Company Reports

We intend to cease coverage of Integral Diagnostics, Australian Clinical Labs, Healius and Nanosonics. We plan to cease coverage on or around June 30, 2026.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business, and we anticipate it will take a few years before significant margin improvements are made in the base pathology businesses. Healius; sale of its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its pathology business is viewed as a positive strategic step. The sale of Lumus Imaging also simplified the business and shored up the balance sheet.

Healius downgraded its full-year underlying EBIT guidance by roughly 30% to AUD 33 million. Revenue for the first 10 months grew by just over 2% due to improved pricing, but volumes fell due to weak referrals. Labor costs also grew 1%, ahead of prior flat guidance. Shares fell 23%.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business, and we anticipate it will take a few years before significant margin improvements are made in the base pathology businesses. Healius; sale of its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its pathology business is viewed as a positive strategic step. The sale of Lumus Imaging also simplified the business and shored up the balance sheet.

Healius' interim 2026 underlying EBIT improved to AUD 8 million versus an AUD 3 million loss last year. Revenue rose a solid 4% despite weak general practitioner referrals. Healius is guiding to roughly AUD 48 million in EBIT for the full year. Shares fell 7%.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business, and we anticipate it will take a few years before significant margin improvements are made in the base pathology businesses. Healius; sale of its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its pathology business is viewed as a positive strategic step. The sale of Lumus Imaging also simplified the business and shored up the balance sheet.

Medicare Australia statistics for benefits paid in core pathology for the four months to October 2025 increased by 2% on the prior corresponding period, a key revenue driver for Healius and Australian Clinical Labs, or ACL.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business and we anticipate it to take a few years before significant margin improvements are made in the base pathology businesses. Healius selling its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its diagnostic businesses is viewed as a positive strategic step. The impending sale of the Lumus Imaging also simplifies the business and shores up the balance sheet.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business and we anticipate it to take a few years before significant margin improvements are made in the base pathology businesses. Healius selling its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its diagnostic businesses is viewed as a positive strategic step. The impending sale of the Lumus Imaging also simplifies the business and shores up the balance sheet.

Healius' fiscal 2025 underlying pathology EBIT fell 5% to AUD 32 million on 6% revenue growth, but was weighed on by increased headcount. The firm's guidance was for softer fiscal 2026 revenue growth of 5%, but reiterated it expects group EBIT margins to recover to high single digits by fiscal 2027.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business and we anticipate it to take a few years before significant margin improvements are made in the base pathology businesses. Healius selling its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its diagnostic businesses is viewed as a positive strategic step. The impending sale of the Lumus Imaging also simplifies the business and shores up the balance sheet.

Following the sale of its imaging division on May 1, 2025, Healius is paying a fully franked special dividend of AUD 41.3 cents per share on May 23, 2025. For tax residents, this represents up to an additional AUD 17.7 cents per share benefit in the form of franking credits.

No-moat Healius detailed its strategy to expand group EBIT margins to high single digits by June 2027. We leave our AUD 2.20 per share fair value estimate and earnings forecasts broadly unchanged. We forecast a group EBIT margin of 7% in fiscal 2027 and anticipate the firm expanding this further to 10% by fiscal 2034.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business and we anticipate it to take a few years before significant margin improvements are made in the base pathology businesses. Healius selling its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its diagnostic businesses is viewed as a positive strategic step. The impending sale of the Lumus Imaging also simplifies the business and shores up the balance sheet.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business and we anticipate it to take a few years before significant margin improvements are made in the base pathology businesses. Healius selling its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its diagnostic businesses is viewed as a positive strategic step. The impending sale of the Lumus Imaging also simplifies the business and shores up the balance sheet.

No-moat Healius increased interim fiscal 2025 pathology revenue by a respectable 7% to AUD 642 million, below market growth of 11%. However, pathology EBIT grew just 2% to AUD 4 million as higher labor costs held EBIT margins largely flat at 0.6%. We decrease our fiscal 2025 EBIT forecast by 8% to AUD 30 million but expect a stronger second half on efficiency benefits being realized and a material skew in volumes. Now operating as a pure-play pathology provider, Healius intends to host an investor day in March 2025 to outline its plan to expand group EBIT margins to high-single digits in the medium term. Our fair value estimate decreases by 4% to AUD 2.20, due to a slight decrease to our fiscal 2034 10% EBIT margin forecast.

Australian pathology market growth, measured by Medicare benefits paid excluding coronavirus testing, was up a strong 11% in first-quarter fiscal 2025. Demand for pathology is defensive and underpinned by population growth, aging demographics, higher incidence of diseases, wider adoption, and a higher number of tests available. In the long term, we expect margin expansion on increased operating leverage from higher volumes and improved labor productivity as digitization and newer artificial intelligence tools expedite diagnoses. We also expect average fee increases through stronger pricing, additional government funding, and favorable mix benefits. Shares in narrow-moat Sonic Healthcare are undervalued versus our unchanged AUD 32 fair value estimate, as well as in no-moat Healius.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business and we anticipate it to take a few years before significant margin improvements are made in the base pathology businesses. Healius selling its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its diagnostic businesses is viewed as a positive strategic step. The impending sale of the Lumus Imaging also simplifies the business and shores up the balance sheet.

In 2018, the former Primary Healthcare rebranded itself as Healius to signify the strategic turnaround underway. Healius is looking to new sources of strategic growth as well as dealing with prior underinvestment in infrastructure. There is much to fix in the business and we anticipate it to take a few years before significant margin improvements are made in the base pathology businesses. Healius selling its medical centers and Montserrat day hospitals to focus on redirecting capital toward infrastructure upgrades and its diagnostic businesses is viewed as a positive strategic step. The impending sale of the Lumus Imaging also simplifies the business and shores up the balance sheet.

Healius has agreed to sell its imaging business, Lumus Imaging, to Affinity Equity Partners for AUD 965 million. The deal is subject to customary conditions, including approval by the Foreign Investment Review Board. Cash proceeds are estimated to be around AUD 835 million after repayment of equipment leases and other working capital and capital expenditure adjustments. This is a huge transaction for Healius, with imaging accounting for almost half of the fiscal 2024 group operating earnings. It leaves the company a pure-play pathology provider.