Healius (ASX:HLS) share price sinks 10% despite 179% profit surge in FY21

This healthcare company had a very strong year…

| More on:
A healthcare worker wearing a white coat holds his fingers to his mouth looking worried as healthcare stocks like Cochlear crash today

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Healius Ltd (ASX: HLS) share price is under pressure on Monday following the release of its full year results.

At the time of writing, the healthcare company's shares are down 8% to $4.53.

Healius share price sinks despite more than doubling its profits in FY 2021

  • Revenue increased 21.7% to $1,913.1 million
  • Underlying earnings before interest and tax (EBIT) jumped 106% to $266.5 million
  • Net profit after tax up 179% to $148.4 million
  • Operating cash flow tripled to $912.8 million
  • Full year dividend of 13.25 cents, up from 2.6 cents in FY 2020

What happened in FY 2021 for Healius?

For the 12 months ended 30 June, Healius reported a 22% increase in revenue to $1,913.1 million and the doubling of its underlying EBIT to $266.5 million. As strong as this was, it was 3% short of the analyst consensus estimate of $276 million. This goes some way to explaining the weakness in the Healius share price today.

Healius' result was driven by growth across all divisions and the success of its Sustainable Improvement Program. However, the standout performer during the year was its key Pathology business, which reported revenue growth of 25% to $1,452.1 million and EBIT growth of 103% to $252.8 million. This reflects strong demand for community and commercial COVID-19 testing, undertaking 5.75 million tests to-date.

Non-COVID revenues also grew, which management believes demonstrates the resilience of its core healthcare services. For example, Imaging revenue grew in all channels and Day hospitals revenue grew thanks to on-going growth in its multi-specialist Westside Private Hospital in Brisbane. At its peak, the latter undertook ~1,000 procedures per month and successfully trialled short-stay surgery for hip and knee replacements.

What did management say?

Healius' Managing Director and Chief Executive Officer, Dr Malcolm Parmenter, said: "Our overriding aim throughout the COVID-19 pandemic has been ensuring we play an instrumental role in Australia's public health response. This has extended the team well beyond our normal capacities and capabilities, including reconfiguring our laboratories to accommodate new equipment, protecting the health and safety of our own people, rolling-out drive-through testing clinics in numerous locations for safe and easy public access, and operating our pathology facilities for significantly extended hours, often 24 hours a day / 7 days a week."

"What's more, we have delivered our non-COVID healthcare services efficiently and effectively within the restrictions of various state lockdown requirements, helping maintain the health of the nation through frontline diagnosis and day surgery."

"While it would have been acceptable to defer our portfolio, capital and other strategic initiatives due to the immediate demands of COVID-19 testing, our people have also delivered on these initiatives resulting in a significant year of growth in shareholder returns," he added.

What's next for Healius?

While no guidance was given for the year ahead, management notes that demand has been strong for its services so far in FY 2022. This is particularly the case for COVID-19 testing following the emergence of the Delta strain.

Dr Parmenter commented: "There has been a further surge in COVID-19 testing in July and August with the emergence of the delta strain in this country and our testing has grown to over 40,000 test per working day in July and August on average. At times these levels have stretched our systems to their limit and we are currently investing in more machines to increase our capacity and technology to speed the process."

"What's more with the revenue we are receiving from COVID testing, we have a real opportunity to invest in the future health of the nation, implementing systems, digital interfaces and a raft of leading-edge applications which should permanently change for the better how consumers access diagnostic healthcare in Australia," he concluded.

The Healius share price was up 33% year to date prior to today.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

More on Earnings Results

Man jumps for joy in front of a background of a rising stocks graphic.
Earnings Results

Catapult shines: 20% sales growth propels ASX tech stock to new 52-week high

A strong annual result from this tech player has caught investor attention.

Read more »

A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.
Earnings Results

Xero share price leaps 8% on staggering earnings upheaval

A major turnaround in profitability is sending investors into a frenzy over Xero shares today.

Read more »

a construction worker sits pensively at his desk with his arm propping up his chin as he looks at his laptop computer while wearing a hard hat and visibility vest in a bunker style construction shed.
Materials Shares

Which ASX 200 stock just plunged 12% despite record full-year earnings?

It looks like an impressive report card but UBS doesn't like the FY25 guidance.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

ASX 200 tech stock lifts off on another record-setting half-year profit

Investors are bidding up the ASX 200 tech company following its half-year results.

Read more »

increasing rural asx share price represented by happy looking sheep
Earnings Results

Why is this ASX All Ords stock staying strong as profits crash 76%

How is this company's share price marching higher after mowing down more than three-quarters of its profits compared to a…

Read more »

Two men sit side by side on a couch with video game controls in their hands and expressive looks on their faces as they react to the action in front of them in a home setting.
Earnings Results

Guess which ASX 200 stock is surging 11% on an 'outstanding' result

This ASX gaming giant just posted a 17% jump in profits, and its shareholders are basking in the glory.

Read more »

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer.
Earnings Results

Graincorp share price lifts off as dividend is maintained and debts plunge

ASX 200 investors are bidding up the Graincorp share price today. But why?

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Earnings Results

Why is this ASX 200 stock avoiding the market selloff and pushing higher?

Not all shares are falling with the market on Thursday.

Read more »