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Coronavirus outbreak is now a pandemic and a global public health emergency, as declared by the World Health Organization (WHO). COVID-19 caused by the mysterious coronavirus began circulating in the Wuhan city of China and fast emerged as a global epidemic, spreading to 84 more nations apart from mainland China, raising panic all over the world.
There are around 300,000 people that have now been affected across the world by this deadly virus, with nearly 13,000 deaths reported. Amid growing fears of COVID-19 pandemic, the entire pharmaceutical and biotech industry has engaged in developing diagnostic and preventing measures for this deadly disease and is targeting to come up with an appropriate treatment option.
To Know More, Read: Biotech companies in the race to seek COVID-19 cure
Considering the urgent demand, the Food and Drug Administration (FDA) has undertaken a significant step, enabling companies to continue with their diagnostic tests without initial submission of application for federal review or obtaining an official emergency clearance, thereby aiding those working towards commercial coronavirus testing.
Let us now discuss an ASX-listed global healthcare company engaged in providing pathology/clinical laboratory services and playing a crucial frontline role in combating the pandemic.
About Sonic Healthcare Limited (ASX:SHL)
Sydney-headquartered global healthcare company, Sonic Healthcare Limited, the third-largest pathology/laboratory medicine company across the globe, offers pathology, laboratory and imaging services to healthcare practitioners and hospitals.
The Company employs a total of 36,000 people with over 900 specialist pathologists, more than 200 radiologists and approximately thousands of technicians and medical scientists. Sonic Healthcare provides high-quality diagnostic as well as medical services to over 100 million people each year. Moreover, SHL is a leading provider of radiology, general practice, corporate medical services and occupational medicine in Australia.
How SHL is contributing during this outbreak?
Testing for coronavirus in several markets has increased. SHL is a global laboratory company, thus playing an important frontline role in addressing the pandemic, according to its CEO Dr Colin Goldschmidt.
The Company has laboratories in regions including Europe, United States and Australia, that are engaged in testing thousands of patients for COVID-19 on a daily basis. Moreover, SHL is boosting its capacity in order to serve the communities where it is currently providing its services.
The Company has also engaged its expert and experienced management teams and medical staff with government and other healthcare organisations in the current scenario to further support efforts towards dealing with this epidemic.
Additionally, SHL is working towards ensuring the supply of necessary materials and equipment for COVID-19 testing.
Withdrawal of earnings guidance for FY2020
On 20 March 2020, Sonic Healthcare updated the market that it has withdrawn earnings guidance for the financial year 2020, mentioning the reason as uncertainty levels resulting from the coronavirus outbreak.
The Company is confident that its trading outcomes remain consistent with the previously provided earnings guidance; however, as individuals have started self-isolating or are quarantined, diagnostic testing may possibly be impacted in short to medium term.
Moreover, SHL mentioned that its balance sheet is in a strong position, with approximately $1 billion of cash and committed credit facilities currently available (before payment on 25 March of the fiscal year 2020 interim dividend totalling $162 million). Additionally, the Company notified that none of its debt facilities are due to mature until the calendar year 2021.
Read More: Coronavirus Triggers Fears about Chinese Economic Growth
First Half 2020 Results-
- The Company generated revenue of approximately $3.3 billion, up by 15%, including solid organic growth of approximately 5%;
- Net profit growth of the Company was noted at 14% to nearly $254 million;
- Sonic Healthcare mentioned that its Aurora Diagnostics acquisition is performing to expectations and the Company has reported record results for the half year, enhanced by the impacts of this acquisition completed in January 2019.
- In its half yearly report, the Company highlighted that it is well set for the upcoming growth, with strong market positions and brands, its binding culture of medical leadership, and a balance sheet that offers SHL considerable financial flexibility;
- Sonic also disclosed that organic revenue growth remains an integral part of the Company’s story, and the management teams all around the world are continually pursuing service enhancements and other organic growth initiatives.
- A few examples cited in the half yearly report comprises expansion of test menus to include ever more complex tests, such as genetic tests, provision of market leading e-health tools, and ongoing billing system enhancement project in the United States.
Stock Performance
On 23 March 2020, SHL stock closed the day’s trade at $23.450, inching upward by 8.124% from its previous close. With a market capitalisation of approximately $10.29 billion, the 52-weeks high and low price of the stock was recorded at $32.070 and $20.060, respectively. The P/E ratio of the Company stood at 17.480x, with an annual dividend yield of 3.92%. SHL stock has generated a negative return of approximately 24.34% on a year to date basis and 23.21% in the previous six months.
Amid the current state of coronavirus pandemic, Sonic Healthcare is well positioned with a strong balance sheet, focusing on meeting the diagnostic testing needs of its communities and wellbeing of its staff.
