Healius Ltd (ASX: HLS) shares are having a horror session on Wednesday.
In afternoon trade, the ASX 300 share is down 23% to a multi-year low of 37.2 cents.
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Why is this ASX 300 share crashing today?
The selling has been sparked by the release of a trading update for FY 2026, which points to a challenging operating environment for the pathology company.
According to the release, Healius now expects group underlying EBITDA of between $259 million and $264 million for FY 2026. It also expects group underlying EBIT of between $30 million and $35 million.
This compares positively to underlying EBITDA of $239.3 million and underlying EBIT of $17.1 million in FY 2025.
Pathology pressures continue
However, taking some of the shine off the profit update was an update on trading conditions.
Management advised that there is ongoing pressure in Healius' pathology business.
For the first half, pathology volumes grew by 1.2% and revenue increased by 3.5%. However, momentum appears to have weakened since then.
For the 10 months to April 2026, pathology volumes declined by 0.4%, while revenue growth slowed to 2.4%.
This is a concern because the division remains the company's core business.
GP attendances have also been soft, falling 1.5% in the first half and 1.0% for the January to March period.
Wage costs add another headwind
Healius has been working to contain costs, with pathology costs rising just 1.1% for the 10 months to April 2026.
However, wage pressure is now emerging as a fresh challenge.
The company advised that pathology labour costs will be impacted by $1.8 million in the fourth quarter due to the Fair Work Commission's initial findings on gender-based undervaluation.
Pathology collectors received an increase from 1 April 2026, with further increases still to come.
Healius said pathology labour costs have now increased 0.8% for the 10 months to April 2026, whereas previous guidance had been for broadly flat labour costs for FY 2026.
The company is now undertaking a strategic review of its Agilex Biolabs and could consider selling the business.
Federal Budget disappointment
Another negative in the update was Healius' response to the Federal Budget.
The ASX 300 share said this year's Federal Budget contained no new funding for pathology, despite the sector facing rising wage costs and an ongoing indexation freeze for most tests.
Management warned that inadequate funding has forced difficult decisions, including cutting staff, closing collection centres, and closing regional laboratories.
The company also said out-of-pocket fees for pathology tests may be the only viable option left to bridge the funding gap.
Overall, today's update highlights a difficult mix of slowing pathology volumes, rising wage costs, limited government funding support, and pressure on earnings.
That combination appears to have spooked investors and sent the ASX 300 share sharply lower.
