The Sonic Healthcare Ltd (ASX: SHL) share price is going up after providing a positive trading update for FY22 at its AGM.
Sonic Healthcare is one of the world’s largest pathology businesses. It has operations in ANZ, Europe and North America. It has been providing the essential service of COVID-19 testing since the pandemic began.
Sonic Healthcare’s FY22 update
The large healthcare business said that it continues to support governments, healthcare authorities and communities with COVID-19 initiatives.
Sonic’s laboratories are testing tens of thousands of people every day for COVID-19, with 36 million PCR tests in total to date, as well as conducting COVID-19 serology testing and, in some markets, COVID-19 whole genome sequencing to aid identification of variants.
In Australia, it has provided more than 1 million COVID-19 vaccinations to the community through special purpose high volume hubs and through its network of more than 200 medical centres.
But apart from that, Sonic’s non-COVID businesses continue to provide services.
Financial growth
Sonic reported that in the first four months of FY21, its revenue grew by 5% to $3.09 billion and its EBITDA (EBITDA explained) increased by 16% to $991 million.
The base business revenue, excluding COVID related services, grew by 6% year on year and it was up 4% against the same period in FY20 (before the pandemic). Those comparative periods were ‘normalised’ for currency exchange rates, acquisitions and disposals of businesses and working days.
Sonic said that its base business has become increasingly resilient to impacts of pandemic waves and it benefits from the essential nature of its services, as well as geographical and business diversification. Management said that the underlying growth drivers for healthcare services remain unchanged.
Summary thoughts about the Sonic share price
Sonic has done well to provide the vast levels of COVID testing and other services that it has over the last couple of years.
I think it’s a leading blue chip ASX share because of its steady growth with its core business. I also believe that COVID testing has been and could be around longer than some investors thought, generating more profit for Sonic and allowing it to use some of the profit to buy useful bolt-on businesses.
Sonic is also one of the more reliable ASX dividend shares in my opinion, so it’s on my income watchlist.
