Healius Ltd (ASX: HLS) has handed in its FY19 half year result, is time to buy the healthcare share?

Healius, formerly known as Primary Health Care Limited (ASX: PRY), is a healthcare business that provides pathology, diagnostic imaging, medical centres and low-cost fertility services, such as IVF. It operates across thousands of sites Australia wide.

Here’s how Healius did in HY19

Healius reported that revenue increased by 4.7% to $871.6 million, but the company’s EBIT fell by 16.6% to $51.4 million (click here to learn what EBIT is) and net profit dropped by 6.4% to $20.7 million. Underlying profit declined by 10.5% to $39.4 million, with Bell Potter analysts expecting net profit of $40 million.

Management said that the result reflected a 13% increase in the contribution from the Imaging division and a good performance in Medical Centres which saw EBIT grow by 50%, partially offsetting a decline in Pathology. According to the company, all divisions experienced soft market conditions in the period.

The company’s recruitment of GPs grew by 48%. In January a record 32 new GPs joined the business and gross billings increased to an average of $234 per hour.

In recent times Healius acquired Monserrat for a cost of $75 million upfront and another potential $20 million based on medium-term targets, which gave the company a portfolio of 13 day hospitals.

Healius was also an acquisition target of Chinese-based Jangho Group, but then the company subsequently rejected the proposal.

Healius Dividend

The healthcare declared an interim fully franked dividend of 3.8 cents per share, which represents a cut of around 25% compared to the payment a year ago. The dividend represents a payout ratio of 60% of underlying net profit.

Management Comments

Healius CEO Dr Malcolm Parmenter said:

We look forward to the second half delivering a stronger result, with underlying market volumes in all divisions expected to trend back towards historic norms and our efficiency drives in Pathology and Imaging, implemented in the first half, delivering benefits with a $10 million EBIT uplift targeted.”

Is Healius a buy?

The company pointed to population growth, an ageing population, advancements in technology and cancer survival rates, and rising patient expectations all as factors supporting “strong long-term market growth.

Healius is predicting underlying net profit will be between $93 million to $98 million in FY19. Healius has been disappointing over the past five years. Whilst Healius does have useful tailwinds, a lot of its revenue is reliant on the government, which is not flush with cash at the moment. I think I’d rather invest in one of the top growth shares in the free report below.


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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).