ASX All Ords share Healius Ltd (ASX: HLS) has taken a significant tumble on Friday amid the company holding its annual general meeting (AGM).
Healius shares fell to an intraday low of $1.31, down 17.6% on yesterday's closing price.
Currently, shares in Australia's second-largest pathology provider are trading for $1.35, down 15.41%.
Meantime, the S&P/ASX All Ordinaries Index (ASX: XAO) is up 0.42%.
So, what's got this ASX All Ords healthcare share on a slippery slope today?
ASX All Ords healthcare share dives on trading update
Perhaps investors were disappointed with the company's trading update provided at the AGM today.
Healius CEO and managing director Paul Anderson reported that pathology volumes had increased by 4.5% for the year to date, with revenues growing by 5.9%.
He said while this was pleasing, it had not yet translated to higher earnings because costs had increased. These included "labour cost pressures for EBAs and other inflationary increases".
He said pathology EBIT for 1H FY25 was tracking broadly in line with 1H FY24. He added that the company achieved better earnings in the second half of FY24 and this would be the case again in FY25.
The Lumus Imaging business recorded a 16% increase in exam volumes and an 11% increase in revenue for the year to date. Healius expects a 40% lift to EBIT for 1H FY25 compared to 1H FY24.
Is bulk billing for blood tests on the way out?
During his speech, Anderson commented on the industry's campaign for indexation on all pathology rebates to ensure Australians would continue to be bulk billed for blood tests.
While the FY25 Federal Budget included $174 million to fund delayed indexation for about a third of pathology items, it also had $356 million worth of "efficiencies", which meant funding cuts, he said.
We know that efficiencies are political-speak for "cuts" and it did not take long to learn that the Government is exploring cuts to both Vitamin B12 and Urine tests.
Without full and fair funding, pathology providers will have little choice but to introduce co-payments or close collection centres and laboratories.
From a COVID high to a present-day sigh…
It's been a rough few years for Healius shares investors.
In December 2021, during the COVID-19 pandemic, Healius shares were trading for just under $5. Since then, shares in the ASX All Ords healthcare stock have lost 73% of their value and are down 22% over the past 12 months.
Anderson, who became CEO in March following Maxine Jaquet's resignation, said Healius had listened to shareholders.
He said management had spent the past six months reshaping the company's strategy and capital structure "to create further shareholder value".
He said Healius had "made a good deal of headway on initiatives that we believe will make a real difference to our business" in FY24.
This included refinancing bank debt and undertaking a review of assets, which resulted in the proposed sale of Lumus Imaging in September for $965 million. He added that Healius has $161 million in franking credits and intended to return some of the sale proceeds to investors via a special dividend.
The company has also sought to transform its pathology division, focusing on "doing the basics well and repositioning our operations for both current economic conditions and future growth."
Anderson said the company would hold an Investor Day in the first quarter of 2025, at which management would provide a detailed update on the progress of the pathology transformation strategy.
However, he acknowledged that it would take time to implement the strategy, stating:
We are conscious that the new Pathology strategy, focused on revenue growth and completing our digital program to enable efficiencies in the medium to long term, is going to take time to embed in the business …
