Sonic Up

By Glenn Dyer | More Articles by Glenn Dyer

Pathology and radiology service provider Sonic Healthcare showed it’s considered by many investors, to be the leader in the healthcare sector.

After a solid result for the December 31 half year, the company said yesterday that it was on track to meet full year guidance after a strong half year.

"Sonic reaffirms its full year guidance given in August 2009 of Net Profit growth of 10-15% over the 2009 “Ordinary Earnings” level of A$315M, on a constant currency basis (applying 2009 average currency exchange rates to 2010)," the company said.

"This guidance excludes the incremental positive impact of business acquisitions announced after August 2009 (East Side and Medhold).

"Net profit was a record $155.2 million up 13.7% on the prior half year. (A$162 million on a constant currency basis, an increase of 19% over the comparative period).

"The result was achieved on a 9% rise in revenues of A$1,489 million (A$1,566 million on a constant currency basis, 9% higher than the corresponding period in the prior year)."

But investors didn’t buy the result and they sold the shares, which fell more than 4% at one stage before retracing a little to close down 29c, or 2%, at $14.20.

The shares had a small recovery in afternoon trading.

Sonic chief executive and managing director Colin Goldschmidt said in the statement it is a strong result.

"Sonic Healthcare has performed very strongly over the half year, and we are on track to deliver on our full year guidance," Dr Goldschmidt said.

Full year guidance is net profit growth of 10-15 per cent over the 2009 ordinary earnings of $315 million on a constant currency basis excluding acquisitions announced after August 2009.

"Sonic Healthcare is now a truly international company, with over 60 per cent of our pathology revenue sourced in Europe and the USA," Dr Goldschmidt said.

"Strong growth in these off-shore markets is set to continue."

Sonic said its first half result was driven by strong organic growth in its key markets, especially in Australian pathology and the US.

In the half year the group has made four synergistic acquisitions in the US and Germany, and most recently, the Medhold Group, providing entry into the markets of Belgium and the Netherlands.

The company says the benefits of these acquisitions will flow in the second half and for years to come.

Sonic’s board declared an interim dividend of 24 cents per share, up 9% from the previous first half of 2008-09.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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