Sonic Healthcare Ltd (ASX: SHL) shares are back in focus after the pathology giant delivered double-digit growth in its 1H FY26 result, even as investors continue to question its US strategy and capital allocation priorities.
After a pandemic boom that sent some healthcare stocks soaring, the shine has faded for many former high-flyers. Sonic Healthcare is no exception. Its share price has roughly halved from its late 2021 peak and, like CSL (ASX: CSL), has faced a tougher post-Covid reality as testing volumes normalised and growth slowed.
Now, with a new chief executive at the helm, the conversation has shifted from expansion at any cost to capital discipline and returns.
What happened in 1H FY26
For the six months to 31 December 2025, Sonic reported:
- Revenue up 17% to $5.45 billion
- Operating earnings (EBITDA) up 10% to $907 million
- Net profit up 11% to $262 million
- Cash from operations up 10% to $682 million
- Earnings per share (EPS) up 8% to 53.1 cents
The company reaffirmed full-year operating earnings (EBITDA) guidance of $1.87 billion to $1.95 billion on a constant currency basis. The interim dividend was lifted 2.3% to 45 cents per share, 60% franked, maintaining its progressive payout approach.
Regionally, Germany and the UK were standout contributors, helped by acquisitions and contract wins. Australia delivered organic pathology revenue growth of 5% and radiology growth of 7%. The United States, however, recorded more modest growth of 3% and continues to face margin pressure.
A shift in tone under new leadership
New CEO Jim Newcombe steps into big shoes. His predecessor, Colin Goldschmidt, built Sonic into a global pathology heavyweight over three decades. Yet investors had grown frustrated with limited disclosure and what they viewed as underwhelming returns in certain regions.
Some shareholders have urged the new CEO to consider whether Sonic’s US business remains strategically sensible.
The US accounts for more than 20% of group revenue, but it is also the only region where Sonic is clearly not the market leader. Competing against Quest Diagnostics and LabCorp, returns have lagged. Some investors believe selling the division could unlock significant capital and allow Sonic to redeploy funds into stronger markets.
So far, there has been no indication of an exit. Instead, management has highlighted improvement initiatives and selective acquisitions within the US, including in haematology oncology testing.
Capital management takes centre stage
More broadly, Sonic outlined “capital management priorities” that signal a more measured phase of growth.
These include:
- Strengthening the balance sheet
- Increased “selectivity” in acquisitions
- Driving return on invested capital
- A sale and leaseback of its Brisbane hub laboratory, expected to raise $450 million to $500 million
There is also potential for share buybacks funded by surplus capital from property transactions.
For a company that expanded aggressively offshore in prior years, the emphasis has clearly moved toward efficiency, returns and disciplined capital allocation.
Where Sonic sits today
Sonic Healthcare generated $9.6 billion in revenue in FY25 and holds dominant positions in Australia, Germany and Switzerland. The platform remains substantial.
Post-Covid and under the leadership of a new CEO, the company’s strategic direction is less focused on revenue scale and more so on return on capital and transparency.
The first half result shows steady earnings growth and reaffirmed guidance. The bigger questions now centre on how the new leadership team allocates capital, manages the US exposure and communicates its strategy in the years ahead.
