By David Winning
SYDNEY--Sonic Healthcare Ltd. said its annual profit rose by 11%, reflecting strong volumes of Covid-19 tests and a recovery in demand for other services as many countries shifted toward treating the virus as endemic.
Sonic said its net profit totaled 1.46 billion Australian dollars (US$1.00 billion) in the 12 months through June, up from A$1.32 billion a year earlier. Directors of the company declared a final dividend of 60 Australian cents a share, up from a payout of 55 cents a year earlier.
Sonic's laboratories have been a key part of many countries' response to the pandemic, analyzing samples daily from tens of thousands of people suspected of having Covid-19. On Wednesday, Sonic said annual Covid-19 revenue rose by 13% compared to a year ago when currency swings were stripped out.
However, demand for PCR tests has begun to fall as countries let the virus circulate in the community and rely more on at-home testing kits. That is threatening to weaken a key pillar of Sonic's profits. At the same time, Sonic is facing an acceleration in cost inflation in many geographies, including in Australia and Europe, which could eat into profit margins.
Still, the revenue windfall from conducting Covid-19 tests on behalf of governments has strengthened Sonic's balance sheet. Analysts say profit margins on Covid-19 tests are higher than the company's traditional pathology business. Sonic's gearing--a measure of debt relative to equity--was at a record-low level at the end of June.
Sonic's strong cash flow generation has stoked speculation about how the company will use surplus capital. In February, Sonic said it would buy back shares worth up to A$500 million after completing around A$585 million of acquisitions. Some analysts expect Sonic to remain on the hunt for deals world-wide as it seeks to keep earnings momentum going.
On Wednesday, Sonic said its buyback was well-progressed and it had A$1.6 billion of available liquidity.
Sonic said its full-year revenue rose by 6.7% to A$9.34 billion, while its earnings before interest, tax, depreciation and amortization--or Ebitda--improved by 11% to A$2.8 billion. Stripping out the boost from Covid-19 tests, Sonic said revenue from its base business rose by 2.1% after the impact of currency swings was excluded.
Write to David Winning at firstname.lastname@example.org
(END) Dow Jones Newswires