Sonic Healthcare share price charges higher on 10% FY22 dividend boost

The ASX 200 global pathology provider invested $628 million in acquisitions over the 2022 financial year.

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Key points

  • Sonic Healthcare share price gains on FY22 results 
  • The full-year dividend increased by 10% from FY21 
  • The company’s on-market share buyback of up to $500 million is ongoing 

The Sonic Healthcare Limited (ASX: SHL) share price is up 4.52% in trade on Wednesday.

Sonic Healthcare shares closed yesterday trading for $33.19 and are currently trading for $34.69.

This comes following the release of the S&P/ASX 200 Index (ASX: XJO) global pathology provider's full-year results for the 12 months ending 30 June (FY22).

Here are the highlights.

Sonic Healthcare share price gains on profit and dividend boost

What else happened during the year?

The 7% revenue growth that looks to be helping drive the Sonic Healthcare share price higher today was comprised of 3% growth in COVID testing, 2% in its base business, and 2% from acquisitions.

The company has ongoing COVID testing in all seven countries where it operates, with $2.4 billion of COVID revenue in FY22, up 13% from FY21. Since March 2020, Sonic reported it has performed more than 55 million COVID PCR tests.

The company invested $628 million in acquisitions over the year, including the acquisitions of Canberra Imaging Group and ProPath, and said it is pursuing further opportunities in FY23.

The final dividend of 60 cents per share, fully franked, was up 9% from the prior year.

With gearing at record low level, Sonic said it has no current exposure to interest rate increases; all remaining debt is fixed rate and long term.

The company's on-market share buyback of up to $500 million is ongoing, with $294 million completed to date.

Sonic's AI initiative, Franklin.ai, was said to be "progressing at pace".

What did management say?

Commenting on the results that are pushing the Sonic Healthcare share price higher today, CEO Colin Goldschmidt said:

Sonic Healthcare and our people have continued to play a major role in combating the COVID-19 pandemic during the 2022 financial year… Concurrently, we have also provided non-COVID essential medical diagnostic services for more than 100 million patients a year…

Sonic's revenue grew organically by 5% for the year, with base business organic growth of 2.1% augmented by significant growth in COVID-related revenues. The contributions of synergistic acquisitions took total growth for the year to 7%. Twelve months ago, we would never have expected our COVID-related revenues to grow by 13% in 2022.

What's next?

Sonic Healthcare didn't provide guidance for FY23 due to pandemic-related unpredictability.

The company does expect its base business growth to accelerate. And it doesn't forecast major cost impacts from inflationary pressures, with wage increases expected to be moderate.

Commenting on the outlook, Goldschmidt said, "It remains difficult to predict future revenues from COVID-19 testing, however we do expect ongoing demand, coupled with seasonally weighted increased testing for other respiratory viruses."

Sonic Healthcare share price snapshot

The Sonic Healthcare share price is down 26% in 2022. That compares to a year-to-date loss of 6% posted by the ASX 200.

Motley Fool contributor Bernd Struben 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 Sonic Healthcare Limited. 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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