Sonic Healthcare Limited (ASX: SHL), the market leader in the Australian pathology services industry, today announced a 14.9% gain in full year net profit on a 12.3% rise in revenue. In addition to having an extensive network of medical diagnostic centres across Australia, two new pathology laboratories are under development and a new lab in Perth was commissioned in the second half of FY 2014.
The $385 million full year profit has maintained the uptrend in earnings growth, which has more than doubled since the $171.4 million profit delivered in 2009.
Final dividend increased
A final dividend of 40 cents per share was declared, 8.1% up from the previous corresponding period. This followed a rise in the interim dividend from 25 cps to 27 cps. That brings the full year dividend to 67 cps and continues Sonic Healthcare's track record for stable and growing dividends. The stock's dividend yield is 3.6% partially franked.
Global healthcare service provider
Foolish investors are always attracted to well performing healthcare companies for their defensive qualities in weak economic times. But Sonic Healthcare is a global healthcare provider in major healthcare markets like the US and Germany, so revenue and earnings growth are accelerated. About half of the company's business is in Australia, with the US and German markets making up about 21% and 19% of revenue, respectively.
US, Germany and UK business growth
Organic business volume in the US is up, benefiting from revenue initiatives and Obama-care health insurance changes making pathology and medical diagnostics more accessible.
German business revenue gained about 5%. A new central lab facility for total lab automation technology was commissioned in Berlin, which will keep growth steady in the coming years.
Medical diagnostics in the UK also saw similarly strong growth, aided by a new state-of-the-art hub laboratory in London, as well as a joint venture with University College London Hospital to provide pathology services to partners over a 10-year contract.
Outlook and analyst forecasts
Sonic Healthcare continues to look for acquisitions and joint ventures to widen its pathology services network. Its FY 2015 guidance is for EBITDA to rise about 5%. Analyst consensus forecasts are looking at a possible 12% compounded annual increase in earnings for the next two years.
