More Covid tests meant more money for Sonic Healthcare in the year to June 30, with the pathology group arguably the single biggest beneficiary of the pandemic on the ASX – both the first wave and now the Delta variant.
But there was an apparent downside in yesterday’s financial year results: uncertainty about the outlook saw the shares fall yesterday.
The company told the ASX that it will not provide earnings guidance for FY22 due to COVID-19 related unpredictability:
“The pandemic has the potential to cause fluctuations in both COVID-19 testing revenues and the base business, although the base business has become increasingly resilient to the impacts of pandemic waves.
“The underlying growth drivers for healthcare services remain unchanged. Base business fluctuations are also mitigated by geographical and business sector diversity. The COVID-19 Delta variant is currently driving increases in COVID-19 testing revenues,” directors said.
Its shares opened relatively flat, down 0.2% to $42.75, before sellers took control, dragging the share price down 4.4% to an intraday low of $40.94.
They ended down 2.7% at $41.65 at the close on Monday
That was after Sonic reported a massive 149% leap in net profit for 2021 to $1.3 billion.
This was on a 28% surge in full-year revenues to a record $8.7 billion.
The $1.3 billion net profit tells us how much money Sonic made out of what is an essential part of the anti-Covid toolkit, as did the final dividend of 55 cents a share, up from 51 cents a year ago.
That made a record 91 cents a year for the full financial year, up from 85 cents a share.
Around 30 million coronavirus tests have been processed to date at Sonic’s 60 labs around the world.
The company admitted its volumes were lower in the second half than the first, but said there was a resurgence in demand recently due to the rise of Delta.
Outside of COVID testing, global base revenues were up 6% on last year. It was also up 4% from 2019, the last ‘normal’ year for the company (and every other company and country!).
Sonic Healthcare highlighted that its base business “has become increasingly resilient to impacts of pandemic waves and benefits from geographical and business diversification”.
We have to remember the shares peaked last Friday at their all-time high of $42.75 on expectations of a very strong result.
That was confirmed yesterday so perhaps we saw yet another example of ‘buy on the prospect, sell on the result’, with the uncertainty about the outlook making profit taking look timely.
