Monday, July 20, 2015
Sonic Healthcare has downgraded its profit guidance for 2014-15 off the back of falling patient numbers and the costs of opening more pathology collection centres.
The listed pathology, medical centre and radiology provider said on Monday morning it expected its full year profit before tax to be $730 million, which is about 3 to 4 per cent lower than previously forecast.
Sonic expects non-recurring costs to be $13 million for the year, mostly in relation to restructuring the company's US interests and exit costs following the expiry of contacts in New Zealand.
Chief executive Colin Goldschmidt? said the profit downgrade was due to fewer people having pathology tests, the impact of changes to Medicare fees on some tests, and the cost of rolling out more centres.
"It [the downgrade] is largely around Australian pathology, which is roughly a quarter of our total business, and largely around fee changes around the Medicare schedule which happened in November last year," Dr Goldschmidt said.
"These were essentially cuts to certain items and some technical changes to tests like vitamin B and vitamin B-12, which have had a negative impact for the entire market."
Dr Goldschmidt said the number of Sonic collection centres had more or less doubled in the past few years and the company was bearing the rent and labour costs of this expansion.
He said bad weather in NSW in April had negatively affected volumes for the whole industry.
Sonic's main rival Primary Health Care last week announced that a mild cold and flu season meant people were taking fewer trips to the doctor and that its profits had fallen as a result.
Sonic expects its 2016 yearnings to be $850 to $875 million, 20 per cent more than in 2015.
That estimate excludes further acquisitions and earnings from a proposed contract with Canadian health authority Alberta Health Services.
"From Sonic Healthcare's point of view, the outlook is pretty strong," Dr Goldschmidt said.
"Our overseas pathology business is substantially larger than our Australian pathology business, and that's tracking strongly, as are our radiology and primary care divisions."
smh.com.au
