Sonic share price sinks after first-half profit crash

The healthcare company's profits have almost halved.

| More on:
Shot of a young scientist looking stressed out while working on a computer in a lab.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Motley Fool contributor James Mickleboro 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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Earnings Results

Photo of two women shopping.
Earnings Results

Premier Investments share price jumps 9% on results and demerger plans

The Smiggle and Peter Alexander owner has released its results. How did it perform?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Earnings Results

Soul Patts share price struggles on falling profits

ASX 200 investment house Soul Patts reported its half year results this morning.

Read more »

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Earnings Results

Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Earnings Results

Brickworks share price tumbles on disappointing half-year loss

This loss didn't stop the company from increasing its dividend again.

Read more »

A man sits on a bench atop a mountain with a laptop, making investments with a green ESG mind.
Earnings Results

ASX All Ords stock KMD tumbles as interim dividend cancelled

Investors are hitting the sell button on ASX All Ords stock KMD today.

Read more »

Coal miner holding a giant coal rock in his hand making a circle with his hand, symbolising a rising share price.
Energy Shares

New Hope share price charges higher despite profit crunch and huge dividend cut

Weaker coal prices have hit this miner's profits and dividend hard.

Read more »

A Chinese investor sits in front of his laptop looking pensive and concerned about pandemic lockdowns which may impact ASX 200 iron ore share prices
Earnings Results

Liontown share price tumbles 7% on half-year results

This lithium developer's results have been released this afternoon.

Read more »

A man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises today.
Earnings Results

Sayona Mining share price jumps despite $32m half-year loss

The Sayona Mining Ltd (ASX: SYA) share price is pushing higher on Thursday. At the time of writing, the lithium…

Read more »