One of the most controversial earnings reports we have seen so far this season has been from S&P/ASX 200 Index (ASX: XJO) healthcare share and former market darling, CSL Ltd (ASX: CSL). CSL dropped its latest earnings, covering the six months to 31 December 2025, on Wednesday of this week. And boy, did they disappoint.
It's not hard to see why. CSL reported revenues of US$8.3 billion, a drop of 4% over the same period last year. Reported net profits after tax (NPAT) tanked by a horrid 81% to US$401 million, while underlying profits fell 7% to US$1.9 billion. The company maintained its interim dividend at US$1.30 per share. Investors were not encouraged by the sudden resignation of now-former CSL CEO Dr Paul McKenzie the night before these results came out.
All in all, it was a disastrous earnings report for CSL. The company's shares have now crashed 16.7% since Monday's close. The $150-levels we are now seeing represent more than a 50% dive from CSL's all-time 2020 highs of over $340 per share, and are the lowest the stock has traded at since early 2018.
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CSL shares plunge, but is all hope lost?
I, perhaps unfortunately in hindsight, own CSL shares myself. I am obviously not too impressed with the company's recent performance. Saying that, I am not selling out of my holdings yet. In fact, I think these earnings were not as disastrous as the market is assuming.
Yes, CSL is certainly in the midst of a rough patch. However, I think the headwinds it is facing are temporary. For example, the company is being hurt by the current US administration's negative views on vaccines. Yet this may pass after the next American presidential elections in 2028. CSL remains one of the world's largest and most dominant healthcare companies and possesses a wide economic moat. I don't see any long-term threats to its blood plasma medicines business.
Additionally, the company's balance sheet and cash flow remain strong. This is evidenced by its decision this week to extend its share buyback scheme from US$500 million to US$750 million. Given that CSL shares are currently at an eight-year low, this should provide significant value for existing investors going forward.
Foolish Takeaway
I am not pleased with CSL's recent performance, and the tenure of former CEO Paul McKenzie was a disaster. However, I think CSL is not permanently damaged and can work its way back to its former glory. I have still put the company on notice in my own portfolio, and am prepared to sell out if CSL continues to make missteps. But I think its restructing and ongoing share buybacks going forward will prove to be a turning point in hindsight. Let's see how the rest of 2026 treats this ASX 200 healthcare stock.
