Sonic Healthcare Limited (AU:SHL)
ASX:SHL
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Sonic Healthcare Limited
(Sydney:SHL)
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Rating:70Outperform
Price Target:
AU$22.50
▲(10.02% Upside)
Action:UpgradedDate:02/20/26
The score is driven primarily by solid financial performance (revenue growth and strong free cash flow) and a supportive earnings outlook with maintained EBITDA guidance and modest margin expansion. Valuation is helped by a strong dividend yield, while the main offsets are mixed technical momentum (negative MACD) and business headwinds highlighted on the call (U.S. margin pressure, working-capital/collections issues, higher net debt, and FX uncertainty).
Positive Factors
Cash generation
Sonic's FCF growth (+16.63%) and strong operating cash conversion (OCF to net income 2.53) indicate durable cash generation. Robust cash flows support reinvestment in automation, M&A integration, dividends and debt service, improving financial flexibility over the medium term.
Negative Factors
U.S. margin pressure
U.S. operations face structural profit challenges: low organic growth and required anatomical pathology rationalisation create ongoing restructuring costs and lower near-term margins. Given the U.S. scale (~$1.4bn revenue) this can weigh on group profitability until efficiencies are captured.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash generation
Sonic's FCF growth (+16.63%) and strong operating cash conversion (OCF to net income 2.53) indicate durable cash generation. Robust cash flows support reinvestment in automation, M&A integration, dividends and debt service, improving financial flexibility over the medium term.
Read all positive factors
Sonic Healthcare Limited (SHL) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$10.11B
Dividend Yield4.69%
Average Volume (3M)1.62M
Price to Earnings (P/E)10.6
Beta (1Y)0.84
Revenue Growth9.44%
EPS Growth-0.37%
CountryAU
Employees42,000
SectorHealthcare
Sector Strength45
IndustryMedical - Diagnostics & Research
Share Statistics
EPS (TTM)0.50
Shares Outstanding494,237,950
10 Day Avg. Volume1,694,025
30 Day Avg. Volume1,619,425
Financial Highlights & Ratios
PEG Ratio0.00
Price to Book (P/B)1.55
Price to Sales (P/S)1.34
P/FCF Ratio13.42
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$24.61Price Target Upside20.34% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)1.22
Revenue Forecast (FY)AU$10.96B
Sonic Healthcare Limited Business Overview & Revenue Model
Company Description
Sonic 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, c...
How the Company Makes Money
SHL makes money mainly by delivering diagnostic services and being paid for those services by a mix of government/public health reimbursement systems, private health insurers, hospitals, clinicians, and (in some markets) directly by patients. Its ...
Sonic Healthcare Limited Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 26, 2026
Earnings Call Sentiment Positive
The call presents a broadly positive operational and financial position — solid H1 results, maintained full-year EBITDA guidance, margin expansion (+30 bps), diversified organic growth across key markets (Germany, Australia, UK, Radiology) and progress on acquisitions, digital pathology and capital management initiatives (dividend increase, sale-and-leaseback program). Headwinds are meaningful but generally manageable: U.S. margin pressure and restructuring, slower revenue-collection benefits pushed into FY2027, working-capital distortion from a Change Healthcare cyber incident, higher net debt from acquisitions/property spending, FX uncertainty and pending Australian wage decisions. Management emphasizes operating leverage, synergy capture and disciplined capital allocation to address these challenges.Positive Updates
Strong H1 Financial Results
Revenue of $5.445 billion, EBITDA of $907 million and net profit of $262 million for H1 FY2026; EPS AUD 0.531. Management maintained full-year adjusted EBITDA guidance of $1.87bn–$1.95bn (constant currency).
Negative Updates
U.S. Margin Pressure and Restructuring
Margin decline in U.S. operations due to low organic revenue growth and restructuring costs; anatomical pathology represents ~1/3 of U.S. revenue (~$400m of ~$1.4bn) and rationalization of nine AP practices is underway. Some further, though described as de minimis, restructuring costs expected in H2.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong H1 Financial Results
Revenue of $5.445 billion, EBITDA of $907 million and net profit of $262 million for H1 FY2026; EPS AUD 0.531. Management maintained full-year adjusted EBITDA guidance of $1.87bn–$1.95bn (constant currency).
Read all positive updates
Company Guidance
Management maintained full‑year adjusted EBITDA guidance of AUD 1.87–1.95 billion on a constant‑currency basis, after reporting H1 revenue of AUD 5.445 billion, H1 EBITDA of AUD 907 million, H1 net profit of AUD 262 million and EPS of AUD 0.531; group organic growth was ~5% with adjusted EBITDA margins up 30 basis points year‑on‑year. They tightened below‑the‑line guidance to depreciation of AUD 770–780 million (constant currency), an interest‑expense increase of about 15% year‑on‑year (constant currency) and an effective tax rate of 27%; guidance excludes property sale gains, assumes only completed acquisitions and prevailing interest rates. Capital management metrics and priorities include maintaining an investment‑grade balance sheet (debt cover ratio ~2.5x), available headroom of ~AUD 1.0 billion before the interim dividend, a progressive interim dividend of AUD 0.45 (up 2.3%, 60% franked, record 5 Mar, pay 19 Mar) and a medium‑term dividend payout target of 70–80% of net profit, with potential sale‑and‑leaseback proceeds earmarked for share buybacks; management also flagged an FX tailwind for the full year that will be smaller than H1 and noted H1 acquisition costs of AUD 8 million.Sonic Healthcare Limited Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
68
Positive
Cash Flow
75
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 10.39B | 9.65B | 8.93B | 8.14B | 9.31B | 8.75B |
| Gross Profit | 3.07B | 3.19B | 2.33B | 6.87B | 3.41B | 7.14B |
| EBITDA | 1.29B | 1.24B | 1.66B | 1.72B | 2.83B | 2.56B |
| Net Income | 539.40M | 513.60M | 511.09M | 684.98M | 1.46B | 1.32B |
Balance Sheet | ||||||
| Total Assets | 17.03B | 16.05B | 14.83B | 13.56B | 13.11B | 12.27B |
| Cash, Cash Equivalents and Short-Term Investments | 557.12M | 673.77M | 645.00M | 797.99M | 780.00M | 899.83M |
| Total Debt | 7.34B | 5.17B | 4.52B | 3.10B | 3.01B | 3.23B |
| Total Liabilities | 8.31B | 7.58B | 6.75B | 5.64B | 5.68B | 5.77B |
| Stockholders Equity | 8.56B | 8.32B | 7.92B | 7.74B | 7.27B | 6.38B |
Cash Flow | ||||||
| Free Cash Flow | 865.97M | 960.55M | 492.01M | 974.02M | 1.85B | 1.68B |
| Operating Cash Flow | 1.36B | 1.30B | 1.07B | 1.47B | 2.23B | 2.04B |
| Investing Cash Flow | -1.28B | -577.62M | -1.81B | -580.04M | -989.18M | -386.75M |
| Financing Cash Flow | -70.48M | -735.93M | 592.41M | -911.51M | -1.35B | -1.95B |
Sonic Healthcare Limited Technical Analysis
Negative
20.45
Price Trends
21.80
Negative
21.93
Negative
22.82
Negative
Market Momentum
-0.50
Positive
39.85
Neutral
65.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:SHL, the sentiment is Negative. The current price of 20.45 is below the 20-day moving average (MA) of 21.08, below the 50-day MA of 21.80, and below the 200-day MA of 22.82, indicating a bearish trend. The MACD of -0.50 indicates Positive momentum. The RSI at 39.85 is Neutral, neither overbought nor oversold. The STOCH value of 65.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:SHL.
Sonic Healthcare Limited Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | AU$10.11B | 10.64 | 6.39% | 4.69% | 9.44% | -0.37% | |
67 Neutral | AU$257.16M | 10.00 | 6.06% | 6.22% | 6.65% | ― | |
59 Neutral | AU$393.75M | 23.92 | 16.35% | 4.60% | 6.73% | 37.16% | |
55 Neutral | AU$879.60M | 26.42 | 2.05% | 2.65% | 33.54% | ― | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
46 Neutral | AU$406.63M | -5.40 | -67.21% | ― | -23.02% | 33.11% | |
41 Neutral | AU$18.85M | -2.23 | -23.93% | ― | 62.81% | 16.37% |
* Healthcare Sector Average
AU:SHL
Sonic Healthcare Limited
20.45
-4.42
-17.76%
AU:HLS
Healius Limited
0.56
-0.45
-44.72%
AU:GSS
Genetic Signatures Ltd.
0.08
-0.39
-82.53%
AU:IDX
Integral Diagnostics Ltd.
2.36
0.15
6.88%
AU:ACL
Australian Clinical Labs Ltd
2.08
-0.77
-27.12%
AU:MVF
Monash IVF Group Ltd
0.66
-0.42
-39.17%
Sonic Healthcare Limited Corporate Events
Sonic Healthcare Issues 54,808 New Shares on Conversion of Unquoted Securities
Mar 4, 2026
Sonic Healthcare Limited has notified the market of the issue of 54,808 new fully paid ordinary shares following the conversion or exercise of previously unquoted securities. The additional equity, recorded on 4 March 2026, slightly expands the co...
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.