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Sonic Healthcare Limited (SKHHY)
OTHER OTC:SKHHY
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Sonic Healthcare
(OTC:SKHHY)
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Rating:69Neutral
Price Target:
$17.50
▲(16.98% Upside)
Sonic Healthcare's overall stock score reflects its strong financial performance and positive earnings outlook, driven by strategic acquisitions and organic growth. However, technical indicators suggest a bearish trend, and challenges in the U.S. market pose risks. The stock's moderate valuation and attractive dividend yield provide a balanced investment opportunity.
Positive Factors
Strong free cash flow generation
A 72.66% rise in free cash flow indicates durable cash generation from core diagnostic operations. This strengthens capacity to fund capital expenditures, dividends and bolt-on M&A without relying excessively on external funding, supporting long-term strategic flexibility.
Consistent revenue and organic growth
Sonic's recurring fee-for-service diagnostic model produced 8% revenue growth and 5% organic growth, reflecting steady demand for lab and imaging services. Durable end-market drivers (aging populations, chronic disease) underpin multi-year revenue stability and predictable utilization trends.
Successful M&A integration and synergies
The company has integrated acquisitions (notably LADR) and expects synergies from Swiss and German deals to peak in FY26–27. Effective M&A execution strengthens geographic diversification, scale economics and margin expansion potential over a sustained multi-year horizon.
Negative Factors
Rising leverage
An increased debt-to-equity ratio of 0.62 signals higher leverage that can elevate interest burden and reduce financial flexibility. Over 2–6 months this could constrain capital allocation, especially if interest costs rise or planned synergies and cash flows take longer to materialize.
Profitability pressure and lower ROE
Declining net margin to 5.32% and ROE of 6.17% point to weakening capital efficiency and profitability. Persisting margin pressure reduces the buffer against reimbursement cuts and cost shocks, making sustained margin improvement critical for long-term return generation.
U.S. market and regulatory risks
Negative U.S. growth, a lost payer contract and risk of PAMA fee reductions highlight structural exposure to reimbursement and contract concentration in the largest market. Regulatory or contract setbacks can materially reduce revenues and returns over the medium term.
Sonic Healthcare (SKHHY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.81B
Dividend Yield4.08%
Average Volume (3M)19.70K
Price to Earnings (P/E)23.1
Beta (1Y)0.39
Revenue Growth8.13%
EPS Growth-1.78%
CountryUS
Employees42,000
SectorHealthcare
Sector Strength45
IndustryMedical - Diagnostics & Research
Share Statistics
EPS (TTM)0.37
Shares Outstanding494,237,950
10 Day Avg. Volume29,893
30 Day Avg. Volume19,698
Financial Highlights & Ratios
PEG Ratio0.00
Price to Book (P/B)1.57
Price to Sales (P/S)1.35
P/FCF Ratio13.57
Enterprise Value/Market Cap2.01
Enterprise Value/Revenue2.19
Enterprise Value/Gross Profit6.64
Enterprise Value/Ebitda12.11
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Sonic Healthcare Business Overview & Revenue Model
Company DescriptionSonic Healthcare Limited offers medical diagnostic services in Australia. The company provides laboratory medicine/pathology; diagnostic imaging/radiology, including magnetic resonance imaging, computed tomography (CT), ultrasound, X-ray, mammography, nuclear medicine, PET CT, interventional procedures, and bone mineral densitometry; and primary care medical services comprising general practice services, occupational health services, remote health services, community and home nursing services, primary care research programs, health assessment technologies, clinical trials, and chronic disease management programs to clinicians, hospitals, community health services, and their patients. It also offers administrative services and facilities to medical practitioners. The company operates in Australia, New Zealand, the United Kingdom, the United States, Germany, Switzerland, Belgium, and Ireland. Sonic Healthcare Limited was incorporated in 1934 and is headquartered in Sydney, Australia.
How the Company Makes MoneySonic Healthcare generates revenue primarily through the provision of pathology and diagnostic imaging services. The company operates a network of laboratories and imaging centers that bill healthcare providers and patients for various tests and procedures. Key revenue streams include fees for blood tests, biopsies, radiological examinations, and other diagnostic services. Additionally, Sonic Healthcare engages in partnerships with healthcare systems and organizations, which can lead to long-term contracts and recurring revenue. The company also benefits from economies of scale, as its large operations allow for cost efficiencies and competitive pricing in the diagnostics market. Factors contributing to its earnings include the growing demand for diagnostic services, strategic acquisitions to expand its service offerings, and its established reputation for quality and reliability in the healthcare sector.
Sonic Healthcare Earnings Call Summary
Earnings Call Date:Aug 20, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Feb 19, 2026
Earnings Call Sentiment Positive
Sonic Healthcare demonstrated strong financial performance and strategic growth through acquisitions and new contracts. However, challenges in the U.S. market and regulatory pressures pose some risks. The company's outlook remains positive, with expected strong earnings growth in FY 2026.Q4-2025 Updates
Positive Updates
Strong Financial Performance
Sonic Healthcare reported revenue of $9.645 billion, up 8% from the previous year. EBITDA also increased by 8%, reaching $1.725 billion, and net profit rose by 7% to $514 million.
Successful Acquisitions and Integration
The company successfully integrated several acquisitions, including LADR in Germany, which will contribute significant revenue. Synergies from Swiss acquisitions are expected to peak in FY 2026 and FY 2027.
Positive Outlook for FY 2026
Guidance for FY 2026 suggests strong earnings growth, with expected EBITDA of $1.87 billion to $1.95 billion on a constant currency basis, representing up to 13% growth on FY 2025.
Expansion in Australian Pathology
Australian Pathology division showed strong performance with organic revenue growth of 6% and successful cost management strategies.
New Contracts and Market Expansion
Sonic Healthcare won new contracts in the U.K. and Australia, including lab services for North Shore Private Hospital and Hollywood Private Hospital. They also secured a contract for the National Bowel Cancer Screening program.
Negative Updates
Challenges in U.S. Market
Statutory growth in the U.S. was negative 2%, impacted by the sale of the West division and the loss of a payer contract in Alabama. Organic growth was minus 1% on a constant currency basis.
Regulatory and Contractual Challenges
The company faced a reduction in the minimum KV quota for statutory insurance fees in Germany and potential PAMA fee cuts in the U.S., though the latter may be postponed or canceled.
Anatomical Pathology Revenue Pressure
Anatomic pathology growth in the U.S. was weaker than clinical pathology, partly due to the loss of pathologists in small labs and the impact of the Change Healthcare cyber attack.
Company Guidance
During the Sonic Healthcare conference call for the fiscal year ended June 30, 2025, the company reported positive financial metrics and provided guidance for the upcoming year. Revenue for FY 2025 was $9.645 billion, marking an 8% increase from the prior year, while EBITDA also rose 8% to $1.725 billion. Net profit reached $514 million, up 7%, with cash generation nearing $1.3 billion and earnings per share of $0.1067. The company achieved its guidance with a constant currency EBITDA of $1.702 billion, and organic revenue growth was 5%. Looking ahead to FY 2026, Sonic Healthcare expects strong earnings growth, driven by organic growth and synergies from acquisitions in Switzerland and Germany, particularly from LADR. The EBITDA guidance for FY 2026 is set between $1.87 billion and $1.95 billion on a constant currency basis, equating to $1.94 billion to $2.02 billion using current exchange rates, reflecting up to 13% EBITDA growth from FY 2025, or about 16% growth with current exchange rates. The company anticipates an effective tax rate of around 27% and an interest expense increase of 15% to 20% on a constant currency basis. Sonic Healthcare also announced a final dividend of $0.63 per share, with total dividends for the year up 1% to $1.07 per share.Sonic Healthcare Financial Statement Overview
Summary
Sonic Healthcare exhibits strong financial health with consistent revenue growth and robust cash flow generation. While profitability margins have faced some pressure, the company maintains a solid capital structure. The increase in leverage warrants careful monitoring to ensure financial stability.Income Statement
Sonic Healthcare has demonstrated a consistent revenue growth trend, with a 6.52% increase in the latest year, indicating strong market demand. However, the net profit margin has slightly decreased to 5.32%, suggesting some pressure on profitability. The gross profit margin remains stable at 33.05%, reflecting efficient cost management. EBIT and EBITDA margins are healthy, but there is room for improvement in operational efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio has increased to 0.62, indicating a moderate level of leverage, which could pose a risk if not managed carefully. Return on equity has decreased to 6.17%, suggesting a decline in profitability relative to shareholder equity. The equity ratio remains strong at over 50%, indicating a solid capital structure.70
Positive
Cash Flow
Sonic Healthcare's cash flow performance is robust, with a significant 72.66% growth in free cash flow, highlighting strong cash generation capabilities. The operating cash flow to net income ratio is 0.58, indicating efficient conversion of earnings into cash. The free cash flow to net income ratio of 0.74 suggests effective cash management.80
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.16B | 9.65B | 8.93B | 7.96B | 9.31B | 8.75B |
| Gross Profit | 2.36B | 3.19B | 2.94B | 2.11B | 3.41B | 7.14B |
| EBITDA | 1.29B | 1.75B | 1.66B | 1.72B | 2.80B | 2.56B |
| Net Income | 375.14M | 513.60M | 511.09M | 684.98M | 1.46B | 1.32B |
Balance Sheet | ||||||
| Total Assets | 16.05B | 16.05B | 14.83B | 13.56B | 13.11B | 12.27B |
| Cash, Cash Equivalents and Short-Term Investments | 673.77M | 673.77M | 645.00M | 797.99M | 780.00M | 899.83M |
| Total Debt | 5.17B | 5.17B | 4.52B | 3.10B | 3.01B | 3.23B |
| Total Liabilities | 7.58B | 7.58B | 6.75B | 5.64B | 5.68B | 5.77B |
| Stockholders Equity | 8.32B | 8.32B | 7.92B | 7.74B | 7.27B | 6.38B |
Cash Flow | ||||||
| Free Cash Flow | 480.27M | 960.55M | 492.01M | 974.02M | 1.85B | 1.68B |
| Operating Cash Flow | 648.39M | 1.30B | 1.07B | 1.47B | 2.23B | 2.04B |
| Investing Cash Flow | -288.81M | -577.62M | -1.81B | -580.04M | -989.18M | -386.75M |
| Financing Cash Flow | -367.96M | -735.93M | 592.41M | -911.51M | -1.35B | -1.95B |
Sonic Healthcare Technical Analysis
Positive
14.96
Price Trends
15.36
Positive
14.72
Positive
15.73
Positive
Market Momentum
0.22
Positive
55.20
Neutral
16.36
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SKHHY, the sentiment is Positive. The current price of 14.96 is below the 20-day moving average (MA) of 15.68, below the 50-day MA of 15.36, and below the 200-day MA of 15.73, indicating a bullish trend. The MACD of 0.22 indicates Positive momentum. The RSI at 55.20 is Neutral, neither overbought nor oversold. The STOCH value of 16.36 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SKHHY.
Sonic Healthcare Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $19.51B | -19.23 | -34.54% | ― | 14.47% | -353.69% | |
70 Outperform | $51.34B | 49.17 | 66.20% | ― | 8.39% | 21.44% | |
69 Neutral | $21.05B | 21.73 | 13.69% | 1.80% | 13.74% | 14.87% | |
69 Neutral | $7.81B | 23.07 | 6.18% | 4.08% | 8.13% | -1.78% | |
64 Neutral | $11.77B | 49.15 | 3.21% | 0.29% | 3.37% | -18.80% | |
58 Neutral | $5.24B | -380.65 | -1.30% | ― | 11.09% | -165.89% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
SKHHY
Sonic Healthcare
15.80
-1.26
-7.40%
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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.