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Sonic Healthcare Limited (AU:SHL)
ASX:SHL
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Sonic Healthcare Limited
(Sydney:SHL)
Rating:73Outperform
Price Target:
AU$30.00
▲(12.36%Upside)
Sonic Healthcare Limited (SHL) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$12.56B
Dividend Yield3.36%
Average Volume (3M)1.17M
Price to Earnings (P/E)23.0
Beta (1Y)0.85
Revenue Growth10.15%
EPS Growth6.20%
CountryAU
Employees42,000
SectorHealthcare
Sector Strength46
IndustryMedical - Diagnostics & Research
Share Statistics
EPS (TTM)0.49
Shares Outstanding480,403,960
10 Day Avg. Volume1,200,656
30 Day Avg. Volume1,166,035
Financial Highlights & Ratios
PEG Ratio2.78
Price to Book (P/B)2.25
Price to Sales (P/S)0.00
P/FCF Ratio21.53
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$31.33Price Target Upside17.34% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Sonic Healthcare Limited Business Overview & Revenue Model
Company DescriptionSonic Healthcare Limited offers medical diagnostic services to medical practitioners, hospitals, community health services, and their collective patients. The company provides laboratory medicine/pathology testing services, such as biochemistry, cytopathology, genetics, haematology, histopathology, immunoserology, microbiology, molecular pathology, prenatal testing, toxicology, and ancillary functions; and radiology services, including magnetic resonance imaging, computed tomography (CT), ultrasound, X-ray, mammography, nuclear medicine, PET CT, interventional procedures, and bone mineral densitometry. It also offers primary care medical services comprising general practice clinics, occupational health services, skin cancer clinics, after-hours general practice services, general practice IT solutions, and community-based healthcare services. The company operates in Australia, the United Kingdom, Ireland, the United States, Germany, Switzerland, New Zealand, Belgium, and internationally. Sonic Healthcare Limited was incorporated in 1934 and is headquartered in Sydney, Australia.
How the Company Makes MoneySonic Healthcare Limited generates revenue primarily through its diverse range of diagnostic and healthcare services. The company's main revenue streams include pathology and laboratory services, which account for the bulk of its earnings. These services cover a wide array of tests and diagnostics essential for patient care, ranging from routine blood tests to complex genetic analyses. Additionally, Sonic Healthcare derives income from radiology services, including imaging procedures such as X-rays, MRIs, and CT scans. The company also operates in the clinical services sector, providing specialized medical services to various healthcare entities. Key factors contributing to its revenue include long-term contracts with hospitals and healthcare institutions, strategic acquisitions to expand its service offerings, and maintaining high standards of quality and reliability in service delivery. Sonic Healthcare's strong market presence and reputation for excellence further bolster its financial performance.
Sonic Healthcare Limited Earnings Call Summary
Earnings Call Date:Feb 19, 2025
(Q2-2025)
| % Change Since: -5.92%|
Next Earnings Date:Aug 21, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive outlook with significant revenue and profit growth, successful M&A activities bolstering future potential, and strong performances in several divisions. However, challenges in the US market, initial losses on a new UK contract, and ongoing labor cost management issues temper the overall sentiment.Q2-2025 Updates
Positive Updates
Revenue and Profit Growth
Sonic Healthcare reported revenue of $4.669 billion, up 8% year-over-year. EBITDA increased by 12% to $827 million, and net profit rose 17% to $237 million.
Strong Cash Generation
The company generated strong operating cash flow of $620 million, which is up 37% on the prior period.
Margin Expansion
EBITDA margin increased by 60 basis points, and excluding recent acquisitions, the margin expansion was 90 basis points.
Successful M&A Activity
The acquisition of LADR in Germany, expected to add over AUD 80 million in EBITDA, and other acquisitions in Switzerland and Germany are on track with synergy initiatives.
Australian Pathology Division Performance
The division showed strong organic revenue growth of 9% and significant progress in genetics and private billing initiatives.
UK Growth and Contract Wins
The UK division reported 10% growth with notable contract wins, including Hertfordshire and West Essex, and a new hub lab in Watford.
Radiology Division Expansion
The division achieved organic revenue growth of 12% and is investing in AI solutions with plans to open new sites.
Negative Updates
US Market Challenges
Organic growth in the US was only 2% due to weaker performance in anatomical pathology and slower-than-expected benefits from the XiFin billing system.
Belgium Revenue Decline
Organic growth was negative at -1%, impacted by fee cuts despite indexation, although future growth is expected to be positive.
Labor Cost Challenges
While labor costs as a percentage of revenue reduced, there is still room for improvement, particularly in the US division.
HWE Contract Initial Losses
The Hertfordshire and West Essex contract will initially incur a loss of AUD 10 million, with profitability expected in FY 2026.
Company Guidance
During the Sonic Healthcare financial results call for the half year ending December 31, 2024, CEO Dr. Colin Goldschmidt highlighted several key metrics indicating the company's recovery and growth post-pandemic. Sonic's revenue increased by 8% to AUD 4.669 billion, with EBITDA up 12% to AUD 827 million. Net profit saw a 17% rise to AUD 237 million, and earnings per share grew by 15% to AUD 0.492. Organic revenue growth was strong at 6.1%, contributing to a 60-basis-point expansion in the EBITDA margin, which would have been 90 basis points excluding recent zero-margin acquisitions. Labor costs as a percentage of revenue decreased by 50 basis points, reflecting effective cost management. The company expects continued growth, bolstered by acquisitions like the LADR Group, anticipated to add over AUD 80 million in annual EBITDA. Additionally, a dividend of AUD 0.44 was declared, marking a 2.3% increase from the previous year.Sonic Healthcare Limited Financial Statement Overview
Summary
Sonic Healthcare Limited demonstrates strong profitability and operational efficiency, with stable margins and effective management of equity. While there is a slight increase in leverage and a recent decline in free cash flow, the company remains financially robust with well-managed resources. Ongoing attention to leverage and cash flow generation will be key to sustaining long-term financial health.Income Statement
Sonic Healthcare Limited shows a robust gross profit margin and stable net profit margins over the past years. Despite a moderate decline in revenue growth from 2022 to 2023, the company has managed to maintain strong EBIT and EBITDA margins, indicating operational efficiency and stability in its income-generating capabilities.76
Positive
Balance Sheet
The company maintains a healthy debt-to-equity ratio, though it has increased recently, which could indicate higher leverage risk. Return on Equity (ROE) remains strong, demonstrating effective use of equity capital. The equity ratio shows a solid level of equity financing, contributing to financial stability.72
Positive
Cash Flow
Operating cash flow remains strong, yet there has been a significant decline in free cash flow year-over-year. The company has a solid operating cash flow to net income ratio, suggesting efficient cash conversion from profits. However, the drop in free cash flow growth might indicate increased capital expenditures or reduced cash generation.68
Positive
| Breakdown | TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 9.33B | 8.93B | 8.14B | 9.31B | 8.75B | 6.56B |
| Gross Profit | 3.08B | 2.33B | 2.84B | 3.73B | 3.43B | 2.20B |
| EBITDA | 1.75B | 1.66B | 1.72B | 2.83B | 2.56B | 1.42B |
| Net Income | 545.47M | 511.09M | 684.98M | 1.46B | 1.32B | 527.75M |
Balance Sheet | ||||||
| Total Assets | 15.38B | 14.83B | 13.56B | 13.11B | 12.27B | 12.63B |
| Cash, Cash Equivalents and Short-Term Investments | 541.32M | 645.00M | 797.99M | 780.00M | 899.83M | 1.23B |
| Total Debt | 4.80B | 4.52B | 3.10B | 3.01B | 3.23B | 4.62B |
| Total Liabilities | 7.04B | 6.75B | 5.64B | 5.68B | 5.77B | 6.97B |
| Stockholders Equity | 8.20B | 7.92B | 7.74B | 7.27B | 6.38B | 5.57B |
Cash Flow | ||||||
| Free Cash Flow | 823.59M | 492.01M | 974.02M | 1.85B | 1.68B | 1.03B |
| Operating Cash Flow | 1.24B | 1.07B | 1.47B | 2.23B | 2.04B | 1.36B |
| Investing Cash Flow | -886.31M | -1.81B | -580.04M | -989.18M | -386.75M | -334.92M |
| Financing Cash Flow | -464.85M | 592.41M | -911.51M | -1.35B | -1.95B | -536.74M |
Sonic Healthcare Limited Technical Analysis
Positive
26.70
Price Trends
26.29
Positive
26.47
Positive
26.78
Negative
Market Momentum
>-0.01
Positive
55.55
Neutral
46.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:SHL, the sentiment is Positive. The current price of 26.7 is above the 20-day moving average (MA) of 26.50, above the 50-day MA of 26.29, and below the 200-day MA of 26.78, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 55.55 is Neutral, neither overbought nor oversold. The STOCH value of 46.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:SHL.
Sonic Healthcare Limited Peers Comparison
Overall Rating
UnderperformOutperform
Sector (51)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | AU$12.56B | 22.96 | 6.86% | 3.36% | 10.15% | 6.20% | |
51 Neutral | $7.41B | 0.36 | -61.88% | 2.34% | 16.99% | 1.69% | |
| €315.36M | ― | -4.46% | ― | ― | ― | ||
| $5.42B | 1,144.55 | 0.52% | 2.00% | ― | ― | ||
| $92.46M | ― | -15.86% | ― | ― | ― | ||
53 Neutral | AU$953.42M | 105.35 | 1.14% | 1.98% | 7.83% | ― | |
45 Neutral | AU$60.84M | ― | -45.40% | ― | 13.61% | -55.12% |
* Healthcare Sector Average
Performance Comparison
AU:SHL
Sonic Healthcare Limited
26.70
2.02
8.18%
DE:PGZ
Healius Limited
0.42
-0.18
-30.00%
RMSYF
Ramsay Health Care
25.18
-5.20
-17.12%
SOMNF
Somnomed Limited
0.42
0.25
147.06%
AU:MVP
Medical Developments International Limited
0.54
0.16
42.11%
AU:IDX
Integral Diagnostics Ltd.
2.56
0.03
1.19%
Sonic Healthcare Limited Corporate Events
Sonic Healthcare Limited Announces Cessation of Securities
Jun 16, 2025
Sonic Healthcare Limited announced the cessation of 20,000 securities, identified by the ASX security code SHLAK, as of June 16, 2025. This cessation of securities may impact the company’s capital structure and could have implications for stakeholders, reflecting a strategic decision in managing their financial operations.
The most recent analyst rating on (AU:SHL) stock is a Hold with a A$25.40 price target. To see the full list of analyst forecasts on Sonic Healthcare Limited stock, see the AU:SHL Stock Forecast page.
Sonic Healthcare Director Increases Shareholding
Apr 11, 2025
Sonic Healthcare Limited announced a change in the interest of its director, Christine Bennett, who acquired an additional 1,000 fully paid ordinary shares in the company, bringing her total to 7,100 shares. This on-market purchase reflects a continued confidence in the company’s performance and could signal positive sentiment to stakeholders regarding the company’s future prospects.
Sonic Healthcare Director Increases Shareholding
Apr 8, 2025
Sonic Healthcare Limited announced a change in the director’s interest, with Katharine Giles acquiring 850 additional fully paid ordinary shares, bringing her total to 3,600 shares. This on-market purchase reflects confidence in the company’s future prospects and may influence stakeholder perceptions positively.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.