Investors in Healius Ltd (ASX: HLS) had a day they would rather forget after the release of the company's FY25 results.
Shares in the ASX 200 healthcare stock ended Thursday at $0.70 per share, down by 14% from yesterday's closing price of $0.81.
Not only that, but the group's share price tumbled to a new 52-week low in today's session.
It is fair to say that both Healius and its shareholders endured a challenging FY25.
Let's take a closer look at what happened.
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Difficult year
FY25 can be characterised as a transitional year for Healius.
The ASX 200 healthcare stock launched a new strategy focused on simplifying its business model after selling its Lumus Imaging business in May.
The sale helped the company improve its balance sheet by generating cash proceeds of $822 million.
Soon after, the board of directors committed to paying a fully franked special dividend of 41.3 cents per share. This payout equates to about $300 million.
New strategic direction
Healius' new strategy seeks to boost revenues and cut costs.
This new direction comes in response to challenging market conditions in the pathology sector, characterised by inflationary pressures and high labour costs.
The ASX 200 healthcare stock has already launched a labour optimisation program to help address this issue.
Healius also seeks to improve the volume and quality of its revenue by providing better services for patients and referrers.
This includes diversifying its revenue away from the Medicare Benefits Schedule (MBS).
Furthermore, the group is aiming to modernise its collection centre and laboratory operations through technological digitisation.
Higher margin products and services are also a priority.
FY25 in review
All up, the ASX 200 healthcare stocks reported a soft set of numbers for FY25.
Revenue of $1.34 billion grew by 5.7% year-on-year.
However, underlying operating earnings (EBITDA) of $239.3 million declined by 4.0%. Underling EBIT of $17.1 million fared worse, tumbling by 27.2%.
These outcomes stemmed from a muted performance in the company's dominant pathology segment.
Here, revenue of $1.30 billion grew by 6% from twelve months prior.
Pathology EBITDA of $244.2 million fell by 3%, with EBIT of $28.2 million clocking in 15.3% lower.
Labour costs remained elevated at almost half of revenue.
In turn, the pathology EBIT margin came in at 2.2% for FY25 but improved to 3.6% in the second half of the year.
On the bottom line, Healius ended FY25 with a net cash position of $57.2 million, aided by the proceeds from the Lumus sale.
Moving forward
Management noted that its focus for FY26 remains diversifying the company's revenue mix and trimming labour costs.
That said, it projects revenue growth in FY26 to be consistent with the growth shown in the second half of FY25.
Pathology revenue jumped by 5.1% in the second half of FY25 despite a modest volume increase of 1.6%.
Meanwhile, labour costs in FY26 are projected to remain flat.
The ASX 200 healthcare stock expects to achieve high single digit EBIT margins at the tail end of the fiscal year.
