up 10 per cent on FY19. In constant currency terms, EBITDA growth was 6.7 per cent in FY19. This outcome is in line with guidance.
- NPAT of A$550 million, up 16 per cent.
- Earnings per share is A$1.22 in FY19, up 9 per cent.
- The final dividend is A$0.51 cents per share (30 per cent franked), up 4.1 per cent.
Organic revenue growth for the group as a whole in FY19 was at around 4 per cent on a constant currency basis. Sonic Healthcare’s Australian, US and UK laboratory operations and the Imaging Division achieved higher organic growth rates, whilst the growth in the German and Belgian operations were impacted this year by regulatory changes.
What is the outlook?
Management expects “EBITDA growth of 6 to 8 per cent on underlying FY19 EBITDA of A$1,052 million (constant currency terms)”. The FY19 base has been adjusted for accounting changes. Management considers that Sonic Healthcare is “well positioned for ongoing strong growth” reflecting, in part, “a pipeline of acquisition, joint venture and contract opportunities” as well as “technology and innovation driving efficiencies”.
What is the market’s reaction?
Today (Tuesday 20 August) Sonic Healthcare is trading at around A$28.00 per share, up around one per cent in a stronger overall market. This reflects that the FY19 result is broadly in line with expectations and contains no surprises. Sonic Healthcare trades at a P/E ratio in the mid 20’s and an annual dividend yield of around 3 per cent (partially franked).
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