Sonic Healthcare is raising $600 million in an accelerated placement to big shareholders and plans to ask small shareholders for another $100 million to help pay for its $750 million purchase of US group Aurora Diagnostics.
Sonic Healthcare (SHL) has shelved a challenging year, providing an outlook for FY16 considered the best for some time. Guidance for earnings is in the range of $850-875m, at spot FX rates, which most brokers find reasonable and achievable. The risk is unexpected cuts to government funding.
As we discussed in a blog post last month, pathology markets around the world are predominantly supported by government funding. This is a blessing and a curse for private operators, evidenced by Sonic Healthcare’s latest announcement.
Macquarie observes growth in Germany is subdued and there are challenges in that region as well as in the US because of reduced reimbursement. However, the broker also considers the changes present opportunities for acquisitions.
Sonic reiterated FY19 guidance at its AGM, albeit with a slight tick-up on an A$ adjustment, expecting a typical second-half earnings skew. Guidance nonetheless depends on no further regulatory changes outside those already known for the US and Germany.