The Sonic Healthcare Ltd (ASX: SHL) share price is in focus after it released its FY21 result showing big profit.
Sonic’s FY21 result
It reported that revenue grew by 28% to $8.8 billion. It’s playing a crucial role in combating the COVID-19 pandemic where it operates. Sonic continues to provide its pre-COVID essential healthcare services with around 138 million patients during FY21.
It has done approximately 30 million COVID-19 PCR tests across around 60 Sonic laboratories around the world. Sonic is also Australia’s largest non-government COVID vaccination provider.
The healthcare business said that it’s generating significant revenue and profit from COVID-19 testing. The PCR test volumes were lower in the second half than the first, but are now increasing with the spread of the Delta variant.
FY21 global base revenue (excluding COVID testing) was up 6% against FY21, and up 4% compared to FY19 (before the pandemic)
Sonic experienced profit margin growth in both its laboratory and imaging divisions.
EBITDA (EBITDA explained) grew by 81% to $2.6 billion and net profit after tax (NPAT) went up by 149% to $1.3 billion.
The COVID testing and profit growth has seemingly been driving the Sonic Healthcare share price higher over the last year (up 24%).
What does management plan to do with its balance sheet?
Sonic Healthcare says that its balance sheet is set for growth by acquisition. Its gearing is at record low level. It has available liquidity of around $1.5 billion.
It has already announced an acquisition called Canberra Imaging Group. CIG has annual revenue of around $60 million.
Dividend
The board decided to maintain its progressive dividend policy. The final dividend has been increased by 7.8% to 55 cents. That means the full year dividend was increased by 7.1% to $0.91.
Outlook for the Sonic Healthcare and the share price
Sonic said that its base business is increasingly resilient to pandemic waves with “strong” underlying drivers of demand for healthcare services.
It’s expecting demand for COVID PCR testing to continue into the foreseeable future, with volumes increasing because of the Delta variant.
Management said that geographical diversification is providing increased opportunities for expansion and risk mitigation. It’s currently pursuing “significant” opportunities in Australia, USA and Europe.
I think Sonic is a high-quality business and it’s doing really well right now. It can lock in this profit growth with smart acquisitions.
If testing continues for longer than expected, today’s Sonic share price could still be good.
