The Sonic Healthcare Limited (ASX: SHL) share price rose 3% in response to the healthy FY19 result.
Sonic Healthcare is one of Australia’s largest healthcare businesses, it provides laboratory services, pathology, and radiology services. It is actually the world’s third largest pathology/laboratory medicine company. It has operations in Australia, USA, Germany, Belgium, Switzerland, the United Kingdom, Ireland and New Zealand.
Sonic’s FY19 Result
The pathology business revealed revenue growth of 11.6% to $6.2 billion driven by organic revenue growth for the group of 4% on a constant currency basis.
The Australian, US and UK laboratory operations and the imaging division had higher growth rates whilst the German and Belgian operations were affected by regulatory changes.
Sonic said it achieved its guidance with underlying EBITDA growth of 6.7% (click here to learn what EBITDA means). EBITDA growth was 13.3% to $1.1 billion.
The healthcare company reported net profit after tax (NPAT) rose by 15.6% to $550 million. This compared to the market expectations of $533.33 million according to CommSec
and Bloomberg, so it seems to have materially beaten expectations.
During the year Sonic acquired anatomical pathology company Aurora Diagnostics in the US for $750 million. It also decided to sell its 85% stake of German GLP Systems, returning $130 million of cash.
Sonic Healthcare Management Comments
Sonic CEO Dr Colin Goldschmidt said: “Sonic Healthcare has produced another solid financial result in the 2019 financial year, in line with our expectations.
“Strategically we have taken major steps forward, opening up new pathways for future growth.”
Sonic Healthcare Dividend
The Sonic Healthcare Board declared a final dividend of $0.51 per share, which is an increase of 4.1%. That brings the full year dividend to $0.84 per share, an increase of 3.7% over last year.
Is Sonic Healthcare A Buy?
Sonic is valued at 23 times the estimated earnings for the 2020 financial year.
It’s a solid business with steadily growing earnings and a fully franked dividend yield of around 3%. It’s also exposed to the ageing population tailwinds. It could be part of a diversified defensive portfolio, but I prefer the idea of the reliable businesses in the free report below instead even more.
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