The Sonic Healthcare Ltd (ASX: SHL) share price is on the slide on Tuesday morning.
At the time of writing, the healthcare company's shares are down almost 6% to $29.92.
This follows the release of the company's half-year results.
Sonic share price falls on half-year results
- Revenue up 5% to $4,306 million
- Earnings before interest, tax, depreciation, and amortisation (EBITDA) down 20% to $737 million
- Net profit after tax down 47% to $202 million
- Interim dividend up 2.4% to 43 cents per share
What happened during the half?
For the six months ended 31 December, Sonic reported a 5% lift in revenue to $4,306 million. This reflects a 15% increase in base business revenue to $4,267 million, which was partially offset by a 90% decline in COVID revenue to $39 million.
While Sonic's EBITDA fell 20% over the prior corresponding period, this was in line with its guidance.
And despite the company's net profit falling 47% to $202 million, this didn't stop the Sonic board from increasing its interim dividend by 2.4% to 43 cents per share.
Management commentary
Sonic's CEO, Dr Colin Goldschmidt, appeared pleased with the way the company's transition was going. He said:
As previously flagged, the 2024 financial year is one of transition for Sonic Healthcare, as the impacts on our business of the COVID pandemic dissipate, and we return to normal business. Whilst our headline numbers for the half-year show significantly lower earnings versus the comparative period, this is the result of having 90% less COVID-related revenue in the current period.
Our base business revenue grew organically by 6.2% on a like-for-like basis versus H1 FY 2023 and 14.3% versus H1 FY 2020 (pre-pandemic). Organic base business growth was particularly strong in our Australian (9%), German (8%), and UK (13%) laboratory businesses. The USA and Swiss operations both achieved base business organic growth of 4%, with Swiss growth impacted by a fee cut in the prior year.
Outlook
Management advised that it is on track to achieve its full-year EBITDA guidance range of $1.7 billion to $1.8 billion. However, it acknowledges that it is now more likely to be towards the lower end of this guidance range.
Dr Goldschmidt concludes:
Sonic's management teams around the world are acutely focused on base business organic growth and margin improvement. Major initiatives are underway to grow earnings, including large scale costout programs. We expect earnings in the second half to be substantially higher than in the first, as the contribution of these initiatives ramps up and the benefits of recent acquisitions accrue.
The Sonic share price is down 9% over the last 12 months.
