Pathology, imaging and medical centre operator Sonic Healthcare is looking to its overseas operations and the faltering Australian dollar for a revenue boost after a fall in full year profit.
The company expects revenue and earnings to rise 20 per cent in the year ahead, with Sonic’s expansion in the US and Europe, and a weaker Australian dollar, making those markets more lucrative.
Chief executive Colin Goldschmidt said consolidation and integration of existing assets will help increase margins, and the company is seeking further overseas acquisitions to follow July’s purchase of Swiss medical laboratory group Medisupport.
Almost 60 per cent of Sonic’s 2015/16 revenue is projected to come from outside Australia.
“Sonic Healthcare certainly is an Australian company and started off in Australia, but we’ve always predicted that our big growth is always going to come from outside of Australia,” he said.
“We’re focusing very much on growth in Europe and America.”
Mr Goldschmidt said the strength of the Australian dollar had suppressed the value of Sonic’s international revenues until recently.
The local currency has declined more than 20 per cent against its US counterpart in the past year.
Sonic blamed the domestic market, with changes in the Medicare Benefits Schedule and higher costs, for a six per cent decline in net profit to $363 million in the year to June 30.
It has stuck to its previous forecast of a rise in underlying earnings to up to $875 million in 2015/16, from the previous year’s $717 million, based on current exchange rates.
Sonic was recently thwarted in its attempt to gain a foothold in Canada when Alberta’s provincial government pulled out of a pathology contract, but Morningstar analyst Chris Kallos said the company was right not to be discouraged.
“The most important takeaway is the growth opportunities going forward, especially in the US,” Mr Kallos said.
“There’s a rising number of insured patients rising out of healthcare reform overlaid with the attractive ageing demographic theme that is well established now.”
Sonic shares dropped 35 cents, or 1.7 per cent, to $19.79.
SONIC’S CHALLENGING YEAR
* Net profit down 6pct to $363.3m
* Revenue up 7pct to $4.2b
* Final partly franked dividend up one cent to 41 cents