Australian Clinical Labs (ASX:ACL) share price on watch following profit upgrade

Let’s find out why.

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Investors will be keeping a keen eye on the Australian Clinical Labs Ltd (ASX: ACL) share price today.

The extra attention comes after the company released a promising announcement earlier this morning.

Let’s take a look at why the Australian Clinical Labs share price is under focus.

Profit upgrade powers Australian Clinical Labs share price

Shares in Australian Clinical Labs are poised to fly today after announcing a profit upgrade.

Earlier today, the healthcare company announced an upgrade to its expectations for the first half of  FY22.

Based on trading to date in FY22, Australian Clinical Labs upgraded its total revenue and net profit after tax (NPAT) forecasts.

For the first half of FY22, the company now expects to deliver;

  • Total revenue of between $398.1 million and $414.0 million, representing between 29.5% and 34.7% upgrade to prospectus forecast of $307.4 million.
  • NPAT of between $63.7 and $70.0 million, representing between 177.9% and 205.6% upgrade to prospectus forecast of $22.9 million.

Australian Clinical Labs noted that the continued strong demand for COVID-19 testing and the resilience of the rest of its business fuelled the upgrade.

The company noted that the new forecasts for the first half reflect continued expansion in its margins.

In addition, Australian Clinical Labs acknowledged that a reduction in COVID-19 testing in October was also assumed in the new forecasts.

More on Australian Clinical Labs

Australian Clinical Labs initially outlined its forecasts earlier this year in its full-year report for FY21.

The company’s report was headlined by a 4.2% increase in revenue of $674 million.

Other highlights from Australian Clinical Labs for FY21 included;

  • Earnings before interest, tax, depreciation and amortisation (EBITDA) came in 11% ahead of forecasts at $270 million and grew 98.4% year on year.
  • Net profit after tax (NPAT) of $88.7 million which was 19.2% in front of the prospectus forecast, and 6% ahead of (previously) upgraded guidance. This is also a 659% year on year increase.
  • Decreased net debt from $93.3 million to $64.1 million
  • Cash EBITDA to operating cash flow conversion of 101.4%, with “pro forma cash flow” of $97.2 million.

Australian Clinical Labs advised that its FY21 non-COVID revenue growth was 6.3% higher than the year prior.

In addition, the company noted that non-COVID sales growth had begun to normalise.

Snapshot of the Australian Clinical Labs share price

Australian Clinical Labs completed its initial public offering (IPO) on the ASX on 14 May 2021.

Since listing, shares in the company have soared more than 36%.

At the time of writing, the Australian Clinical Labs share price is poised to open more the 4% higher after closing yesterday’s session at $4.69.

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Motley Fool contributor Nikhil Gangaram 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 recommended Australian Clinical Labs Limited. 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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