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Results in: Sonic Healthcare Limited (ASX:SHL) shares hit an all-time high

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:

Source: Company results

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).

Alternatively, these top growth shares could be even better investment options in FY 2019.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Ramsay Health Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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