COVID has been good news for two of Australia’s health giants – Sonic Healthcare and CSL which both revealed very strong double-digit profits on Thursday for the six months to December, and the very good chance of a record full year result at June 30.
Both companies also rewarded shareholders and say the outlook for the full year is solid
For CSL it was a rise in global demand for its specialist medicines and vaccines that saw it report a 44% jump in net profit for the half as the country’s biggest locally owned pharmaceutical group starts the mammoth task of manufacturing COVID-19 shots for Australia.
The company topped market forecasts in reporting a $US1.8 billion ($2.3 billion) profit for the six months to December 31.
That was off the back of a 15% rise in sales for the half to $US5.7 billion.
CSL also maintained its forecast for the full financial year that net profit would rise about 8% to between $US2.17 billion and $US2.27 billion.
Judging by the first half performance (and even accounting for the extra costs this half from the vaccination program and restarted R&D in other areas), that estimate does look a bit light on.
CSL will pay an interim dividend of $US1.04 a share, up from 95 US cents previously.
The company said in its ASX release that it was strong demand for its flagship immune deficiency treatment Hizentra boosted sales at its CSL Behring division 9% to $US4.3 billion.
As good as that was the mainly flu vaccine producer Seqirus was the standout performer, with sales up 38% to $US1.4 billion amid global demand for seasonal influenza vaccines in the face of the COVID-19 pandemic.
“I am pleased to report a strong result during an unprecedented time of uncertainty during the most severe pandemic of our lifetime,” chief executive Paul Perreault said in the statement.
For analysts the most important news in the statement was the comment from the CEO who revealed CSL’s “plasma collections have been adversely affected during the pandemic.”
“To combat this, we have implemented a number of initiatives to increase plasma collections and introduced a customer fulfilment process to ensure the equitable distribution of medicines to patients.”
That means extra costs, a question analysts had been wondering about and one that will be a focus of interest from now on.
Pathology tester Sonic Healthcare has confirmed a bumper half-year, with net profit up 166% to $678 million off the back of smaller but still strong 33% rise in revenue to $4.4 billion for the half.
Sonic has rebounded strongly from the initial bumpiness from COVID-19 shutdowns that saw it forced to halt medical testing in a range of jurisdictions for varying periods of time.
That problem eased as the lockdowns came off and the company was able to offset the early fall by processing more COVID-19 tests as virus surges in the US in the closing months of 2020 which saw its laboratory business strong.
Sonic says it has processed more than 18 million COVID 19 tests in 60 countries.
Excluding COVID-19 testing, Sonic’s base business revenue eased 1% for the six months to December.
The company boosted interim dividend to a high 36 cents a share.
CEO Colin Goldschmidt said in a statement to the ASX this was still a strong result, because it was a “very significant improvement versus the dramatic falls in base business we experienced from mid-March through May 2020”.
“Our Laboratory division achieved organic revenue growth of 39% in the half year, with very strong growth in the USA, Germany, Belgium and the UK. Without the benefit of COVID-19 testing, our Imaging division grew revenue by 14%, much higher than long term industry averages, an amazing outcome which included taking market share.
“On the back of this strong revenue growth, the operating leverage inherent in Sonic’s business was very apparent, with the level of profit growth far exceeding that of revenue. Our existing infrastructure of specimen collection facilities, courier networks, laboratories and other facilities, equipment, IT, management, staff and supply chains were all crucial to handle the increased patient volumes we have been, and continue to be, experiencing.
“Our global base business revenue (excluding COVID testing) declined by 1% versus the comparative period, which was a very significant improvement versus the dramatic falls in base business we experienced from mid-March through May 2020. It appears our base business is becoming increasingly less affected by social restrictions and fear of infection, through better community understanding of the dangers in delaying or avoiding essential healthcare services. Sonic is also benefiting from our geographical and healthcare sector diversification.