Sonic Healthcare witnessed a significant surge in its share price, closing nearly 10% higher, as the global diagnostics provider delivered a solid set of first-half financial results. The company's performance was bolstered by revenue growth and improved profitability, leading to a positive market reaction.
Financial Performance Highlights
For the six-month period concluding on December 31, Sonic Healthcare reported a 17% increase in revenue, reaching A$5.445 billion. Net profit after tax rose by 11% year-on-year to A$262 million. Earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 10% to A$907 million. On a per-share basis, earnings advanced by 8% to 53.1 Australian cents.
Operating cash flow also demonstrated strength, climbing 10% to A$682 million. This financial robustness provided the foundation for the company's capital management decisions announced alongside the results.
Dividend Increase and Capital Management
Reflecting confidence in its financial position, Sonic Healthcare's board declared an increased interim dividend of 45 Australian cents per share, up by one cent from the prior corresponding period. The dividend is 60% franked and will be paid on March 19. The shares are scheduled to trade ex-dividend on March 4, with a record date of March 5.
In a significant capital management initiative, the company detailed plans for a sale-and-leaseback transaction involving its Brisbane-based laboratory hub. This move is anticipated to generate proceeds between A$450 million and A$500 million, with an expected completion date by June 2026. Management indicated that surplus capital from such property transactions could be directed toward on-market share buybacks.
Guidance and Strategic Review
Management reaffirmed its full-year constant-currency EBITDA guidance for fiscal 2026, maintaining the forecast range of A$1.87 billion to A$1.95 billion. Chief Executive Jim Newcombe attributed the resilient performance to the "strength and global diversity" of the company's operations.
However, the company acknowledged challenges within its U.S. segment, where margins have been pressured by softer organic growth and costs associated with ongoing restructuring. A comprehensive operational review of the U.S. business is currently underway, with a focus on rationalising anatomical pathology services.
Market Context and Investor Implications
The substantial share price movement underscores investor relief at the company's ability to deliver profit growth amidst a complex operating environment. Sonic Healthcare has relied on a combination of cost discipline and strategic acquisitions to support margins, particularly as it addresses headwinds in its American operations.
The timing of the results, closely preceding the ex-dividend date, often attracts short-term trading activity which can influence price volatility. The key focus for investors now shifts to the execution of the U.S. operational review and the progress of the flagged property transactions. The maintained earnings guidance provides near-term certainty, but the company noted that persistent volume weakness or rising costs in the U.S. could pressure that outlook.
Looking ahead, the market will monitor for further details from the strategic review and updates on capital deployment. The upcoming ex-dividend date on March 4 and the dividend payment on March 19 are the next immediate financial events for shareholders.