The Sonic Healthcare Limited (ASX: SHL) share price is rising after the healthcare giant released its September 2020 quarterly results.
Sonic’s impressive growth
Sonic advised the market that revenue grew 29% on the corresponding quarter in FY20 to $2,144 million, while EBITDA jumped 71% to $580 million.
EBITDA grew quicker than revenue due to “cost savings initiatives that were implemented during the early days of the pandemic”.
Sonic has played an important role in conducting COVID-19 testing across its laboratories in Australia, Europe and the US. The company has conducted in excess of 9 million tests and counting.
That said, management stated non-COVID-19 related volumes are down in the US (5-10%) and the UK (10-15%). Reasons cited include social distancing, lockdowns and reduced in-patient/out-patient activity.
Outlook
Sonic informed the market that it is “uncertain how long the current revenue growth rates will continue, with both base business and COVID-19 testing volumes potentially fluctuating in different markets as the pandemic evolves”.
As a result, the company again refrained to provide FY21 earnings guidance.
Summary
Sonic’s revenue and EBITDA are currently surging due to COVID-19 and nobody (including management) is sure when this surge will come to an end.
Therefore, I don’t believe the current growth is sustainable and would prefer to invest in other ASX growth shares.
