Sonic Healthcare (SKHHY) AI Stock Analysis

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Sonic Healthcare

(OTC:SKHHY)

Rating:69Neutral

Price Target:

$19.00

▲(3.15%Upside)

Sonic Healthcare's strong earnings growth and successful integration of acquisitions are significant positives, contributing to a higher score. However, challenges in certain divisions and a high valuation compared to industry norms bring the overall score down. The technical analysis indicates positive momentum, but financial performance weaknesses, especially in cash flow, need attention.

Sonic Healthcare (SKHHY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$9.09B

Dividend Yield3.7%

Average Volume (3M)9.93K

Price to Earnings (P/E)24.5

Beta (1Y)0.48

Revenue Growth9.50%

EPS Growth5.09%

CountryUS

Employees42,000

SectorHealthcare

Sector Strength42

IndustryMedical - Diagnostics & Research

Share Statistics

EPS (TTM)0.32

Shares Outstanding494,237,950

10 Day Avg. Volume8,078

30 Day Avg. Volume9,927

Financial Highlights & Ratios

PEG Ratio4.33

Price to Book (P/B)1.60

Price to Sales (P/S)0.00

P/FCF Ratio16.36

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

Sonic Healthcare Business Overview & Revenue Model

Company DescriptionSonic Healthcare (SKHHY) is a global leader in medical diagnostics and healthcare services. Established in Australia, the company operates through three main sectors: laboratory services, imaging, and clinical services. Sonic Healthcare offers comprehensive laboratory services, including pathology and radiology, across multiple continents. The company is renowned for its commitment to quality and innovation, providing essential diagnostic services that aid in disease detection, diagnosis, and management for patients and healthcare professionals worldwide.

How the Company Makes MoneySonic Healthcare generates revenue primarily through its laboratory services, which include pathology and radiology diagnostics. These services are provided to a wide range of clients, including hospitals, medical practitioners, and patients, both in the public and private sectors. The company also earns income from its imaging services, which offer advanced diagnostic imaging solutions. Sonic Healthcare's operations span several countries, allowing it to benefit from diverse healthcare markets. The company's revenue model is bolstered by strategic partnerships with healthcare providers and continuous investment in technology and infrastructure to enhance service quality and efficiency. Additionally, acquisitions of local diagnostic companies contribute to Sonic Healthcare's growth and revenue diversification.

Sonic Healthcare Earnings Call Summary

Earnings Call Date:Feb 19, 2025

(Q2-2025)

% Change Since: 2.11%|

Next Earnings Date:Aug 21, 2025

Earnings Call Sentiment Positive

Sonic Healthcare reported strong financial growth and successful integration of acquisitions, indicating a positive outlook. However, challenges in the USA division and specific regional difficulties like Belgium's revenue decline and initial losses in new U.K. contracts present some concerns.

Q2-2025 Updates

Positive Updates

Strong Financial Performance

Sonic Healthcare reported revenue of $4.669 billion, up 8%, and EBITDA of $827 million, up 12%. Net profit rose by 17% to $237 million, and earnings per share increased by 15% to $0.492 per share.

Margin Expansion and Cost Control

The EBITDA margin expanded by 60 basis points, with labor costs as a percentage of revenue reduced by 50 basis points. Excluding recent acquisitions, EBITDA margin expansion was 90 basis points.

Successful M&A Activity

Recent acquisitions in Switzerland and Germany, including the LADR or Kramer Group, are expected to add AUD80 million per annum in EBITDA.

Australian Pathology Growth

The Australian Pathology division reported organic revenue growth of 9%, outperforming the market.

U.K. Division Performance

The U.K. division showed a 10% growth, with a notable new 11-year contract with the Royal National Orthopedic Hospital.

Negative Updates

USA Organic Growth Challenges

The USA division reported a statutory growth of -2% due to the sale of the West division. Organic growth was only 2%, possibly below market.

Belgium Revenue Decline

Organic growth in Belgium was -1%, and statutory growth was -3% due to fee cuts and indexation, although future growth is expected to be positive.

Primary Care Challenges

Sonic Clinical Services reported organic revenue growth of only 2% and flat earnings, attributed to challenging conditions in the primary care market.

Hertfordshire and West Essex Contract

The Hertfordshire and West Essex contract in the U.K. is expected to lose about AUD10 million in the current financial year before becoming profitable in FY 2026.

Company Guidance

During the Sonic Healthcare conference call, the company provided a comprehensive update on its financial performance for the half-year ending December 31, 2024. Key metrics highlighted included a revenue of AUD 4.669 billion, marking an 8% increase, and an EBITDA of AUD 827 million, up 12%. Net profit rose by 17% to AUD 237 million, with earnings per share increasing by 15% to AUD 0.492. The company also reported a strong operational cash flow of AUD 620 million, up 37% from the previous period. Sonic Healthcare's EBITDA margin expanded by 60 basis points, or 90 basis points if excluding recent zero-margin acquisitions. The presentation reaffirmed the company's guidance for the fiscal year, with expected full-year EBITDA in the range of AUD 1.7 billion to AUD 1.75 billion at constant currency. Additionally, Sonic announced an interim dividend of AUD 0.44, an increase of 2.3% from the prior year. The company reported organic growth rates across its divisions, including 9% in Australian pathology and 7% in Germany, and discussed future benefits expected from recent acquisitions, such as the LADR/Kramer Group, which is anticipated to contribute over AUD 80 million in annual EBITDA starting July 2025.

Sonic Healthcare Financial Statement Overview

Summary

Sonic Healthcare shows solid revenue growth and improved gross profit margins, indicating operational efficiency. However, declining net income and free cash flow highlight emerging financial challenges. The balance sheet is robust with controlled leverage, but decreasing profitability metrics suggest areas needing improvement.

Income Statement

Positive

Sonic Healthcare shows a consistent revenue growth trend, although the recent year's growth slowed down. Gross profit margins have improved significantly, showcasing efficient cost management. However, the decline in net profit and EBIT margins suggests rising operational challenges.

Balance Sheet

Positive

The company maintains a stable equity base with a moderate debt-to-equity ratio, indicating manageable leverage. Return on equity has decreased, hinting at reduced profitability. The equity ratio suggests a solid asset base backed by equity, reducing financial risk.

Cash Flow

Neutral

Free cash flow has decreased, indicating lower cash generation from operations after capital expenditures. The operating cash flow to net income ratio remains healthy, suggesting good cash conversion efficiency. However, the decline in free cash flow growth rate is concerning.

Breakdown	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement
Total Revenue	8.93B	7.96B	9.31B	9.13B	6.56B
Gross Profit	2.94B	2.11B	3.41B	3.43B	1.67B
EBITDA	1.66B	1.72B	2.80B	2.56B	1.04B
Net Income	511.09M	684.98M	1.46B	1.32B	527.75M
Balance Sheet
Total Assets	14.83B	13.56B	13.11B	12.27B	12.63B
Cash, Cash Equivalents and Short-Term Investments	645.00M	797.99M	780.00M	899.83M	1.23B
Total Debt	4.52B	3.10B	3.01B	3.23B	4.62B
Total Liabilities	6.75B	5.64B	5.68B	5.77B	6.97B
Stockholders Equity	7.92B	7.74B	7.27B	6.38B	5.57B
Cash Flow
Free Cash Flow	492.01M	974.02M	1.85B	1.68B	1.03B
Operating Cash Flow	1.07B	1.47B	2.23B	2.04B	1.36B
Investing Cash Flow	-1.81B	-580.04M	-989.18M	-386.75M	-334.92M
Financing Cash Flow	592.41M	-911.51M	-1.35B	-1.95B	-536.74M

Sonic Healthcare Technical Analysis

Technical Analysis Sentiment

Positive

Last Price18.42

Price Trends

50DMA

17.45

Positive

100DMA

16.91

Positive

200DMA

17.21

Positive

Market Momentum

MACD

0.29

Negative

RSI

64.65

Neutral

STOCH

80.07

Negative

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 18.42 is above the 20-day moving average (MA) of 17.89, above the 50-day MA of 17.45, and above the 200-day MA of 17.21, indicating a bullish trend. The MACD of 0.29 indicates Negative momentum. The RSI at 64.65 is Neutral, neither overbought nor oversold. The STOCH value of 80.07 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SKHHY.

Sonic Healthcare Peers Comparison

Overall Rating

UnderperformOutperform

Sector (52)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QGEN	75 Outperform	$11.04B	122.35	2.67%	2.45%	3.31%	-72.63%
DGX	71 Outperform	$18.77B	20.07	13.65%	1.85%	12.58%	13.00%
CRL	70 Outperform	$8.79B	449.94	-0.92%	―	-2.16%	-107.31%
SKHHY	69 Neutral	$9.09B	24.53	6.96%	3.70%	9.50%	5.09%
RVTY	63 Neutral	$11.20B	40.30	3.70%	0.30%	3.33%	―
ILMN	55 Neutral	$17.39B	―	-23.82%	―	-3.47%	25.55%
Sector *	52 Neutral	$7.58B	0.48	-62.71%	2.36%	15.33%	0.41%

* Healthcare Sector Average

Performance Comparison

SKHHY

Sonic Healthcare

18.34

1.17

6.81%

CRL

Charles River Labs

178.45

-66.84

-27.25%

ILMN

Illumina

108.71

-13.79

-11.26%

RVTY

Revvity

94.47

-32.35

-25.51%

QGEN

Qiagen

51.07

6.60

14.84%

DGX

Quest Diagnostics

167.93

27.76

19.80%

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.Date of analysis: Jun 27, 2025