Sonic Healthcare Limited (ASX: SHL) – Revenue Growth from contracts and acquisitions

Sonic Healthcare Limited presented full year results for the year ending 30 June 2018 reporting 9.9% increase in earnings per share to $1.12 cents. As a result of Sonic’s expansion across the globe, net profit of the company increased to $476 million, up 11.2%, including one-off benefit of US tax rate change. At constant currency, earnings before interest tax depreciation and amortization increased 6.4% to $962 million, in line with company’s FY18 guidance.

Company’s management confirmed the acquisitions of Laboratory Bremen and Stabler laboratory group, in Germany while in USA the group gained momentum in forming laboratory partnerships with hospital systems.

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With the statutory revenue growth of 8.2% to $5.5 billion, there has been significant growth in Laboratory division. Company reported 6% growth in organic revenue from Australian laboratory business at the back of winning six-month national bowel screening contract, while Australian diagnostic imaging business recorded 7% growth in organic revenue.

As per the statement of CEO Dr Colin Goldschmidt, the company’s strong financial and operational performance in FY18 is primarily attributable to the success of winning the eminent contracts during the year as well as acquisitions, restructuring, synergy extraction and debts’ refinancing strategies.

Gearing ratio reduced to 36.7%. Capital expenditure has gone down on completion of building projects.

The company declared final dividend of 49 cents per share, franked to 30%, which is 6.5% higher than previous corresponding period. The total of interim and final dividend makes full-year dividend to 81 cents, up 5.2%.

Sonic expects growth of 3-5% in earnings before interest tax depreciation and amortization for FY2019 over the FY2018 underlying EBITDA of $962 million. The company also anticipates 4% increase in net interest expense.

SHL share price dropped by 1.792% to $26.30 on 16 August 2018.

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