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Healius (ASX:HLS) share price jumps 6% on update and $200m share buyback plan

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The Healius Ltd (ASX: HLS) share price is charging higher on Wednesday following the release of an update.

At the time of writing, the healthcare company’s shares are up 6% to $3.85.

What did Healius announce?

This morning Healius provided investors with an update on its performance so far in FY 2021 and its plans for some of the funds raised from its medical centres sale.

In respect to the former, management revealed that Healius’ performance has been strong and its volumes are improving.

Pathology.

The Pathology business continued its strong revenue growth in October and November. This was driven by a mix of COVID-19 testing volumes and the on-going recovery of non-COVID-19 revenues.

Community COVID-19 testing remains broadly within a band of 7,000 to 10,000 per working day, whereas commercial COVID-19 testing is continuing to grow.

Its non-COVID revenues are trending up to be flat year-on-year.

Imaging.

The Imaging business has delivered sustained growth in revenues in all states in October and November. This was driven by both volumes and average fee growth, other than in Victoria and South Australia.

In Victoria, activity is returning rapidly with the easing of restrictions and revenue was above the prior corresponding period in November.

In South Australia, the COVID-19 related shutdown temporarily impacted revenues in November. Though, revenues are still ahead year to date.

Day Hospitals.

Day Hospitals revenue was materially ahead of the prior corresponding period in October and November.

Management notes that Montserrat is delivering good returns with Westside at record levels. The Adora Fertility business is also performing well with record cycles in November.

On-market buyback.

Last month the company completed the sale of its medical centres to BGH Capital. This led to the company receiving proceeds of $483 million.

This morning the company has announced a new capital management plan which aims to facilitate strategy, optimise shareholder returns, and manage uncertainties.

Part of this will see the company undertake an on-market share buy-back of up to $200 million in 2021. This remains subject to the Healius share price and market conditions.

It has also revised its dividend payout ratio to a target of 50% to 70% of reported net profit after tax.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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