Healius share price climbs as profit doubles in FY22

Healius has reported 23% revenue growth and a big improvement in its bottom line in FY22.

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Key points

  • Healius has reported its full-year FY22 results 
  • Profit more than doubled as cost management initiatives bear fruit 
  • The company declared a fully franked final dividend of 6 cents, putting shares on a trailing dividend yield of 4.3% 

The Healius Ltd (ASX: HLS) share price is experiencing a healthy rise this morning after the healthcare company handed in its FY22 results.

While the S&P/ASX 200 Index (ASX: XJO) has climbed 0.3% in early morning trade, the Healius share price is outperforming the market with a 1.4% gain.

Healius share price rises on healthy profit boost 

Here are some of the headline results from Healius' full-year FY22 report:

  • Revenue came in at $2.34 billion – up 23% compared to the prior corresponding period of FY21
  • Underlying earnings before interest and tax (EBIT) jumped 85% to $492 million
  • Underlying net profit after tax (NPAT) shot up 108% to $309 million
  • A fully franked final dividend of 6 cents was declared – slightly down from the prior period but for the full year, total dividends lifted by 21%

Impressively, Healius' underlying EBIT margins improved from 13.9% in FY21 to 21.1% in FY22.

This was underpinned by progress in the company's sustainable improvement program, with nearly half of its phase two initiatives complete.

Even still, the company's result on the bottom line fell short of Citi's forecast, with analysts expecting NPAT of $316 million.

What else happened in FY22?

During the year, Healius successfully scaled its operations to satisfy an upswing in COVID-related demand.

The company conducted extensive COVID testing from July 2021 to January 2022. This contributed to a 40% rise in pathology episodes across the year.

From there, screening cooled down as the Omicron variant became endemic in the population.

Healius also provided critical non-COVID pathology testing, maintaining its market share in FY22.

Meanwhile, the company continued to deliver its imaging and day hospital services. However, throughout the year these were impacted by lockdowns, elective surgery restrictions, and COVID-related cancellations.

While Healius' dividend increase in FY22 lagged profit growth, the company returned around $140 million to shareholders through an on-market share buyback

Healius also completed two acquisitions during the year. In July 2021, it purchased Axis Diagnostics, a Queensland-based imaging business with three radiology practices.

Then, in December 2021, it made a ~$300 million acquisition of Agilex Biolabs, a leading bioanalytical laboratory. At the time, the Healius share price bounced around as the reaction to the acquisition was mixed.

What did management say?

Commenting on the results, Healius CEO Dr Malcolm Parmenter said:

We have emerged from a period of intense COVID-19 screening with a strong balance sheet, higher free cash flows and good returns to our shareholders. 

We are also a far better company than we were before COVID-19 due to the actions of the Healius team.

We have a simplified portfolio, more competitive networks including a more profitable ACC footprint, broader growth options and far more firepower for delivering this growth.

What's next?

Healius refrained from providing FY23 guidance, citing the unpredictability of COVID and the timing of the acceleration in underlying diagnostics.

Nonetheless, commenting on market conditions, Healius said it expects broad demand for non-COVID services to return. 

The company noted that the underlying drivers in both pathology and imaging remain strong. These drivers include an ageing population with greater longevity but more complex health issues.

The company is also expecting a period of catch-up for the backlog in routine care. However, the timing is uncertain while COVID remains endemic.

Healius share price snapshot

The Healius share price initially emerged as a COVID beneficiary but ran out of puff at the end of last year.

The Healius share price has suffered a 27% fall so far this year. But it's up by the same amount since the beginning of 2020.

Motley Fool contributor Cathryn Goh 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 Scott Phillips.

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