One Mid-cap All Ordinaries Healthcare Player that Investors Like: EBOS Share Price

Summary

• Marketer and distributor of healthcare products, EBOS Group, witnessed strong performances from both Healthcare and Animal Care segments in FY20; total revenue grew by 26.5%.
• With the distribution of healthcare products falling under essential services, the business activities of the Group continued during the pandemic.
• Revenue of Healthcare and Animal Care segments increased by 27.4% and 11.3%, respectively.
• Underlying EBITDA of healthcare segment increased by 14.8% and Animal Care EBITDA rose 8.3%.
• The Group declared a final dividend of NZ 40.0 cents per share, taking total dividends declared for FY20 up by 8.4% to NZ 77.5 cents.

While companies are going belly up during the COVID-19 crisis, the ASX healthcare sector is flourishing in this reporting season. Due to the ever-increasing demand for healthcare products, biotech and pharma shares have generated profits amid the turmoil. Moreover, investors are watching the healthcare industry closely to reap the benefits of improving the share price of the healthcare companies that are posting impressive financial results.

Some ASX healthcare shares observed a significant upsurge in share price in the ongoing period of uncertainty, despite the market volatilities during the chaos instigated by the novel coronavirus.

With their impressive financial results and rising share price, many healthcare players have added significant value to the ASX healthcare sector index during this month. The Month-to-Date return of the S&P/ASX 200 Health Care sector index stood at an impressive 8.93% (as on 20 August 2020) compared to a 3.24% return of the benchmark index, S&P/ASX 200.

GOOD READ: Unveiling Current Challenges & Opportunities in Healthcare Space Amidst Virus Threat

With this backdrop, today, we will discuss an ASX-listed healthcare company which posted impressive FY20 results. Let us delve deep and discuss EBOS Group Limited-

EBOS Group Posts Record Full-year Results

Dual-listed (both ASX and NZX) company EBOS Group Limited (ASX:EBO) is the largest & most diversified marketer, wholesaler and distributor of healthcare, medical as well as pharmaceutical products across Australasia. The Company is also a prominent marketer and distributor of recognised consumer products and animal care brands.

EBOS witnessed robust performances from both Healthcare and Animal Care segments in FY20

On 20 August 2020, EBOS updated the market with its FY20 results, with the Company posting record results for the period and a substantial increase in earnings. Highlights from FY20 results are detailed below:

• During FY20, EBOS revenue stood at ~A$8.8 billion, an increase of 26.5%.
• The underlying EBITDA was recorded at ~A$296.6 million, up by 13.4%, while underlying NPAT increased by 16.5% to A$168.3 million.
• Both Healthcare, as well as Animal Care segments, performed well and demonstrated the strength of their market-leading positions.
• Underlying EBITDA of Healthcare segment and Animal Care segment were up 14.8% and 8.3%, respectively.
• During the period, operating cash flow of A$229.2 million was reported because of the rise in earnings combined with the industry-leading the management of working capital of the Group.
• EBOS Group has a strong balance sheet, with Net Debt/EBITDA ratio of 1.11x, strengthened through the latest refinancing programs which boosted the weighted average maturity of debt facilities of the Group to 2.5 years.
• The Group declared a final dividend of NZ 40.0 cents per share, taking total dividends declared for FY20 up by 8.4% to NZ 77.5 cents.

The overall net impact of COVID-19 on the Group’s financial performance was broadly neutral for FY20, although there were both positive and negative trends in months as the COVID-19 crisis evolved. Trading conditions were better towards the end of the financial year.

EBOS Group’s business activities that formed a part of essential services had earlier aided the Company in generating improved business momentum in the third quarter of FY2020.

DO READ: 5 Healthcare Stocks Riding High Amid Buoyed COVID-19-induced Healthcare Opportunities

Notably, EBOS has market leading positions in stable and defensive industries and has a solid balance sheet. These attributes have held the Group in good stead during these challenging times.

Healthcare Segment Revenue Increased by 27.4%

Healthcare segment of EBOS Group generated a 27.4% increase in revenue during FY20, bolstered by substantially higher sales volumes in community pharmacy along with continued growth in its institutional healthcare and contract logistics businesses.

• In Australia, Healthcare revenue increased by A$1.7 billion (+33.1%).
• Underlying EBITDA rose by 19.6% led by the performance of EBOS Group’s institutional healthcare, community pharmacy, along with contract logistics businesses.
• New Zealand Healthcare revenue grew by 8.5%. However, underlying EBITDA was affected by cost escalations in labour and freight as well as the softer overseas requirement for consumer products of the Company.
• Community Pharmacy revenue across Australia and New Zealand climbed by A$1.4 billion (up by 37.4%) owing to substantially increased volumes.
• The business gained profit from initiation of the wholesale distribution of the Chemist Warehouse volumes from 1 July 2019 in Australia, as well as the improved performance from our TerryWhite Chemmart (TWC) franchise network partners.
• Community pharmacy profited from unprecedented need during March 2020 as many consumers stored ethical and OTC products.

Animal Segment Revenue Rose by 11.3%

The revenue of Animal Care segment of EBOS rose by 11.3%, mainly by a combination of the continued outstanding performance from its branded products portfolio and higher veterinary wholesale volumes.

Key brands of the Group Black Hawk and Vitapet recorded robust uplifts in revenue. Lyppard bolstered its market status during the period with revenue rising by ~12.0% due to customer growth along with the lately acquired Therapon business.

COVID-19 Update-

• The Group’s response to the COVID-19 pandemic has been extensive.
• While continuing to serve the community and its customers as effectively as possible, during extremely restrictive conditions, the Group’s primary objective has been the safety as well as the wellbeing of its employees.

The government measures implemented in response to COVID-19 did have a financial impact on the business of EBOS during FY20. However, the net overall financial effect was roughly neutral.

Stock Information- On 21 August 2020, EBO share price stood at A$20.440 (at 3:29 PM AEST), up by 0.69% from its previous close. The market capitalisation of EBOS stood at ~A$3.31 billion.

Given EBOS’ scale as well as a leading position in stable industries, along with a strong balance sheet, the Group is well positioned to respond to the upcoming challenges.