Green Shoots Showing in the Healius 2019 Results, Maintain AUD 3.50 FVE

No-moat Healius’ fiscal 2019 result was in line with our expectation and showed signs that the major restructuring and reinvestment underway is gaining traction. Importantly, the company was able to attract over a hundred additional GPs to operate from its medical centres, a key driver of revenue in this segment. Following a transfer in analyst coverage, our unchanged AUD 3.50 fair value estimate factors in a substantial improvement in the medical centre revenue growth at 9.3% over the next five years, but assumes it will take longer than management have targeted to grow the GP base. While currently contributing just 18% of revenue, the medical centre revamp received 60% of the capital raised in fiscal 2019 and is an important part of Healius’ turnaround.