By Michael Smith
Healius, the debt-heavy pathology company once known as Primary Health Care, says it is closing in on a key asset sale as it seeks to rebuild under new management.
Chief executive Paul Anderson, who was appointed to the top job to fix the company in March, said his priority was increasing revenue in pathology and improving front-line services. But he warned that inflation, a nationwide GP shortage hurting referrals, and a government funding gap in pathology were still key challenges.
“It is a very important part of the primary healthcare sector and preventing disease should be a priority rather than spending money on secondary healthcare,” Mr Anderson, a former Ten Network boss, said in an interview.
Healius shares rose 13 per cent after the country’s second-largest pathology group posted underlying earnings in line with its downgraded guidance and said revenue at its core business rose 4 per cent in July and August this year. It also said the sale of its radiology business Lumus, which is expected to fetch about $700 million, was well advanced.
Investors said the result was the first sign the company was stepping back from the brink under Mr Anderson’s turnaround plan after a shocking two years that saw profit plunge, management change, and $2 billion in sharemarket value disappear.
“There is a long way to go with the company, but these are small steps. We are very happy with the progress. The vision is a bit better than expected. It is clear that the exit into the new financial year is a bit better. It feels like the cost inflation is starting to moderate,” said Oscar Oberg, portfolio manager at Wilson Asset Management.
Healius said underlying earnings for the year ending June 30 before interest, tax, depreciation and amortisation was $346.6 million, 8 per cent lower than last year and in line with the company’s downgraded guidance of $345 million to $350 million.
It reported a net loss including discontinued operations of $645.8 million compared with $367.8 million in FY23. Healius did not pay a final dividend. Underlying EBIT was $65.4 million, at the top end of the company’s guidance.
Its net loss widened to $645.8 million from $367.8 million.
Healius shares rallied 13 per cent to $1.66.
Mr Anderson did not issue an earnings forecast for the year ahead but said volume growth in pathology improved by more than 4 per cent in July and August, while imaging grew revenue by about 12 per cent.
Interested Lumus bidders include TPG Capital, Asian buyout firm Affinity Equity Partners and Pacific Equity Partners’ Secure Assets Fund, according to The Australian Financial Review’s Street Talk column.
Healius and other pathology companies are lobbying the federal government to keep the sector bulk-billed, noting that just one-third of pathology items will be indexed from July next year. It says this is driving up the cost of tests that diagnose diabetes and other conditions.
Healius is the second-largest pathology test provider in the country, running 1981 collection centres and 93 testing laboratories. It also operates 150 imaging sites under Lumus.
The company’s valuation soared during the COVID-19 pandemic as demand for testing boomed. But it failed to restructure its pathology business as the pandemic waned and testing volumes dropped.
Healius replaced its chief executive, Maxine Jaquet, in early March after just 12 months in the job.
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