The Sonic Healthcare Limited (ASX: SHL) share price has edged higher this morning following the release of its full-year results for the 12 months ended June 30.
At the time of writing the healthcare company's shares are up over 0.5% to an all-time high of $27.00.
Here is how Sonic Healthcare performed in comparison to the prior corresponding period:
- Revenue grew 8.2% to $5.5 billion.
- Underlying EBITDA increased 8.3% to $962 million.
- Net profit after tax (including U.S. tax benefit) rose 11.2% to $476 million.
- Net profit after tax (excluding U.S. tax benefit) was up 7% to $456 million.
- Earnings per share increased 9.9% to $1.12.
- Final dividend declared of 49 cents per share, bringing full-year dividend to 81 cents per share.
- Outlook: EBITDA growth of 3% to 5% in FY 2019.
Overall, I thought Sonic Healthcare delivered a reasonably solid but unspectacular result in FY 2018. Driving the positive performance was the strong growth being exhibited by both its Laboratory and Imaging divisions.
On a constant currency basis, Laboratory revenues rose 6.3% to $1,403 million in Australia, 5.2% to $1,163 million in the U.S., 9.5% to $1,803 million in Europe, and 12% to $28 million in New Zealand. Imaging revenues increased 7% to $473 million and Other revenue climbed 4% to $439 million. The latter includes Sonic's medical centre, occupational health businesses, laboratory automation development subsidiary, GLP Systems, and other minor operations.
Here is a breakdown of its revenue split in FY 2018:
As you can see above, Sonic Healthcare has a diverse business with no single operation accounting for more than a quarter of its revenue. I find this level of diversification attractive as it should mean the Sonic Healthcare is less impacted by the slowdown in a single market compared to the likes of Ramsay Health Care Limited (ASX: RHC) which generates a significant portion of its revenue in Australia.
However, like Ramsay Health Care, I wouldn't be a buyer of Sonic Healthcare's shares due to its outlook for FY 2019.
Based on today's result Sonic Healthcare's shares are changing hands at approximately 24x full-year earnings. I think this is quite expensive for guidance of EBITDA growth in the range of 3% to 5%.
Instead of Sonic and Ramsay, I would be buying the shares of healthcare juggernaut CSL Limited (ASX: CSL).
