The Healius Ltd (ASX: HLS) share price finished the session on Wednesday up 7.75% after the company released its full-year FY23 results.
Healius reported an underlying profit of just $25.7 million, which is a 91.6% fall year over year.
Despite this, investors in this ASX 200 healthcare share were excited today.
In fact, the Healius share price was the third-strongest riser on the ASX 200 today.
This might be because Healius said it had increased core revenues and met its underlying EBIT guidance in what it described as a "reset year" for the business.
Let's take a look at the numbers.
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Healius share price lifts despite profit crash
- Group non-COVID revenue of $1.6 billion, up 6.3% on FY22
- COVID revenue of $83.8 million, down from $763.5 million in FY22
- Underlying EBIT of $99 million in line with May 2023 guidance
- Cost reset program completed and 240 basis-points growth in 2H FY23 margin
- Non-cash impairment charge to goodwill of $349.8 million in 2H FY23
- Bank gearing ratio at 3.48 times
- Underlying net profit after tax (NPAT) of $25.7 million, down from $306.6 million in FY22
- Reported NPAT of a loss of $367.8 million, down from a profit of $307.9 million in FY22
- No final dividend will be paid
What else happened in FY23?
This $367.8 million loss was due largely to the non-cash impairment charge relating to the pathology division.
The company said the impairment relates primarily to Agilex, lower forecast cash flows post-COVID, and an increase in the weighted average cost of capital.
Healius said there was an 89% reduction in COVID-19 testing revenue, which also had a major flow-on effect on the bottom line.
Healius said its current challenges include GP shortages across the country. This has resulted in fewer referrals for blood tests. This has impacted Healius' pathology volumes.
Healius said FY23 was a "reset" year for the business following the disruptive COVID-19 period.
It's now business as usual, with Healius resetting its strategy, leadership team, and cost base.
In March, Australian Clinical Labs Ltd (ASX: ACL) launched an off-market takeover bid for Healius.
The Healius share price stormed 8.3% higher on the news, but the company eventually rejected the offer.
Last month, Australian Clinical Labs extended the offer date to 17 November.
The Australian Competition & Consumer Commission (ACCC) has released a statement of issues regarding the takeover proposal.
The ACCC's preliminary view is that the takeover would substantially reduce competition for pathology services.
It invited Australian Clinical Labs and Healius to submit more information before making its final decision, which will be announced on 12 October.
What did Healius management say?
CEO and managing director Maxine Jaquet said:
We have reset the foundations of our business to put us on a sound footing for a successful future.
We are already seeing the benefits in revenue and financial performance in the second half of FY 2023.
Pathology non-COVID revenue was up 7.9% and Imaging revenue was up 11.6% on 2H 2022.
Our EBIT margins have expanded by 240 basis points in the last six months as we have delivered significant improvements in our cost and productivity ratios.
What's next for Healius?
Healius expects the pathology market to trend higher and the imaging market to remain strong in FY24.
Healius says it intends to increase automation, digitisation, and the use of AI and other technology in the business.
The company says it will resume dividend payments "as soon as practicable on the return of more normal market pathology volumes and improved operating cashflows".
Healius did not pay an interim dividend for FY23, either.
Healius share price snapshot
The Healius share price is down 2.7% in the year to date and down 21.5% over the past 12 months.
