Healius share price on watch as FY20 results hit guidance

The Healius Ltd (ASX: HLS) share price is one to watch today after the Aussie healthcare group reported full-year results in line with guidance.

Why is the Healius share price worth watching?

For the year ended 30 June 2020 (FY20), Healius reported a 2.2% increase in underlying revenue to $1,600.4 million.

Underlying earnings before interest and tax (EBIT) fell 18.4% lower to $102.7 million. That saw underlying net profit after tax (NPAT) from continuing operations fall 21.2% lower to $55.4 million.

Both of these figures were in line with Healius’ 27 July 2020 trading update with underlying NPAT in line with its mid-March guidance.

The coronavirus pandemic did weigh on earnings but strong pathology trading and subsequent initiatives underpinned the result. That strong pathology performance was aided by COVID-19 testing which is increasing in FY21.

Healius also booked a $142.5 million loss relating to the in-year impart of its Healius Primary Care business, largely relating to goodwill.

The company also reported strong performance up to March 2020 across its Pathology, Imaging and Montserrat Day Hospitals.

FY20 operating cash flow was up on FY19 figures to $153.4 million despite COVID-19. That saw the company’s net debt position improve to $666 million with $424 million in liquidity.

What’s happening with the final dividend?

Despite some strong earnings, the board declined to pay a full-year dividend. That makes the Healius share price worth watching as investors consider the capital management decision.

The first half dividend of 2.6 cents per share has been delayed due to COVID-19 until October.

Healius decided it was “not considered appropriate” given the assistance received. That includes significant government support, with other ASX companies coming under pressure this August.

An out-of-cycle dividend will be considered as part of a capital structure review following the Healius Primary Care sale.

Trading update

In a good sign for the Healius share price, the company reported a strong start to FY21.

Pathology revenues were up by 25% in July compared to last year thanks to significant community COVID-19 testing. Pathology has commercial contracts for COVID-19 screening with entities like the Federal Government and the AFL.

Imaging revenues were down 4% from July 2019 with further declines in August. Day Hospital has started the year strongly with Montserrat revenue up 27% compared to July 2019 and Adora Fertility up more than 50%.

Healius Primary Care revenues were up 7.5% on pcp with the dental business now recording results to receive the earn-out on completion of the Healius Primary Care sale.

Outlook

Management did cite a “strong outlook” for FY21 largely underpinned by the pathology business.

The board expects regular dividends to recommence in the first half of next year which is good news for the Healius share price.

Healius will provide a further trading update on 22 October when it holds its annual general meeting.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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