Sonic Healthcare Limited (SKHHY)
OTHER OTC:SKHHY
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Sonic Healthcare
(OTC:SKHHY)
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Rating:68Neutral
Price Target:
$15.00
▲(0.27% Upside)
Action:Reiterated
Date:02/19/26
The score is driven primarily by solid financial performance—especially strong free cash flow growth and stable margins—plus a constructive earnings outlook with reaffirmed EBITDA guidance. Offsetting these positives are weak technical signals (below key moving averages, negative MACD) and stated near-term operational risks in the U.S. and FX uncertainty, while valuation is supported by the dividend but tempered by a mid-range P/E.
Positive Factors
Strong free cash flow generation
A 72.66% increase in free cash flow and a FCF-to-net-income ratio of 0.74 signal durable cash generation. This supports ongoing dividends, near-term capex (e.g., Docklands), potential deleveraging and selective buybacks or acquisitions, preserving financial flexibility over months.
Negative Factors
U.S. margin pressure and restructuring
The U.S. business is experiencing lower organic growth and margin decline, prompting restructuring across anatomical pathology practices. Given the market's size, restructuring costs and slower recovery of collections can weigh on group EBITDA and require multiple quarters to restore normalized margins.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong free cash flow generation
A 72.66% increase in free cash flow and a FCF-to-net-income ratio of 0.74 signal durable cash generation. This supports ongoing dividends, near-term capex (e.g., Docklands), potential deleveraging and selective buybacks or acquisitions, preserving financial flexibility over months.
Read all positive factors
Sonic Healthcare (SKHHY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.57B
Dividend Yield4.08%
Average Volume (3M)19.70K
Price to Earnings (P/E)10.8
Beta (1Y)0.43
Revenue Growth10.70%
EPS Growth-4.95%
CountryUS
Employees42,000
SectorHealthcare
Sector Strength45
IndustryMedical - Diagnostics & Research
Share Statistics
EPS (TTM)0.81
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 Cap2.52
Enterprise Value/Revenue2.12
Enterprise Value/Gross Profit7.47
Enterprise Value/Ebitda12.54
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.86
Revenue Forecast (FY)$7.75B
Sonic Healthcare Business Overview & Revenue Model
Company Description
Sonic 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, mammogra...
How the Company Makes Money
Sonic Healthcare makes money mainly by delivering diagnostic services and charging fees for tests and procedures, with revenue largely tied to the volume and mix of diagnostics performed. Its core revenue stream is pathology/laboratory medicine: r...
Sonic Healthcare Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 26, 2026
Earnings Call Sentiment Positive
Overall the call presents a largely positive operational and financial picture: strong H1 results (revenue, EBITDA, net profit), maintained full-year EBITDA guidance, margin improvement at group level (+30 bps), successful integration progress in major acquisitions (Germany LADR and Swiss deals), and continued organic growth across several markets (Australia, Germany, UK, Radiology). Offsetting these positives are concentrated challenges in the U.S. (margin pressure, restructuring and delayed revenue collection benefits), elevated short-term net debt and working capital due to acquisitions and the Change Healthcare billing disruption, FX headwinds for H2, and some regulatory/wage uncertainties (Germany GOA reform and Australian Fair Work outcomes). Management has clear remediation and capital management plans (operating review, sale-and-leaseback program, potential buybacks) and has retained guidance, supporting a constructive outlook despite identifiable near-term risks.Positive Updates
Strong H1 Financial Results
Revenue of $5.445 billion, EBITDA of $907 million, net profit of $262 million and EPS of AUD 0.531 for H1 FY2026.
Negative Updates
U.S. Operations Margin Pressure and Restructuring
Margin decline in U.S. operations due to low organic revenue growth and restructuring costs; operating review underway including rationalization of 9 anatomical pathology practices. U.S. underlying organic growth (after adjustments) ~2%.
Read all updates
Q2-2026 Updates
Positive
Negative
Strong H1 Financial Results
Revenue of $5.445 billion, EBITDA of $907 million, net profit of $262 million and EPS of AUD 0.531 for H1 FY2026.
Read all positive updates
Company Guidance
Sonic reaffirmed full‑year adjusted EBITDA guidance of AUD 1.87–1.95 billion (constant currency) after reporting H1 revenue of AUD 5.445 billion, EBITDA of AUD 907 million, net profit of AUD 262 million and EPS of AUD 0.531; management said group organic growth is running at c.5% and adjusted EBITDA margins were up ~30 basis points year‑on‑year (H1), with H1 acquisition costs of AUD 8 million. For the full year depreciation is now guided to AUD 770–780 million (constant currency), interest expense is expected to increase ~15% (constant currency) versus last year, and the effective tax rate is guided at 27%; the guidance assumes completed acquisitions only, current interest rates, and excludes any gains from property sales. Capital management priorities remain an investment‑grade balance sheet (debt cover ~2.5x), a progressive interim dividend of AUD 0.45 (up 2.3%, 60% franked; record 5 Mar, pay 19 Mar), available headroom ~AUD 1.0 billion pre‑dividend, potential sale‑and‑leaseback transactions (Brisbane hub targeted June 2026) with proceeds possibly funding on‑market buybacks, and near‑term capex for Docklands of c. AUD 20–30 million over the next six months (maintenance capex ~3–3.5% of revenue); FX provided a strong H1 tailwind and is still expected to be a net tailwind for the year but more modest if current rates prevail.Sonic Healthcare Financial Statement Overview
Summary
Income Statement
75
Positive
Balance Sheet
70
Positive
Cash Flow
80
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 7.80B | 9.65B | 8.93B | 7.96B | 9.31B | 8.75B |
| Gross Profit | 2.22B | 3.19B | 2.94B | 2.11B | 3.41B | 7.14B |
| EBITDA | 1.32B | 1.75B | 1.66B | 1.72B | 2.80B | 2.56B |
| Net Income | 396.13M | 513.60M | 511.09M | 684.98M | 1.46B | 1.32B |
Balance Sheet | ||||||
| Total Assets | 17.01B | 16.05B | 14.83B | 13.56B | 13.11B | 12.27B |
| Cash, Cash Equivalents and Short-Term Investments | 556.57M | 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 | 8.30B | 7.58B | 6.75B | 5.64B | 5.68B | 5.77B |
| Stockholders Equity | 8.55B | 8.32B | 7.92B | 7.74B | 7.27B | 6.38B |
Cash Flow | ||||||
| Free Cash Flow | 604.23M | 960.55M | 492.01M | 974.02M | 1.85B | 1.68B |
| Operating Cash Flow | 1.01B | 1.30B | 1.07B | 1.47B | 2.23B | 2.04B |
| Investing Cash Flow | -1.11B | -577.62M | -1.81B | -580.04M | -989.18M | -386.75M |
| Financing Cash Flow | 52.22M | -735.93M | 592.41M | -911.51M | -1.35B | -1.95B |
Sonic Healthcare Technical Analysis
Neutral
14.96
Price Trends
14.95
Negative
15.02
Negative
15.11
Negative
Market Momentum
-0.11
Negative
56.40
Neutral
99.90
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SKHHY, the sentiment is Neutral. The current price of 14.96 is above the 20-day moving average (MA) of 14.11, above the 50-day MA of 14.95, and below the 200-day MA of 15.11, indicating a neutral trend. The MACD of -0.11 indicates Negative momentum. The RSI at 56.40 is Neutral, neither overbought nor oversold. The STOCH value of 99.90 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | $42.03B | 40.41 | 70.87% | ― | 13.08% | 25.40% | |
70 Outperform | $20.80B | 21.39 | 14.11% | 1.80% | 11.03% | 14.34% | |
68 Neutral | $6.57B | 10.84 | 6.39% | 4.08% | 10.70% | -4.95% | |
63 Neutral | $10.75B | 60.67 | 3.28% | 0.29% | 4.79% | -16.36% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
51 Neutral | $4.20B | -32.17 | -1.88% | ― | 14.72% | 59.37% |
* Healthcare Sector Average
SKHHY
Sonic Healthcare
13.38
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-17.05%
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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.